An established company with growing business needs to do upgrading at some point, including ERP upgrade. However, if done at the wrong time or without good preparation, ERP upgrade will only end in unnecessary spending and even consumer’s dissatisfaction. While the integrated system upgrade is good for the company, it also costs much money and leads to major changes in the operation for a long term.
Signs Your Company Needs ERP Upgrade
A key for successful company is choosing the right time to upgrade the system. Here are signs that signify the right time to do ERP system upgrade:
- The system lacks modern features that other companies have to support their main functions. Progressive development in technology requires companies to have modern features in their systems, especially those that support the main functions every company has, such as HR and logistic. Make sure to upgrade if the company lacks these modern features.
- The system is older than 5 years. ERP system software usually has expiration date, but if it isn’t, make sure to do examination every 5 years to make sure the system can still support all the operations. Improvement is necessary to keep up with new trend and customer’s growing needs, and making sure that the system stays in its best performance.
- The company employees and consultants do not use the system, or feel that the system hurts their performance. When employees, technicians, consultants and inner departments in the company feel that the old system can no longer support their best performance, it is time to revamp the old system. ERP system that does not get upgraded will hurt the company performance in the long run.
- The ERP integration is hindered because of old-fashioned system. System integration is not uncommon when a company tries to develop business range, improve profits from growing market, and keep getting updated with the current technology and trend. However, old ERP system makes the process difficult, because of things such as complicated custom code or incompatibility with new, more modern features.
When these things happen, company must consider having ERP system upgrade to keep the day-to-day activities running.
ROI Analysis and ERP System Upgrade
ROI Analysis is a thing that every upper management thinks about when IT department proposes for ERP upgrade. ROI used to determine the decision to upgrade the ERP system, but experts such as Jim Shepherd from AMR Research Inc. said that ROI analysis is no longer a common factor that determines the ERP upgrade decision. Currently, ROI analysis only takes up about 10% to 15% of consideration process to decide about ERP upgrade, compared to 70% to 80% in the past.
ERP upgrade is now considered an important part of running a business, just like water or electricity an important part of a house. This understanding has been common in modern business world, and companies that refuse to apply the same idea will find themselves left behind in market competition. ERP system upgrade is an important aspect of successful business, so upper management should allow it to be done whenever required.