The recent economic downturn forced all organizations to have a relook at their expansion plans and with these the most impacted part was the IT organization. The IT organization is seen as the enabler of growth and if the company is facing tough times in surviving the volumes, then it is obvious for IT to take a back seat and cut costs. Wherever, the organizations had a clear cut business case to upgraded to a newer release or replace their ageing ERP, those were put on hold and fresh thinking and cost benefit analysis exercise took over. This article focuses on those reasons or considerations that should be part of your business case to upgrade or replace your ERP system.
Let me first talk about the version upgrade of ERP and the main factors that should drive our decision to upgrade are:
- Current release of ERP do not satisfy your business needs or immediate expansion/change in strategy demands more or different functionality in the current ERP
- Newer release has the ability of meeting your anticipated needs
- Expiry deadline of “support at no extra cost” provided by the ERP vendor
- Level of customizations in the system and feasibility of version upgrade
- Budget and cash flow to support version upgrades
- ERP strategic direction for next 3 to 5 years in terms of probability and feasibility of moving towards a different model like SaaS
The factors that drive replacement of an ERP for an organization should be:
- Even the version upgrade to the newest release will not meet specific important requirements and substantial customization will be required
- Consolidation of ERP on acquiring a new company or internal rationalizing or multiple ERP systems
- Need a better and global standardized solution with international capabilities in terms of language, multi currency etc.
- Issues in integration of present ERP
- Outdated or less user friendly user interface
- More cost effective options available in market
If the business case of your organization’s ERP strategy is well thought and include above factors, there are less chances of it going in the deep freeze even in times of economic downturn as it will seamlessly integrate with the overall strategic direction of your organization and the IT department will not work in silos.