Enterprise Resource Planning (ERP) systems and software are critical for businesses of all sizes and in all industries, as they provide a single view of all the processes and operations within an organization when implemented correctly. Upgrading an existing ERP system or implementing a new one can both have significant benefits and drawbacks.
In this blog post, we will discuss why it is important to keep your ERP up to date, plus compare the pros and cons of upgrading an ERP system versus implementing a new one to help businesses make the best decision for their organization.
The importance of maintaining your ERP
So why is it key to keep your ERP updated and well-maintained in the first place?
To cut a long story short, it's the same reason we maintain our cars. A well-maintained car will mean fewer breakdowns, fewer emergency call-outs, less expensive repairs, better miles per gallon, and most importantly, far less stress for you and your passengers.
Let's discuss the benefits of keeping an ERP system up to date and the benefits it can bring to a business.
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Increased Efficiency and Productivity An ERP system that is not up to date can cause delays and inefficiencies in the processes and operations of a business. Updating an ERP system ensures that it is running on the latest software version, which can lead to improved performance and faster processing times. This can help businesses to increase their efficiency and productivity, which can ultimately lead to increased revenue and profitability.
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Better Data Management An up-to-date ERP system also ensures that the business's data is accurate and up to date. This is essential for making informed business decisions and for maintaining compliance with regulatory requirements. An ERP system that is not up to date can lead to data inconsistencies, which can cause confusion and errors.
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Improved Security Keeping an ERP system up to date is also essential for maintaining security. As technology evolves, so do the methods used by cybercriminals to access and steal sensitive information. Updating an ERP system ensures that it is protected against the latest security threats and vulnerabilities, which can help businesses to protect their sensitive data and maintain the trust of their customers.
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Better Integration and Scalability An ERP system that is not up to date may not be able to integrate with new technologies, such as Artificial Intelligence (AI) or Internet of Things (IoT) systems. This can limit the business's ability to improve its operations and processes and to take advantage of new technologies. Updating an ERP system ensures that it is compatible with the latest technologies, which can help businesses to scale and grow.
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Vendor Support An ERP system that is not up to date may no longer be supported by the vendor. This means that the business will not have access to technical support and updates, which can be critical for maintaining the system's performance and security. Updating an ERP system ensures that the business has access to the latest software versions and vendor support, which can be essential for maintaining the system's performance and security.
Pros of upgrading an existing ERP system:
- Cost: Upgrading an existing ERP system is typically less expensive than implementing a new one. This is because the business already has the infrastructure and resources in place to support the system, and the costs associated with data migration and training are minimized. But don't forget that cost isn't necessarily the same as value. The costs may be lower, but the return on investment of upgrading may be lower too. You can use our ERP Business Case Builder to help you quantify this.
- Familiarity: Businesses are already familiar with their existing ERP system, which means that employees will not have to spend a significant amount of time learning a new system. This can save a lot of time and resources for the business. On the other hand, your current ERP may be slow and clunky despite being familiar.
- Customization: Upgrading an existing ERP system allows businesses to maintain the customizations and configurations that have been made to the system over time. This can be especially important for businesses that have invested a lot of time and resources into customizing their ERP system to meet their specific needs.
Cons of upgrading an existing ERP system:
- Limited capabilities: Upgrading an existing ERP system may not provide the same level of capabilities and functionality as a new system. This can be especially true for businesses that have an older version of an ERP system that is no longer supported by the vendor such as Microsoft Dynamics Great Plains, SAP ECC 6.0 and more. These systems are being replaced by new, next generation ERP systems like Microsoft Dynamics and SAP S/4 HANA.
- Limited scalability: Upgrading an existing ERP system may also limit the business’s ability to scale in the future. This can be especially true if the business is considering expanding into new markets or adding new products and services.
- Limited integration: Upgrading an existing ERP system may also limit the business’s ability to integrate with new technologies, such as Artificial Intelligence (AI) or Internet of Things (IoT) systems.
Pros of implementing a new ERP system:
- Latest capabilities: Implementing a new ERP system provides businesses with the latest capabilities and functionality that can help them improve their operations and processes. This can be especially beneficial for businesses that are looking to expand into new markets or add new products and services.
- Fresh start: a new ERP implementation gives you the ability to recreate your processes and change the way your organization operates to create new efficiencies which is both a benefit, as well as a large scale change management and design project. Businesses can start from the beginning and create new ERP requirements that can have big impacts on their productivity.
- Scalability: Implementing a new ERP system allows businesses to scale as they grow, which can be especially important for businesses that are looking to expand into new markets or add new products and services.
- Integration: Implementing a new ERP system also allows businesses to integrate with new technologies, such as AI and IoT systems, which can help them improve their operations and processes.
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Cons of implementing a new ERP system:
- Cost: Implementing a new ERP system can be expensive, especially when compared to upgrading an existing system. This is because businesses will need to invest in new infrastructure and resources to support the system, and they will also need to invest in data migration and training. You will also need to pay for new software licenses or subscriptions if you choose a Cloud ERP such as Netsuite, Sage Intacct, Acumatica or Microsoft Dynamics.
- Learning curve: Implementing a new ERP system can also be time-consuming, as employees will need to learn how to use the new system. This can be especially challenging for businesses that have a lot of employees who will need to be trained.
- Customization: Implementing a new ERP system can also be challenging, as businesses will need to start from scratch when it comes to customizing the system to meet their specific needs.
In conclusion, upgrading an existing ERP system or implementing a new one both have benefits and drawbacks. Businesses should carefully consider the pros and cons of each option before making a decision. Factors such as cost, familiarity, capabilities, scalability,