ERP upgrade is an important phase after implementation since it helps to ensure that your system is never out of date. The process is a step towards better software that is capable of growing your business and catering to its dynamic needs. Any company that has implemented an ERP system in the past, must go for an upgrade to stay in the competition.
In this blog, we will tell you all that you need to know about an ERP upgrade and how it can be made easy.
ERP and its Benefits
ERP software may be defined as a set of applications that streamline the entire business and automate its processes. Such software manages processes like business analytics, accounting, supply and marketing automation among others.
The upgrade is important because it provides you with an upgraded solution that integrates all processes across the business. Here are some points for you to understand the importance of ERP in an organization:
a. Collaboration: A lot of times the problem of duplication arises because of different departments using the same information. However, when they collaborate this issue takes a backseat and all that happens is smooth. ERP provides you with a centralized form of information and leads to an increase in productivity, collaboration and efficiency of your business.
b. Better performance: By putting all things in one place and ensuring that there is no repetition in work, ERP promises to improve the overall performance of your employees and increases customer satisfaction. It transforms the work from being robotic and monotonous to something that requires less effort and gives better results.
c. Enhanced tracking capacity: ERP helps you manage resources, transport final goods and ensure the satisfaction of end users and your clients. It provides you with an overview of the business and helps you identify and find solutions to the problems that occur simultaneously.
d. Detailed analysis: It further improves the functionality of your business by keeping an account of all that goes on and what each end user does. It helps you create reports and better understand your functions, thereby ensuring better results.
e. Return on Investment: While ERP might come out as a costly affair in the beginning but believe us, it is a one-time investment. Once it starts working you will realize that it is value for money as it reduces training, saves time and provides better visibility.
Reasons to Begin ERP Upgrade
ERP upgrade is quite important for any business as it brings a lot of benefits. However, you need to know why you should begin the process. We have listed some key reasons behind the ERP upgrade:
I. Access to the Modern System
One thing that is quite dynamic in the present scenario is technology as it gets outdated within a few days of its release. There is a constant upgrade in it and this makes ERP upgrade essential. When you upgrade your ERP, you are actually bringing in new technology that promises to make your work more efficient.
It modernizes everyday functions for you and reduces the workload too. Through it, your business will stay competitive and you will see positive results as well.
II. Zero Re-training needed
The best part of an upgrade is that it does not require you to re-train your employees, at least not from scratch! Generally, training can be a very tiring activity because you are dealing with individuals who are not aware of what you have brought in.
However, when it comes to upgrading your ERP system, the hidden benefit is that you do not have to redo stuff. This is because you are upgrading yourself and not changing the core of its functioning.
III. Constant Vendor Support
As we have said above, technology becomes outdated very quickly. Therefore, if you fail to upgrade your ERP system for a long period, the vendor will gradually withdraw support.
It is quite obvious that no one will keep providing you with support for outdated software, as they can make more profit through the new one! This is also why you must upgrade your system and there is no point in investing in something outdated.
Five Factors Behind an ERP Upgrade
It is quite important to know about the factors which matter during an ERP upgrade. An upgraded system guarantees several benefits and therefore, you should invest in it. Here are five major factors behind an ERP upgrade:
Growth is what every business desires and if there is something that can help you with this, and is readily available, it is an upgrade! You may analyze four growth indicators to understand if your business is growing or not. They are:
- More transactions: If you are getting more data that needs to be tracked and experiencing more transactions, employees and projects, it means that your business is growing.
- Newer products: When businesses grow, they add newer products and services to their portfolio and expand themselves.
- Sale in newer markets: If you are expanding into newer markets and reaching commendable heights, it means that your business is growing.
- New line of business: A new business line requires adequate software to be handled and if this is improving, you are growing!
Mergers, expansions and acquisitions are quite common in businesses and therefore, if you want to undergo the same fate you must begin the upgrade process. This will be essential in catering to their needs and expectations. Moreover, if you plan on acquiring a smaller organization, you would definitely want them to do the same.
III. Legacy Technology
A legacy system is your parent system, which stores all your data and is custom-built for you. However, a major constraint when it comes to legacy technology is the lack of vendors, who will be able to support it. Also, this system runs out of date, so you cannot expect much from it.
IV. Regulation-related Conditions
Regulation is another major factor behind any ERP upgrade. As a business, you need to keep regulatory practices in mind to avoid any future problems. You may have to begin the upgrade due to regulatory reasons, as it involves complex accounting and revenue rules. The other reasons may also be weaker controls and functionality.
If you think that your current leadership has become redundant, it is time for an ERP upgrade, which will provide you with new leadership. A new individual will be in a better position to understand the probable changes that your business might need.
ERP Upgrade vs Replace
One question that most companies have is whether they should go for an ERP upgrade or an ERP replacement. While both options may seem good, you need to know them inside out to make an informed decision. We have listed the benefits of both options below:
I. Upgrade Benefits
An ERP upgrade does not cause any disruption and is a smooth transition. This will just be an upgraded version of the ERP software you are already using, and you will be preventing any hurdles in the way. Moreover, this will be more cost-efficient and save more time than a paradigm shift.
II. Replace Benefits
An ERP replacement comes out as a better option, when other vendors have launched newer systems with better features in the market. A completely new system will help you benefit from better opportunities and improve efficiency. When it comes to mergers or acquisitions, a replace would be your best bet.
You must consider cloud-deployment options before choosing whether you want to upgrade or replace. It would be wise to analyze most possibilities, listen to the vendor you think is best and then decide for yourself. Another factor is the amount you are willing to spend!
Evaluate ERP Systems
One important question is regarding the basis on which an ERP system is evaluated. Generally, an ERP upgrade evaluation begins with an understanding of your goals as well as the issues you want to solve. There could be several problems that your business may be facing.
Most companies investigate the chances of lowering or even alleviating certain costs or irregularities in forecasting the future course of action of the company. In such situations, an ERP upgrade comes out as a saviour, as it automates the processes of your business instantly.
Once you know what you desire, you can easily evaluate the various options that you have and choose the most ideal out of them.
8 Tips for ERP Upgrade Success
By now we have come to know the importance of an ERP Upgrade. Let us discuss some quick tips to make the process of ERP upgrade a success.
I. Impress the Executive
No job can, practically, be done without getting the top leadership on board. The same is true with the process of an ERP upgrade. If you want the process to be a success story, you must ensure that the executive is interested in buying it. This section needs to understand the reason behind the ERP upgrade and the related processes, for you to begin with the work.
II. Understand Issues and Set Standards
You must identify the pain points that are there in your ERP software. It is important to understand these, as they are the most potent reason behind the upgrade. These may vary from a lack of data integration and management to poor user adoption. Once you know the problems, you may set standards for the upgraded software and expect better results.
III. Involve Users in the Forefront
It is important to involve users at the forefront when it comes to an ERP upgrade. You cannot just present the upgraded system to your employees one fine day and then expect them to adapt to it instantly! Try to understand the processes that will be affected by the ERP upgrade and discuss these with the users for better collaboration.
IV. Identify Gaps
All ERP systems have imperfections, and your task is to identify these. Understand the needs of your business and whether the system can provide them or not. Once you know where you are lagging, you will be able to come up with an ERP upgrade plan and work accordingly.
V. Draft an Achievable Plan
Be very realistic with your plan and do not set the bar too high such that it becomes unachievable. Understand that the upgrade will be changing your core business operations as well as the working of your employees. After getting this straight, plan accordingly and do not over-expect.
VI. Data Mapping
Generally, data mapping is something that you have to take care of yourself. Do not rely on your vendor for this purpose because they will be more concerned about what is in their system and not about what you have to offer. This is a journey you need to go on, yourself.
VII. Take Care of Scope Creep
A lot of times the actual cost of an upgrade can be way more than what you had estimated because of a change in business needs or other additions. Therefore, you need to ensure that the needs are solid in nature, and do not fluctuate every now and then.
VIII. Educate Users
Educating users is different from training them. This will include teaching them how to use certain new features of the upgraded system and explaining what it entails. If they know the system and the need for it, inside out, they will be in a better position to use it.
ERP Upgrade Checklist
When you decide to begin the ERP upgrade process, you need to draft a foolproof plan to avoid any hiccups. Generally, a good plan consists of creating a checklist to get you going. Here is an ERP upgrade checklist to help you out.
I. Bring Together a Project Team
You should begin by establishing a project team consisting of individuals from the different departments of your company, who have expertise in the matter. Assign roles to each individual to understand if you should go for an ERP upgrade. This team may comprise end-users, key stakeholders, coordinators etc., who will prove a great help.
II. Business Case and Management Approval
Once you have brought together a team and decided on the initial question of whether you should go for an ERP upgrade or not, you may analyze how a new system will be beneficial to you. Once you are done, you may discuss it with your executives and seek their approval.
III. Identify Needs
The next step after getting approval is identifying the needs of your business as well as your project. You may consult the department heads, who will help you understand the needs of each department. You can then understand the larger needs of your business and choose an ERP upgrade easily.
IV. Find Reliable Vendors
You need a reliable service provider, that is, a vendor when you are starting with the ERP upgrade. Find out whether a person has a good reputation and expertise in the field or not. The best way to understand this is through references. Talk to other companies which have used their services and find out if they are a good option.
V. Construct a Plan and Set Achievable Goals
In this part, you need to be focused on back-end database upgrades as well as data integration and migration. You may also pay attention to stuff like user training, go-live planning and the list of available vendors. Any ERP upgrade plan has numerous phases and so, you can start benefiting while you establish a foundation for your project.
VI. Establish Good Relations
It is very important to establish an open relationship with all your employees and start communication, so that they can express themselves freely. This way they will be able to report any confusion or problems going on, in the working of the project, easily and without hesitation.
VII. Evaluate and Plan Further
Once you are done, it is important that you learn from your experiences, as you will be working with technology that is forever changing. You will also remain in touch with the vendor for several years therefore, you need to establish good relations with everyone.
You may take the following steps if you plan to replace the ERP system:
a. Upgrade or replace: You can analyze cost, disruption, and business value to decide on the question. One may also consider the information provided by the vendor. It would be wise to have most stakeholders’ approval.
b. Shortlist best vendors: You may request the available vendors to send your proposals and demonstrate the working of the upgraded system. Compare them all and then shortlist the best 3 or 4 vendors.
c. Select a vendor: Once you have just 3 or 4 vendors in hand, choose the best one as your partner. This person should be giving you the best services at the least price.
d. Bring together a real project team: Now that you have everything in place, you will need a team that will essentially handle all the processes. You can then delegate the work accordingly.
In this blog, we have talked extensively about the ERP upgrade process and the various benefits that it has for your company. We have also enlisted eight tips to help you out and smoothen the entire process for you. You may also use our checklist to ensure that your ERP upgrade stays on track and ensures the best results for your business.