If your current enterprise resource planning (ERP) solution is showing its age, you’re likely weighing your options – do you purchase add-ons or upgrades to your existing solution, or migrate to a brand new ERP system?
Before jumping into anything head first, I think it’s important to note that on average, businesses replace their
Top 5 ERP Considerations
Since this is a significant investment that impacts many areas of business operations, it is best to have a strategic plan in place on how to create the right blueprint that will identify the best solution for your business, with the least amount of risk. An informed deicision is surely a smart decision. Here, we highlight the top five factors you need to consider in order to make the best choice for your business.
- Product Lifespan & Your Business Evolution A carefully-selected ERP solution will help keep your business and its processes organized for 15 years. If your business has evolved significantly since you first adopted your legacy software, a thorough evaluation of its functions is a must. If it’s determined that many of its pivotal functions require changing, migration can save you the headaches that come with trying to force changes on an infrastructure that simply wasn’t built to support them. Otherwise, if only a few minor alterations are needed, an upgrade could be your better option.
- Systems Compatibility Does your current ERP system integrate well with other systems you use and rely on? If not, it can be a strain on productivity, not to mention the sanity of your people. Investigate whether or not a new system will resolve this incompatibility issue. If it can, it will be well worth the investment.
- Benefits-to-Risks Ratio Clearly, if you are considering adopting a new ERP system, you have determined the benefits of doing so. However, don’t forget that with any ERP implementation, there are also potential risks. And greater changes translate to greater risks. Are the risks worth it? Performing a comprehensive risk analysis will help you weigh the risks to the potential reward. Data migration poses particular risks when not properly planned for, as can insufficient preparation, inadequate training, and lack of change-management leadership. Knowing where the risks lie will help you determine how to prevent those risks from becoming reality, and whether or not migration is your preferred option.
- Budget In either a migration or upgrade scenario, you will be making an investment. How much? New systems generally start at just over $7,800 per user (including implementation) for a small business and can run into the millions for enterprises over $1 billion, according to Aberdeen Group’s Enterprise Strategies: Insight and Advice for Enterprise Executives. However, there is no guarantee that an upgrade will cost less, as price is highly dependent on what it is precisely that requires improvement. In any case, doing your research will inform your decision.
- User Adoption User adoption plays a large part in whether your ERP system upgrade or migration is a success. So if you are currently having user-adoption issues, it is critical to find out why. What do your people dislike about your current system and, most importantly, is it something that can be fixed by upgrading? Or conversely, might there be a different solution that will better address the needs of users and encourage adoption. On the same token, if user adoption is not currently an issue with your legacy ERP system, make sure you do know what people like about it. If you still decide to proceed with migrating, you can then ensure the favored features and functions exist in your new solution, rather than fixing something that wasn’t broken in the first place.
When faced with replacing ERP solutions, many companies do not have the time or resources to dedicate to analyzing the intricacies of their own business processes, evaluating technology solutions, and developing the strategic plan for ERP selection. If you think about it, why would you utilize your internal resources that have specific skillsets unrelated to technology solutions/ERP selection and allocate their time to researching and analyzing software functionality that maps to specific business processes? Putting an internal resource in this position would essentially create an operational gap of their job duties and responsibilities which essentially would slow business growth during the time they were assigned to this project.
That’s why at
Are you considering options for your ERP system? Learn more about the importance of assessing your business here: