Security prevails or affordability matters? The optimal ERP releasing strategy considering differentiated customer security perceptions

Given differentiated cloud-security perceptions between large enterprises (LEs) and small and medium enterprises (SMEs), enterprise resource planning (ERP) providers face a strategic paradox: whether and when to compromise on security with costs for maximized profit. Through modelling versioning strategies by on-premise, cloud or the dual version, we find that their optimal strategies depend on the quality–security balance across various cloud ERP quality periods. Contrary to the intuition that the dual version should be more attractive to end-users, we find that the cloud strategy grows from infeasibility to domination as cloud ERP quality grows. Moreover, as SMEs’ proportion increases, the dual version strategy becomes less viable. Our research adds to the literature by highlighting how quality–security balance shapes cloud product versioning decisions. These findings benefit ERP providers for their optimal product schemes under the security-cost paradox.