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How often should a company expect to need to update its ERP?
Annually? Every 2-3 years? How often should a company expect to update their ERP system?
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3 Answers
Caty - here I go again....
If by update you mean upgrade - it depends on who you ask. If you ask the Software Vendor, every new version is quite simply a few clicks and an upgrade is done. They seem to publish new versions every 12 - 18 months. If you ask the IT Department, they will tell you an upgrade isn't possible as it will mean an entirely new installation. If you ask the Operations people, they will say the system needs to change much more quickly - perhaps multiple times per year or even quarter. In reality, the average ERP is 11.5 years old (Constellation Research). This demonstrates that regardless of what the vendor says IT is correct and Operations is screwed.
If by update you mean replace - then again it depends upon who you talk to. Software vendors will tell you anything other than the most recent version needs to be replaced. IT will tell you no thank you we'll stick with what we've got (see average age of ERP). If you ask Operations they will tell you they need to change the transactions of the business much more frequently in response to internal strategy and external market demands.
Unfortunately, based upon history, there should be no expectation for an upgrade or a replacement. Once you choose your grave it is version 1.yours. We agree. Don't ask these systems to do what they were not meant to do: adapt to dynamic business needs or allow a company to be unique and responsive in deciding how their business works.
Caty, I am assuming that you mean update to the latest version of the software that is currently being deployed at their site. For example; the company is on 4.1 version of the ERP and there is a 5.0 version that is now available.
The answer is "it depends". There are various elements that need to be considered. The two basic ones are:
1) Do we need the additional functionality that is being provided in the latest version or can we continue with our current version for the time being.
2) I said in the time being above, because sooner or later you will most likely have to upgrade to the new version in order to keep up with technology and the related compatibility issues that will eventually arise.
For example:
1) Expandable has a few customers still using the DOS version of our software and are quite happy with it.Having said that, they have to contend with using computers or terminals that can run DOS. If they need to go and buy a new computer with the latest operating system, then the DOS version would no longer work for them.
2) ERP providers need to stay current with the latest and greatest technology . For example, Expandable uses Microsoft SQL, so if you are running Microsoft SQL 2003, you will probably eventually run into trouble as well.
The main reason for the above two examples is that in order to continuously improve the product, ERP providers need to stay with the latest technology as the latest technology facilitates and provides the capability for many of the enhancements on their R&D road-map.
With the above as context, and as a simplistic generic recommendation, I would recommend seriously considering upgrading to the latest version once you are more than 2 releases behind the latest version that your ERP vendor provides. This will typically be 2 years.
1. Update or Upgrade ?
2. Vendors keep issuing new updates every couple of months that adds to some of the existing features in the system, gives easier user interfaces etc. These would "automatically" be updated into your system much like the way Windows updates -without your knowledge or consent. Atleast Chrome/Firefox ask. This is global across ALL installations of the vendor.
3. Major version changes will come at an additional cost and a major re-installation of the system. This will cost you not only money to the vendor, but also a lot of time and effort from all your internal customers. This is also a global trigger from the vendor across ALL installations.
4. Another update is a purely LOCAL update done by the vendor for you - yes, the vendor only does it as you have no access to the code. This happens when your local/national environment has changed and the software has to be modified for the new environment: change in tax laws/structure or HR laws for example will have to be reflected in the "modified" ERP Package.
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