IT Services Firms, ERP Systems, and Contracts

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Describe the types of software and systems that IT services firms produce.

There are numerous types of software and systems that IT services firms produce, including middleware, server and system integration services, IT consulting, business solutions, database and business process management, telecommunication services, operating systems and application software, as well as many others (Fuller, Valacich, George, Schneider, 2019). Due to every organization’s differences in their needs, many of the more extensive, packaged services offerings either have features an organization does not require (yet still have to pay for) or don’t offer something that is tailored for the given situation. IT services firms are popular due to the customization of their products and services, providing customers unparalleled levels of information technology-related sophistication, scalability, confidentiality, integrity, and availability, all while remaining on budget.

  • What is an ERP system? Why is the installation of these systems one of the harder challenges for a PM team?

An ERP (enterprise resource planning) system is combining the many programs and services an organization utilizes to perform day-to-day activities, track orders and resources, as well as facilitate communication between the company and its customers. An efficient ERP system will connect all departments, process tasks, data collection, and other business-related projects, into an all-in-one service. The reason for the difficulty of implementing such a system is due to factors such as the complexity of connecting various services and software, the length of time it takes to plan for each department’s adaptations and requirements, as well as the enhanced levels of risk, should even a single link in the system’s chain fail.

  • Why is a contract a special document? How is it treated differently from other documents?

A contract is special due to its nature of being a legally binding document; there are also multiple versions of them, including cost-reimbursable, time-and-material, and fixed-price (Fuller, Valacich, George, Schneider, 2019). Contracts govern what is expected in a project, what will be done, the timeframe it needs to be completed in, and how much it will cost. A well-researched contract should be agreed on by all project stakeholders; with this, the entire project’s chance of unexpected risks, sudden cost increases, and legal disputes are dramatically reduced. Without a contract, a vendor has no real legal obligation to provide the agreed-upon services, nor does the client have the requirement to pay (besides just not wanting to be a horrible person).

  • In your opinion, when a company elects to install an ERP system, what would be the best type of contract to use?

In my opinion, a fixed-bid contract would be the right choice for an ERP system install, as long as the client is clear about what is expected. To clarify, if proper research is performed on the vast amount of work required for the ERP install, one can better estimate the costs, timeframe, and potential risks that are involved. By using a fixed-bid contract, when trouble arises during the project, the prices of the event would fall on the IT services provider, not on the client. Due to the high chance of problems that require additional funding or increased time, a time-and-materials contract might end up costing quite a bit more, as well as providing the IT services provider the desire to raise costs by ‘mysteriously breaking something.’


Fuller, M. A., Valacich, J. S., George, J. F., & Schneider, C. (2019). Information Systems Project Management: A Process Approach, Edition 2.0. Prospect Press, Inc.

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