Wednesday, May 22, 2024

Don’t panic, but it’s time to upgrade

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Several weeks ago, the controller of a $500-million company told me he couldn’t wait until he was able to upgrade his firm to the Web-enabled version of its Oracle Corp. enterprise resource planning suite (to version 11i from 10.7). The ability to access information easily, from anywhere, was irresistible, he said. Score another victory for Oracle’s salesforce.

As an IT manager responsible for the operation of an ERP system, you are going to hear quite a lot of noise about upgrading your software over the next year or so. Web mania, vendors desperate for sales, and the lure of unusually compelling new bells and whistles will make the latest versions of ERP software too tempting to resist by business users. Although they may not use all the modules, people usually upgrade the entire suite. In a few years, they won’t have to, but right now it’s generally an all-or-nothing proposition. However, you remember the pain, suffering, and budget chaos that resulted from the initial ERP implementation, and you don’t want to go through that again while you’re still dealing with Y2K issues. And don’t forget the clipping you still have from The Wall Street Journal that compared ERP implementations to a corporate root canal operation. The pain lingers.

The Business Side Rules

Roughly one-third of an Oracle ERP implementation involved IT resources, specifically DBA support. Most of the effort was borne by the business side.

Database administrator (DBA)

Manufacturing systems staff
Finance staff
Project management

Upgrading a mid-sized manufacturing company’s Oracle ERP implementation consumed about 2,230 hours of staff and consultant time over a three-month period, according to the consultant involved in the project, Daniel Reilly of Reilly & Associates Inc. Consultant time accounted for roughly 40% of the total hours involved.

Source: Reilly & Associates Inc.,

Let me offer you some relief. After talking to a score of ERP upgrade veterans over the past few years, as well as having discussions with vendors and implementation partners, I think your fears exceed the reality. Depending on the condition of your current ERP system and the level of good implementation practices embraced during the initial install, an upgrade may not be a big deal. Indeed, I’ve talked with several IT managers recently who claim that the cost of their implementation was included in their normal, annual operating budget.

But don’t think an upgrade is as simple as loading a CD into a server and letting the Upgrade Wizard whirl for a few minutes. Go back and review your diary of the original ERP implementation and try to avoid repeating the mistakes you made the first time.

First, it’s a business project

What’s crucial to the success of an initial ERP implementation, as well as an upgrade, is understanding the nature and purpose of the project. An ERP upgrade is not an IT project. While you may lust after the latest version of Oracle 11i, PeopleSoft version 8.0, or version 4.5 of SAP R/3 so you can play with Java and otherwise enjoy the latest and greatest code that the vendors offer, that’s not the reason your organization should upgrade. An ERP upgrade is a business project.

The CFO, the VP of marketing, or the director of logistics must become enamored with a legitimate set of features and be willing to champion the upgrade–or the effort will be doomed. Just like the last ERP implementation, the project must have a sponsor with clout. Fortunately, the lush set of Web-enabled features of the ERP suites’ newest versions–think self-service procurement and benefits administration as examples of instant return on investment–provide ample opportunities to deliver significant financial value from an ERP upgrade.

Top 10 tips: The collected wisdom of ERP upgrade veterans

An ERP upgrade is a business project, not an IT project.

It takes more time to cajole, shape, and direct business unit support, involvement, and leadership than it takes to install the code.
Training should focus on changes in business processes. Even little improvements need to be thoroughly covered.
Alert customers and suppliers in advance.
Make prior support arrangements with the ERP vendor. Identify a key developer who knows the new version before the weekend install crisis hits.
Developing new interfaces to key bolt-on software such as supply chain management may require consultants.
Business managers should describe what functionality should be tested.
After you’ve successfully completed the entire test protocol, test it again.
Establish a separate environment for testing.
Don’t veer from vendor upgrade install directions. Follow instructions precisely.

Source: Datamation

At a recent meeting of the Oracle Applications Users’ Group (OAUG) in San Diego, every speaker involved in an ERP upgrade made the same point: Business managers must be recruited to provide leadership roles. IT officials at McKee Foods Corp. of Collegedale, Tenn., the makers of Little Debbie snack cakes, said they spent more time developing business-side support and involvement than actually upgrading their Oracle applications suite.

Over the course of an upgrade project, you can assume that business managers, not IT, will expend most of the project’s staff effort. During OAUG discussions, the rule of thumb I heard was two-thirds business side efforts, one-third IT. An experienced Oracle consultant provided the time sheets for a recent project, and the ratio was a bit different.

The business side must define the key features it needs and wants so everyone understands why the effort is being made. It must define the timetable for configuration, testing, and installation of the upgrade to avoid disruption to critical business operations. The business side also must prescribe the training regimen to make sure the business users are properly weaned off old procedures and onto the new approach.

Veteran know-how

Training and testing are two intrinsic tasks of ERP upgrading that veterans harp on. Over the last 10 years, Scott Nasmyth, DBA manager at Nike Inc., of Beaverton, Ore., claims to have done more than 40 upgrades of various applications and systems packages, including several generations of the Oracle ERP, and he focuses on testing as a key precursor to ERP upgrade success. In what turned out to be a group therapy session at OAUG, Nasmyth urged other IT managers contemplating an upgrade to include a minimum of two rounds of testing to avoid a meltdown. The first round finds the “big kinks,” and the second round is for “fine-tuning,” he said. He also urged colleagues to set up a separate test instance of the ERP suite to allow for full-function testing without risking the production or development environments.

Alonzo Noble, administrator of part of McKee Foods’ ERP implementation, recommends a serious training commitment. While he was preaching to the converted as far as I was concerned, I was struck by the minute level of detail he recommended as part of an upgrade training program–clearly, Noble is someone who has learned the hard way. He described how changing even the size or relative location of a date field on a new order form can cause chaos. “Don’t underestimate the users’ love of the current system,” he warned. “Little things throw them.”

Lots of little things throw IT managers involved in an upgrade. Your organizations’ trading partners should be alerted to what could be a short-term disruption and a long-term change in some business procedures. Make sure you’ve found and locked in support from the ERP vendor during the upgrade installation, test, and roll out. Check out the tip sheet, “Top 10 tips,” for a laundry list of helpful hints. If you have questions, send me an e-mail and I’ll elaborate. Or, drop me a note and tell me how your upgrade is going. //

Larry Marion is an editor and consultant with more than 20 years of experience in the use of computer technology in manufacturing and finance. He is the former editor of Datamation, Electronic Business, and LOTUS magazines. He can be reached at

Other voices chime in on upgrading ERP

Several consultants offered the following advice and observations about upgrading an enterprise resource planning implementation:

More reasons to upgrade
Upgrading preserves the ERP system as an asset with balance sheet value, contends Thomas Bruno, managing director of Eisner Consulting of New York City. “We do a lot of valuation work for venture capitalists and underwriters, and one of the questions they want us to answer is, ‘Are they running the current version?'”

An upgrade gives IT the opportunity to revisit the collection of legacy systems and interfaces that may be compromising the integrity and efficiency of the ERP system. Perhaps the reason for keeping the legacy system is no longer valid, thanks to new functionality of the ERP system. “The more modifications you remove, the lower your operating costs,” notes Bruno. Furthermore, an upgrade also is an ideal time to consider implementing additional modules that were skipped during the rush to complete the initial implementation.

Don’t forget…
…the rest of the environment. Upgrading to a Web-enabled version of an ERP suite should trigger a detailed assessment of the network and client infrastructures, notes Robert Jorgenson, Minneapolis-based partner for the Oracle Services Practice of Ernst & Young. Your firm may have an opportunity to reduce its operating costs by switching to an inexpensive browser-based workstation rather than a smart client-networks and clients need to be revisited as upgrades. The new generation of systems uses Web (thin) clients, which offer better performance.

…to consider an upgrade in mid-implementation. If your firm is in the middle of an extensive implementation, it may be smart to consider upgrading to the newest version of the ERP suite now rather than later. So says Fred Fickling, Dallas-based director of SAP support services of Origin for Business, a consulting firm with U.S. headquarters in Murray Hill, N.J. The total cost of training for an implementation will be less if the upgrade is done in midstream rather than waiting until the rollout is complete before upgrading.

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