Deciding to upgrade packaged software: a comparative case study of motives, contingencies and dependencies

Packaged software is widely adopted and has become an integral part of most organizations' IT portfolios. Once packaged software is adopted, upgrades to subsequent versions appear to be inevitable. To date, research on packaged software has not paid attention to the upgrade decision process. To explore this area, we studied cases of upgrades to two widely used packaged software products (SAP and Windows) in a multi-billion dollar division of a Fortune 500 company. From an analysis of the cases, we induced a theoretical model explaining the influences affecting the decisions to upgrade. Our model suggests that upgrade decisions are the outcome of interaction between motivating forces that can originate from internal and external environments, and contingency forces. Business need was found to be one of the key internal requirements, along with organizational risk mitigation policies. Organizational reliance on packaged software also creates dependence on vendors that gives them influence over the organization's upgrade decision. The decision to upgrade is also contingent on the availability of internal resources. Although scarcity of internal resources can postpone an upgrade when the need to upgrade is deferrable, organizations will prioritize internal resources when the upgrade is deemed necessary.