Do you know when you deployed your current ERP system? There is a good chance it was a few years ago. In 2017, a survey of 225 companies by SelectHub found that the average lifespan of an ERP system was 5-10 years. This is not surprising given the investment required to implement an ERP solution in terms of capital, time and potential loss of productivity.
That being said, many business will begin to find themselves in the position after a number of years wherein their ERP system is no longer meeting the needs of the business. This may be down to a number of factors, but due to the serious undertaking an implementation project represents, the decision to invest in a new one is not one to be taken lightly.
With that in mind, here is our quick guide to reviewing your ERP needs, and knowing when to update your software.
End of support
The first thing to consider is a – relatively – simple one. Is your current software version so old that the vendor has ended, or is planning to end, support for it? This is a very good reason to upgrade. Using unsupported software puts you at serious risk of complete lack of productivity should something go wrong. This lack of support also means you will not be able to deploy any updates, security patches or maybe even customisations that could help you grow the capability of the system. Also, if the software is outdated, chances are that if you are upgrading other aspects of your infrastructure – operating system, hardware – there may be a compatibility problem. You are also likely to struggle to integrate the software with other systems – increasing the amount of time spent on manual data entry, and most likely, data duplication.
Growth and change
If you are one of those businesses that is on the further end of the ERP lifespan scale – more towards 10 years – there is strong chance your business looks a little (or a lot) different to how it did when the software was first deployed. Whether it has grown, downsized, shifted into different markets, or absorbed other smaller companies, the need you identified when you first selected and deployed the software will have changed. This is as good a reason as any to re-examine the needs of the business and how this relates to your ERP system.
In a similar vein to re-examining ERP use in relation to the business’ needs, it is a good idea after a number of years to revisit how your core business processes are mapped to your ERP system. Following a business process mapping exercise, you can more clearly see the part the software plays in each process, and as a result, opportunities for things like better automation and integration. If you have not updated your ERP system for over 5 years, then you may well be missing out on some automation capabilities that newer versions of the software present. Similarly, if you have not viewed your business processes through this lens for the same amount of time, you may be missing some integral inefficiencies which are stuck in the “this is how we have also done things” loop.
Access to more functionality
Lastly, and perhaps most obviously, updating to the latest version of your ERP software gives you access to better capabilities and expanded functionality, opening up opportunities for automation, efficiency savings and integrations that you could not have achieved before. Whether or not you need this functionality will be addressed by your business process/ERP requirements assessment. That being said, newer ERP systems bring a number of capabilities that few business would not see benefit from, such as the ability to host in the cloud, mobility, better usability and – everyone’s favourite software gripe – improved speed! And that is without even going into more specific modules and business functions and the technologies which will enhance those.
Whether or not you should update your ERP system, and when, is really down to your business and its needs and goals. As always, we advise starting with the process – examine what your business needs to achieve and how, and map this closely to your ERP software usage. This exercise will tell you everything you need to know. If you would like more advice or guidance on upgrading your ERP system, get in touch.