ERP systems form the core of the IT infrastructure in any manufacturing or distribution setup these days. Businesses rely on these ERP systems not only for capturing the day-to-day operational information, but also to derive value from analysis of this data. However, the constantly changing IT landscape and introduction of newer, smarter ERP Solutions in the market drive CIOs and CEOs to evaluate the ROI of their current ERP system. Most of them want their ERP systems to streamline processes, help them serve in new markets across the globe seamlessly.
In the initial few years of ERP implementation, the Benefits-to-Cost Ratio looks very promising. But gradually there is a dip in this figure and it’s only a matter of time before the system starts causing major disruptions in business operations.
- So how can management arrive at the perfect time for a system overhaul?
- How can businesses be pro-active and not cross over into the “Unproductive ERP” Zone?
Here are a few indicators or suggestions when one should consider an ERP Upgrade.
End of Life (EOL)EOL is the scenario where your current ERP product has exhausted its shelf-life. The system does not receive continuing support. Most well-known ERP vendors like Oracle do provide the end of support dates well in advance. EOL is a result of the vendor introducing a newer product lines with upgraded features and functionalities. Businesses must be pro-active and look for a good ERP partner to start the ERP upgrade process well before the current system reaches EOL.
Missing New age functionalities & features
Obsolescence of technology and ERP features are a major reason for ERP Upgrades across the globe. With the growth of SMAC Technologies (Social, Mobile, Analytic and Cloud), traditional ERP systems are losing their competitive edge and so are the businesses who have implemented them. By 2018, at least 30 percent of service-centric companies will move the majority of their ERP applications to the cloud. Similar trends are observed for ERPs with Business Intelligence, Mobility features and social collaborative tools that sit over the traditional ERP systems. Businesses can upgrade their ERP systems to leverage all the new age functionalities & features offered by these technologies. Customization are often a pain-point in the long run for ERP users. Most of these new age functionalities reduce customization needs and thus improve maintenance costs & support requirements.
For example, say you want to upgrade to Oracle E-Business Suite R12, there are a multitude of features which can improve your business output. Features like usability enhancements, Fusion Middleware, enhanced industry-specific functionalities, improved analytics & reporting and much more.
Improved User Productivity through Reporting & Visibility
Consider an ERP upgrade when the current system limits your ability to produce granular-level reports which you expect. Legacy systems fail to provide you the operational & transactional visibility that will aid your strategic decision making process. User productivity is directly related to the level of reporting provided by your ERP system. Detailed Reports often lead to better productivity across business functions.
Only when there is Tangible Positive Impact on Business Operations
Don’t upgrade to the next-level ERP system only because of the general benefits of the newer products. Make a serious note of all the new functionalities on offer, conduct a need analysis and arrive at the actual list of features which will directly impact your business operations positively. Make sure your Key Performance Indicators (KPI) are going to be benefited by this change. There are many ERP partners who will offer Planning Services for your ERP upgrades and help you choose the right modules and features to maximize your returns.
Sufficient Resources are available and User Adaptability is High
ERP upgrade decisions are often senior management decisions. But the actual impact is on the end-users of these systems and the people who are involved in the Implementation projects. So before you jump start an ERP Upgrade, make sure your in-house teams are on-board with the changes coming their way. Typical ERP upgrade projects last from anywhere between 6 to 12 months. There should be dedicated resources to support the upgrade projects. It is also important to take a survey of existing ERP users to check their levels of adaptability. Disruption in ser experience is often a major reason why upgraded systems fail to deliver the level of performance expected from them.
Of course, the perfect timing for an ERP Upgrade will also depend on the individual priorities, IT Budgets and current release. Every business has ERP upgrade needs and reasons. It could be purely Functional or Technical or both. You have to find out the ones that will give you the best Benefits-to-Cost Ratio. Having a faster, more integrated and versatile ERP system takes your business from “doing just fine” level to the “doing great” level.
About BrightStar Consulting
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