When is it time to upgrade your ERP?

What is an ERP system upgrade?

An ERP system upgrade refers to the process of moving from an older version of your existing ERP solution to a newer version with additional features or customizations or to a newer, more advanced ERP system that better suits your business needs.

An enterprise resource planning (ERP) system is the backbone of any organization, and keeping it relevant and up-to-date is essential. An ERP system upgrade ensures that your IT foundation can meet the evolving needs of your staff, end-users, and business requirements.

In short, an ERP system upgrade is a calculated and planned process in which you transition from your current ERP platform to a newer one, with or without the help of your current vendor. This doesn't always involve replacing the entire ERP system. If you upgrade your current system to a newer version without switching to a different ERP system, you simply adopt the latest and most advanced version to ensure your business remains supported for the upcoming years.

When upgrading an ERP system, version upgrades can be carried out by the same vendor or be automatic if the ERP solution is cloud-based. However, upgrading by switching to a different ERP solution or if your system is set as an on-premise or hybrid infrastructure may require involvement from your in-house IT team to ensure that everything is running smoothly.

Importance of staying current with ERP technology

As any experienced ERP expert will tell you, even the latest versions of any ERP solution require regular updates to ensure the system is aligned with evolving market and industry needs. Since all ERP systems collect and store enormous amounts of critical data, frequent upgrades are essential to apply vulnerability patches and address compliance issues to protect it.

Purchasing, implementing, and customizing a new ERP is often an expensive, lengthy, and resource-consuming endeavor; therefore, even with technology evolving rapidly, it is not practical to purchase a new ERP solution every other year. Instead, if your solution provides this option, it generally makes more sense to upgrade your ERP system to benefit from new technologies, third-party applications, and easily integrated features that can help you automate processes and reduce the need for manual tasks.

Regularly upgrading your ERP ensures compatibility with advanced third-party tools and in-house applications like HRMS, CRM, or MES, future-proofs and scale-proofs your business. Keeping your ERP up-to-date prevents productivity drains and maintains efficient process performance. Additionally, an updated ERP system contributes to cost efficiency, reducing the likelihood of system incompatibilities and performance issues that could otherwise increase operational costs.

Using an updated ERP also helps ensure data accuracy and enhanced decision-making that benefits customers. However, In cases where the existing ERP infrastructure does not support such enhancements, replacing it with a more contemporary ERP solution is advisable.

How often should an ERP system be updated?

Most ERP solutions require a significant version upgrade every 5 to 10 years. This allows the vendor to incorporate newer features, modify the architecture, and uphold the system's relevance. Based on the vendor's recommendation, updating the system every three to six months is best, particularly when the ERP is deployed on-premises.

Failure to implement minor patches can result in poor performance, corrupted files, and vulnerability to security threats, and timely adoption of bug fixes and security patches guarantees optimal performance and security standards for your ERP.

Cloud-based ERP systems may roll out upgrades automatically and regularly. However, it is important to audit your ERP performance and requirements annually so you can choose when to implement a major upgrade or replacement.

Key signs that it's time for an ERP upgrade

If you regularly audit your ERP's performance, you will inevitably encounter indicators telling you it is time for a significant upgrade. While some signs may be subtle, others cannot be overlooked too long. Here are 5 telltale signs that it's time for an ERP upgrade:

1. System performance issues

One significant potential issue with ERP is slow data processing. This may lead to productivity issues, as the system may struggle to support regular, day-to-day operations. This can result in frequent downtime, and employees may complain about frequent crashes, leading to poor workplace productivity.

If you notice system performance issues, it could be a sign that your current ERP solution can no longer handle integrations and demanding processes. Unless your hardware is outdated, the issue lies in an older version of your ERP that requires a long overdue update.

2. Incompatibility with modern technologies

Although many ERP systems pose as holistic, complete business solutions, most rarely are. They often need to be integrated with third-party applications in order to enhance their features. Consider upgrading if your ERP is no longer compatible with modern applications and tools.

Outdated ERP tools usually create integration challenges and will not support seamless data syncing over the cloud. You may also experience difficulties integrating artificial intelligence (AI) tools and machine learning (ML) enabled applications with your ERP. These restrictions lead to poor performance and an inability to use available technologies.

3. Inadequate support for business growth

The time to upgrade your ERP can also be ascertained by looking at specific indirect pain points. For instance, you may notice that you can no longer scale on demand, and your operations feel curtailed by various factors. Your ERP could be the culprit as it may no longer handle increased data volumes, transactions, and demand.

You may also notice that your business operations have become limited in terms of flexibility, restricting you to certain fixed business models and markets. When you feel constrained, it is time to consider a major ERP upgrade.

4. High maintenance costs

You might notice that maintaining the ERP solution is getting increasingly expensive.
If you can no longer use the ERP according to your vision without encountering additional costs, it is time to consider upgrading. Trying to fix an older version of ERP is like using your fingers to plug a leak in the dike. Get the professional help you need to address your pain points.

5. Security vulnerabilities

ERP products tend to become vulnerable to newer security threats over time. This is primarily due to outdated security protocols and features. You must consider upgrading if your ERP product no longer offers the latest encryption or multifactor authentication.

Using an outdated ERP may also make you vulnerable to compliance issues, resulting in fines and legal issues. Hence, if you notice any security vulnerabilities, make sure that you upgrade your ERP tool immediately.

Evaluating whether to upgrade or replace your ERP system

Deciding between upgrading or replacing an ERP platform can be challenging. While upgrading an ERP is advisable in some situations, replacing it might be a better decision in many others.

When does upgrading make sense?

If your current ERP system can withstand your business's perspective scalability requirements and minor customizations and integrations render it future-proof, upgrading might be the more sensible, cost-effective option.

To decisively decide if upgrading is a better decision, do the following:

• Conduct cost versus benefit analysis to evaluate the impact of upgrading your ERP on your finances and operations.
• If upgrading your ERP despite the costs is more beneficial, speak to your vendor about it.
• Consider incremental improvements to your existing ERP to avoid purchasing a brand-new solution.

When to consider a replacement

Sometimes, upgrading an ERP to its next version is not an option. You may notice that your current ERP solution no longer serves your business needs or is severely curtailed in functionalities and features. It may also not be compatible with modern technologies and solutions, making it difficult to integrate with essential applications.

While replacing may entail a higher cost than upgrading, it provides access to the latest features and functionalities in the long term, thereby ensuring the efficient operation of your business.

6 Steps to plan your ERP system upgrade

If you decide to upgrade your existing ERP and make it suitable for shifts in the market dynamics, it is essential to go step by step, and plan ahead.

1. Assess the current system and identify pain points

Before upgrading your ERP to the next version, you must audit your existing platform and accurately identify different pain points. This will allow you to identify bottlenecks, loopholes, and potential hurdles your staff experiences.

Speak to all the stakeholders involved, including staff who use your ERP solution regularly. Make sure that fixing the identified problems will align with your future goals. Once you know where the gaps are, you can move to the next step.

2. Define objectives and budget

The success of an ERP upgrade project depends on how you set your future goals. Ensure you include crucial factors such as enhanced scalability and system flexibility, better security, improved reporting, and excellent productivity. Prioritize your objectives and have an honest conversation with your vendor.
This will allow you to set aside a budget or gain stakeholder buy-in to complete the upgrade process. Remember that you may incur additional consultations, testing, and customization expenses.

3. Research and select upgrade options

Your vendor may offer you a variety of upgrade options. If you are currently on an on-premise plan, consider moving to a hybrid or cloud-based solution.
Quite often, vendors offer more than you currently need. A modular and incremental upgrade may help you more than a dramatic upgrade. Researching what's on offer is important, and choosing an upgrade plan that resolves your pain points is essential.

4. Develop a detailed implementation plan

Implementing a new version of your existing ERP requires as much diligence and planning as deploying a brand-new ERP. You must ensure that your existing hardware is compatible with the upgrade, migrate data carefully, monitor the system's performance, and maintain regular contact with your ERP vendor.

5. Train and prepare your team

Although training and preparing your team may hint at a new ERP deployment, a successful ERP upgrade requires the same. ERP upgrades entail changes to existing features and functionalities and differences in interfaces.
Your employees will require assistance and encouragement to make the switch smoothly. You can ask your vendor for help training and preparing your team or assign an internal manager to ensure a smooth transition.

6. Monitor and review post-upgrade

An upgraded ERP should help you achieve the goals and objectives you listed in Step 2. The best way to track its performance is to identify industry-specific key performance indicators (KPIs) and monitor them rigorously over the first few weeks.

You may also use employee communication tools to gather feedback and inputs from your staff regarding the upgraded version. Based on insights and feedback, you can continuously improve your ERP to achieve your objectives.

Common issues to avoid during an ERP upgrade

Despite the proven best practices, measures, and precautions, an ERP upgrade may not go as planned, and the results may not be what you expect. Here are 5 common issues to avoid during an ERP upgrade.

1. Improper planning

Businesses sometimes overlook critical details, such as ensuring data integrity during migration, customizing features to match unique business processes, or planning for adequate user training. Their implementation strategies might not fully prepare the business for future challenges, like business growth, compatibility with emerging technologies, or compliance with new regulations. This oversight can lead to operational disruptions, increased costs, and lost opportunities.

2. Insufficient training

Many companies take upgrades for granted, assuming that employees are used to the previous version and can handle the new version just the same. However, vendors may often change existing ERP solutions dramatically, making them unrecognizable to users.

Hence, ensuring your staff receive all the training and support they need during the initial few weeks is essential. Thiswill give them the time to transition smoothly to the upgraded ERP.

3. Ignoring data integrity

While you might not be deploying an entirely new ERP, the upgrade requires the same diligence. You must still cleanse your data and prepare it for the upgraded version of your existing ERP.
This is an opportunity to delete corrupted files and redundant data and unify datasets. Remember that older versions usually store data in incompatible formats, so converting datasets to formats recognized by newer applications and technologies may be a good idea.

4. Underestimating resource requirements

When an ERP is upgraded, things can change dramatically, from hardware resources to energy requirements. Resource requirements can further climb when multiple integrations are enabled across locations.
An upgraded ERP may require higher processing power. Failing to estimate the resource requirements might contribute to a failed implementation. Ensure you have ample space to make hardware purchases if necessary.

5. Failing to align the upgrade with business processes

Upgrading your ERP influences practically every business process and deeply affects your operations. If you do not list your objectives and goals as stated in Step 2, you may receive an upgrade that does not align with your business processes.

If this happens, you will have to settle for costly customizations to ensure that the upgraded ERP is in sync with your goals.

How long does an ERP upgrade take?

You may require a major upgrade if you have been using an ERP system for five or more years. It is important to remember that technology evolves rapidly.
Major upgrades may require waiting between three and six months to ensure that your ERP platform is ready for the changes that have taken place and those that will.

Minor upgrades, and security patches, may take just a few weeks. However, you may need to make contingency plans to ensure your business operations are not affected during upgrades or implementations.

How Priority Software can help

If you need to upgrade your ERP, the first step is to begin the evaluation process. Explore your current requirements and assess your ERP system. If you cannot decide or need further information, you can always seek expert advice.

Priority Software would gladly answer your queries and help you determine if it is an upgrade or a replacement. Contact us today to learn how you can make the most of your existing ERP system.