Consequently, many companies consider upgrading their ERP apps on a regular basis. But the upgrade decision causes no small amount of corporate hand wringing. Can we wait or should we upgrade later? How long can we wait? And the big one: Is it worth the expense?
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Upgrade is a tough decision right now. Its a real dilemma, says Forrester analyst Paul Hamerman. Companies are really having a tough time justifying the cost of the upgrades.
On the one hand, the advantages of an ERP upgrade are enticing. Adding new functionality is attractive, and moreover, upgrading can allow a company to extend its support options. Upgrading gives a chance to consolidate ERP platforms; to reduce customizations; and this is key to synchronize tools and infrastructure releases. Looking ahead, an upgrade keeps a companys options open for SOA releases.
On the other hand, upgrades are avoided for good reason. Besides the obvious cost, some companies find that their current ERP apps are mature, and that enhancements arent compelling. Some companies have so customized their existing ERP tools that the upgrades are logistic headaches. Support services often do not provide value, leading to disenchantment with a given package. And naturally, if youre looking at another vendor, you dont want to upgrade with your current one.
Amid all the pros and cons of the upgrade decision, some companies reach a kind of paralysis by over analysis mode. They decide not to upgrade partially because the decision making process is simply too complex.
And anyway, if it aint broke, why fix it?
Wanted: New Tools
The factor that often pushes companies toward an ERP upgrade is desire for an array of hot new tools that will significantly boost productivity.
Indeed, while justifying an upgrade is always difficult, The ones that are most appealing are when the newer release has significant new functionality that the customer needs, Hamerman says. Thats when its easier to justify, as opposed to upgrading just to stay on a roadmap path that will lead you to the SOA product.
If a company upgrades without a specific clearly beneficial functionality in mind, it risks upgrading based on vendor sales technique rather than business needs.
In short, the best ERP upgrade decisions are made after reviewing specific packages.
For instance, it doesnt make sense to upgrade now to Oracle Fusion, because it's [the new functionality] not there...On the other hand, Oracle has a new release coming out, EBS 12 [Oracle E-business Suite 12.0], which I think has a lot of new stuff in it. (EBS 12 was shown at OpenWorld, but with no release date given; its likely due out in mid 2007.)
In a similar vein, Ive seen a lot built in to, say, the PeopleSoft 8.9 release it has a lot of new functionality. But the 9.0 release thats coming out hasnt come out yet has very little by comparison.
Buyers have to do their homework. I really think it depends on the releases, he says. I think customers have to look at the business value of the release and make decisions based on that.
Consolidate or Bust
Another key value an enterprise gains from upgrading is consolidation of its various stand alone ERP packages. In an ideal world, its more efficient to have fewer ERP packages monitoring more data per package, rather than cobble together a crowd of EPR apps for each vertical.
Its a trend thats going on, and most companies are going in this direction, to have fewer and fewer ERP systems running, Hamerman says. And the systems are now more scalable, to the extent that they can move toward the notion of a global, single instance type of a product.
The goal is to have one product providing global visibility into financials, revenue streams, human capital, and other data metrics.
Companies have, for the most part, not yet arrived at this ideal state. Looking at the ERP packages, there still tends to be a lot of disparate components that are either homegrown or older packages, he notes.
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