Your Guide to a Painless ERP Upgrade

Monica Orrigo
September 16, 2015

There are many reasons for wholesale companies to consider upgrading their ERP systems. In some cases, the ERP vendor may no longer support their older software applications. In other cases, companies may be hoping for business and operational improvements. If your wholesale business is thinking about upgrading your ERP system, it’s important to have a clear strategy in place, as well as an awareness of common mistakes and how to avoid them. Here are a few tips to help you develop your strategy for a successful ERP upgrade.

When Should You Upgrade Your ERP?

Figuring out the right time to upgrade your ERP depends on your company’s needs. ERP vendors are constantly in the process of upgrading their software and rolling out new releases, so if companies aren’t selective, it can be easy to get caught in a constant cycle of upgrades. This is not only costly, it can also lead to “upgrade burnout,” in which companies give up on upgrades entirely. When this happens, ERP software can quickly become hopelessly out of date ––no longer able to provide the competitive advantage or other business benefits that were once promised.

Here are a few signs that you’re ready to upgrade your ERP software:

1)    There are clear benefits to the upgrade that outweigh the costs. 2)    Your team can handle workload for the upgrade. 3)    You’ve created a clear strategy and plan for the upgrade.

Creating an ERP Upgrade Strategy

In setting your strategy for your ERP upgrade, you need to take a look at where your organization is now, where you’d like to go, and what it will likely take to get there in terms of resources: time, dollars and staff commitments. Here are five areas to consider:

  1. Current state: Whatcan you currently do with your ERP software? What processes are supported or not supported by your current ERP system?
  2. Requirements: What is the desired end state: what would you like to be able to do after the upgrade is over that you are unable to do now? What sorts of business process improvements would you like to see?
  3. Fit/Gap: How does the upgrade fit your requirements? Where are the gaps, and how will you fill them? Customizations, third party software, or other solutions?
  4. Staffing: Howwill you handle the staffing requirements to perform the upgrade, as well as training and ongoing support?
  5. Total Cost of Ownership (TCO): What is the total cost of ownership going to be?

When considering TCO, you’ll need to have a realistic idea of the costs involved in the upgrade. Your TCO calculations should include:

  1. The cost of the upgrade process: In addition to the cost of the software upgrade itself, include any consulting fees and staff costs (plus the cost of pulling staff away from their regular jobs to perform upgrade tasks).
  2. Infrastructure costs: Include the cost of any additional equipment needed for the upgrade, such as additional servers, new computers or devices, network/connectivity upgrades, etc.
  3. Ongoing maintenance and support: This includes maintenance for day-to-day operations, plus any support required to keep your ERP software and infrastructure up and running.
  4. Cost of maintaining the status quo: this is the opportunity cost of doing nothing. What business opportunities would you miss? What are the costs associated with those missed opportunities?

6 Mistakes to Avoid During Your ERP Upgrade

Some of the biggest mistakes companies make when they upgrade their ERP include:

1. Inadequate Assessment of Customizations:

With regard to customizations, it’s important to look at why customizations exist, and determine whether they really need to be maintained. Sometimes, customizations enable business processes that no longer reflect best practices. Perhaps these business processes can be managed better in other ways, whether it’s by revising those processes or deploying a third party cloud solution. Weigh your alternatives before proceeding with customizations, since customizations tend to make upgrades more difficult.

2. Lack of Communication:

Users need to understand the benefits of the upgrade up front, along with any changes in the end user experience. Their buy-in is needed for the upgrade to be successful. This communication needs to continue throughout the project and following go-live, so that users understand the changes in the software and how they will affect them.

3. Inadequate Testing:

Most ERP software is designed to handle “typical” user loads in a “typical” environment. Your company’s specific workload and requirements may have some differences. Test thoroughly to be sure the software works for your workflow, and address any needed changes prior to go-live.

4. Going Live Without a “Dress Rehearsal”:

A mock go-live is the final exam for your testing process. It should be performed in circumstances as close as possible to your planned actual deployment, and will allow you to catch any last problems before final rollout.

5. Inadequate Training:

Classroom training is not enough. Users need access to knowledge about the software on an ongoing basis. An online resource that they can turn to with questions helps immensely.

6. Forgetting to Address Archiving and Security

Archiving your old data will help speed up the upgrade process. Security should be addressed during the upgrade and on an ongoing basis to ensure your company’s important business data is protected. By carefully creating your ERP upgrade strategy and keeping these potential pitfalls in mind, your upgrade project is set to be a lot less painful and a lot more successful. Do you have questions about ERP upgrades or a story you’d like to share? We’d be interested to hear your views or experiences in the comments.