Case Study: ERP Dilemmas at MedSys Health
Background
MedSys Health is a regional healthcare organization that operates a network of hospitals and clinics
across three countries. Each location uses different software systems for patient records, inventory,
HR, and finance. The lack of integration has led to data inconsistencies, billing errors, and inefficient
supply management.
In 2024, MedSys decided to implement a single, cloud-based Enterprise Resource Planning (ERP)
system to unify operations. The project was projected to cost $20 million over 18 months.
The ERP Project Goals
Integrate all departments under a single system
Improve data visibility and accuracy
Comply with regional healthcare regulations
Support future growth and scalability
Dilemmas Faced
1. Vendor Lock-In vs. Open Architecture
MedSys considered two ERP vendors:
Vendor A offered a complete, all-in-one solution but limited flexibility.
Vendor B provided modular components with greater customization options but required third-
party integration.
Dilemma: Should MedSys choose Vendor A for simplicity or Vendor B for long-term flexibility?
2. Centralized vs. Decentralized Control
Corporate leadership wanted centralized control over data and processes to ensure standardization.
However, local administrators argued that healthcare delivery varies by region and needs local
autonomy.
Dilemma: How much control should be centralized versus left to local managers?
3. Clinical Staff Resistance
Many doctors and nurses were skeptical of the ERP system, fearing it would increase their
administrative workload. Some warned that the system could negatively affect patient care.
Dilemma: How should MedSys encourage user adoption among clinical staff while ensuring patient
care isn’t compromised?
4. Budget Constraints
Halfway through the project, costs began to exceed estimates due to unanticipated customization
needs and data migration challenges. The board considered cutting the training budget to save money.
Dilemma: Should MedSys reduce training and change management efforts to stay on budget?
5. Ethical Use of Data
The new ERP system would allow MedSys to analyze patient data across regions to identify trends and
reduce costs. Some stakeholders raised privacy concerns about how the data might be used.
Dilemma: How should MedSys balance data analytics with ethical concerns and patient privacy?
Discussion Questions
1. Vendor Decision:
What factors should MedSys consider when choosing between Vendor A and Vendor B?
How might vendor lock-in affect the organization in the long term?
2. Control Structure:
What are the benefits and drawbacks of centralized vs. decentralized ERP management in a
healthcare context?
What approach would you recommend, and why?
3. Change Management:
What strategies can be used to address resistance among clinical staff?
How can MedSys ensure that ERP adoption enhances rather than hinders patient care?
4. Budgeting Trade-Offs:
What are the risks of cutting the training budget during ERP implementation?
How would you justify continued investment in change management?
5. Data Ethics:
What policies should MedSys implement to use patient data responsibly?
How can transparency and compliance be ensured without sacrificing innovation?
1. Vendor Decision
Factors to consider: Total cost of ownership, integration capabilities, scalability, vendor
support, long-term flexibility.
Vendor lock-in risk: Limits future adaptability; switching costs can be high; may hinder
innovation.
2. Control Structure
Centralized benefits: Standardization, better compliance, streamlined reporting.
Decentralized benefits: Flexibility, local responsiveness, improved user satisfaction.
Recommendation: A hybrid model—core processes centralized, local customization
where essential.
3. Change Management
Strategies: Early engagement with clinical staff, role-based training, pilot testing,
appointing change champions.
Ensuring patient care: Involve frontline staff in design decisions; ensure usability aligns
with clinical workflows.
4. Budgeting Trade-Offs
Risks of cutting training: Poor user adoption, errors, reduced ROI, potential disruptions
to patient services.
Justification for training: Essential for success; well-trained users reduce long-term
support and error costs.
5. Data Ethics
Policies needed: Clear data governance, anonymization protocols, user consent procedures.
Ensuring compliance: Transparent communication, adherence to HIPAA/GDPR, regular
audits, and staff training.
