SO, why upgrade your ERP system? ERP (Enterprise Resource Planning) systems are a major investment for any business. After the initial investment, making the decision of when and how to update the existing system can be a daunting task. When assessing the need to make such a sizeable investment, it is important to consider the business implications of such a decision.
What will your company gain? How many more years of working life does the system have? What types of updates are needed? Questions like these can help clarify to size and necessity of the updates. Periodically, though, it is important that companies perform some types of updates on their ERP systems for a variety of reasons, four of which will be outlined in more detail below.
Maximize the lifespan
With a typical lifespan of 15-20 years, ERP systems allow an organization to manage and automate many back office functions related to technology, services and human resources. The benefits of integrating all facets of business operations can be enjoyed for years but, in order to ensure the system continues functioning at a high level, it is important to perform periodic updates over the course of the system’s life. Without such updates, the lifespan can be reduced by as much as half. Considering that the initial investment in a new ERP system is more costly than periodic updates, it is financially more feasible to update the system as needed and maximize the lifespan of the technology.
Meet business objectives
ERP systems are designed and tailored based on the goals of the company. When your company initially invested in the system, it may have had only short-term, only long-term or other types of objectives it wanted to meet. Now, years down the road, it is important to reassess the strategy of the business to ensure that the ERP system continues to align with it and position the company to meet its objectives. If the objectives, or the strategy implemented to meet those objectives, have changed then it is important to upgrade the ERP system accordingly.
Maintain the bottom line
In business, everything comes down to the bottom line. By quantifying the effects of keeping your old system, investing in a brand new one or updating the existing one, you can make a cost-based decision that best aligns with your company’s budget and strategy. The long-term costs of ERP systems can be kept from ballooning out of control by performing updates to the system along the way. Instead of investing in and implementing a brand new software program every few years, focus on the bottom line and reduce your company’s overall investment in the software by updating your existing program.
Assess business opportunities
As mentioned in the previous section, a cost analysis can be critical to making a decision on updating your ERP software. In this process, it is easy to skimp out on a necessary purchase for the sake of saving a few dollars. For this reason, companies should keep in mind other opportunities that can arise from investing in an upgrade of the system. Potential benefits for your business may include increased communication, efficiency, productivity and visibility of day-to-day operations. In this streamlining process, businesses often see reductions in overall costs across the organization that make the upgrade in the ERP system worthwhile.
These are just four of the main reasons companies have cited for upgrading their existing ERP systems. Once they have justified their investment, usually with one of these four reasons, they can begin to consider exactly how they will implement the changes. From consolidating all systems to the same provider to eliminating obsolete reports to including data archives, there are a variety of ways to include upgrades into an existing ERP system.
In the end, a company needs to be clear from the start about exactly what they need from their ERP system. With an ERP strategy in place, it will make it easier for businesses to know the proper timing for an ERP upgrade in the future. Upgrading your systems can be daunting but, by following your company’s strategy and the four justified reasons to upgrade listed above, your business is well positioned to make the best decision possible.
Bio: Deanna Ayres is the SEM Strategist and Community Outreach Supervisor at The Marketing Zen Group. She loves to come up with new content strategies for and with her team and believes that connecting on a personal level is vital to success. Growing up in Europe has allowed her a unique insight into cultural differences in business & marketing. In her spare time she is a photographer, hobby cook with a love for coffee, gamer and geek.