Drivers to evaluate ERP upgrade needs

Multiple times, I get questions from corporate leaders like, why should I upgrade my ERP system if I am fine with the current version and also do not have enough cash to spend on "not so useful"  upgrade process? Can I delay the upgrade process for unlimited time? What are the factors I should consider before building a business case for an ERP upgrade? etc. Though there are separate factors or drivers for each organization that will impact the decision to upgrade the ERP version or not but yes there are some common drivers also which helps you to evaluate your organizational needs to upgrade or not. You need to build your business case based on these and can flank the other factors that are true for just your organization:
  • NEW FUNCTIONALITY REQUIREMENT: Evaluate the new features needed by business vis-à-vis severity of requirement and availability of those in new version of product. Also, check how long the business can wait to get those requirements fulfilled and what are the expected benefits by bringing in those features and in how much time
  • UNSTABLE CURRENT SYSTEM: Observe the nature and number of issues that have come in last 6 months to measure stability of system. If the root cause analysis brings out that the system stability is at risk due to mismatch of versions within different sections of ERP, then evaluate the amount of risk  
  • COST TO UPGRADE: Calculate the cost to upgrade the version vis-à-vis immediate as well as long term benefits. this can be done with the help of a consultant too who can provide the service provider fee and the amount of bandwidth required by the business teams during the course of upgrade
  • LEVEL OF EXISTING CUSTOMIZATION: Measure the level of customization in the existing instance and evaluate if upgrading the system will impact their stability. Lot of times, upgrade process become lengthy and complex if there are large number of customizations in the current version. But lot of these customizations can potentially be replaced by standard functionalities that will come as a result of upgrade. So evaluate both the factors beore taking a decision 
  • PROCESS STANDARDIZATION: Check if current processes are no longer best in class and need to be re-engineered and standardized across plants, divisions and subsidiaries again and if that needs the system to be redesigned
  • MERGERS & ACQUISITIONS: Check if any recent merger or acquisition demands any new functionalities or needs to be at same level of same product as of the acquired company
  • SUNSETTING LEGACY APPLICATIONS: Find out if any legacy application is planned to be retired in immediate future and that requires any features to be added in existing ERP product
  • VENDOR MANDATE: Check if ERP product vendor still supports general product configuration & bugs, product getting phased out or vendor charges extra cost to support current version. This will generally vary from product to product and again from customer to customer for these vendors as generally these ERP vendors negotiate different terms with different customers
All above drivers to evaluate ERP upgrade needs are generic factors that will fit in almost any of the organization but as I said earlier, there will be some more that will be specific to you organization and you need to include them also in your evaluation exercise.

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