Over the years, you’ve invested a great deal in your ERP system—the software itself to the hardware to run it, training for your staff, and more. Now you are considering whether you should upgrade or update your system. We addressed the four most common reasons why businesses upgrade their ERP system in our article and how to identify when it’s time to upgrade your financials or ERP system.
What do we mean by an ERP upgrade?
When we discuss upgrading your ERP system, we’re referring to two distinct sorts of ERP upgrades:
The first type of upgrade is the literal one. Let’s say you’re using version 5 of a software package and wish to upgrade to version 8.2, which is the most recent version. You’re still using the same program from the same vendor; the only difference is the version. These upgrades happen regularly, especially in cloud-based programs, and often without realizing it.
The second type is when you wish to upgrade to a more advanced system, similar to upgrading from an apartment to a house or from a Toyota to a Lexus.
Four Key Reasons to Upgrade Your ERP
The first reason is growth, and there are three growth indicators to consider when assessing whether or not your company’s ERP system needs to be upgraded.
- New Products and Services: As a company grows, its business model may expand or evolve, as we’ve seen with many of our clients. To develop a more substantial value offer, they may begin to add more services to their repertoire.
- Increased Transactions: When a company undergoes a significant transformation, more data is generated that needs to be tracked. There are more sales, fulfillment transactions, staff, projects, and everything that management needs to keep track of.
- New Line of Business: This isn’t simply a new product or service; it’s a whole new business line. A new business line is a product or service that is fundamentally distinct from the previous one, with a different consumer base, different producers, and different processes, among other things. With a new company line, you’ll need an ERP system that can handle all details.
When your company is experiencing rapid expansion, it’s good to examine your ERP system and choose a software solution that will help your company flourish.
The possibility of missing out on feature enhancements should also be considered. A company can benefit from functional advancements in new versions of the software, which can help it increase productivity, reach new clients more effectively, and service and grow existing clients in new ways.
As a result, many businesses that use modern solutions have a distinct competitive advantage over others that are still utilizing outdated versions or technologies that cannot provide the new features or innovations that come with upgrades.
When discussing ERP improvements with many of our clients, we frequently come across legacy technology. A legacy system is typically a custom-built application that has been in use for years, if not decades, by a company. For fear of losing its customizations, company leadership was hesitant to update to a newer version, let alone a new software brand. It was always easier for organizations to leave those unique features as is in prior on-premise software deployments since the expense of upgrading them was so high. The difficulty with this technique is that few vendors can support this type of customized software; therefore, switching to a widely supported ERP system might save a company money in various ways.
Another issue we encounter in firms that rely on legacy technology is that only a few personnel within the company understand how the program runs and functions. When those people depart or retire, there is frequently no one to take their position. If you find yourself in this circumstance, upgrading your ERP system ahead of time may be a wise (and required) option for your company.
Finally, outdated technology may no longer do what it was designed to do or what you require. Processes evolve with time, and businesses grow, so the app may not be able to monitor exactly what you need today or in the future, even if it was ideal in the past. If your old software isn’t meeting your needs, it may be time to switch to a more capable solution.
Change in Leadership
When your company’s leadership changes, you should consider upgrading the ERP system. For example, a new CEO or CFO is appointed to take the company to the next level, either organically, by acquiring other companies or simply through improved operations. They may want more visibility into the business, want to automate more processes or wish to return to a previous solution. While this isn’t a guarantee, it’s worth noting that a new leadership role or team may seek to enhance the company’s ERP system.
Avoiding updates and upgrades takes more effort, and it can be more expensive, riskier, and hurts your business. According to G2, 95% of companies achieve significant improvements after using ERP by reducing process times, increasing collaboration, and centralizing enterprise data. All of these are possible when you opt for the best technology for your business. Considering that, we don’t advocate for upgrading an ERP system unless it is necessary, and one of the primary concerns discussed in this article is affecting a company or organization. We’re happy to talk about specific cases.