Article, ERP Tips   May 10th, 2017

5-Steps to Decide Whether to Upgrade or Replace your ERP System

Follow these 5 steps to decide whether to upgrade ERP or replace it with a new system

When should you upgrade ERP or consider replacing it?

Your ERP system supports your core business operations and data. When it falls behind, your business processing efficiencies and decision-making abilities tend to follow suit. Although an ERP implementation is a daunting project, it might be necessary if you want to remain competitive.

The first step is to understand that your company needs to make a change.

Deciding how to change is a much tougher question to answer. Your company might upgrade to a newer version of the legacy system it’s operating or it might open its search to other vendors and solutions.

Here are five steps to building a thorough due diligence process:

Step 1: Define your business requirements

Modern systems have evolved tremendously over the past 15 years. Functionality improvements offer you new and better ways of business processing. So, when drafting your requirements, business process flows, data flows, and requirements lists should reflect your company’s “to be” needs in a reengineered and optimized future state.

Step 2: Define your enterprise architecture options

Generally, an ERP decision has implications on edge software needs, the platforms that enable and integrate various technologies, and the infrastructures that house those technologies. So, the next logical task is to map out enterprise architecture options capable of supporting your business needs.

Step 3: Build supporting project roadmaps for each architecture option

For each viable architecture option, it’s important to break down an implementation and support plan. The roadmaps should span initial technology evaluation and extend out to post-implementation optimization and support.

Step 4: Build your business case: from TCO to ROI

A TCO (total cost of ownership) and ROI (return on investment) analysis should quantify the financial implications of the business needs, technology architecture options, and implementation plans. Generally, TCO and ROI are both prepared over 10-year periods.

Step 5: Define your decision-making methodology

The process is similar, regardless of whether you’re inclined to upgrade or expand your search. In Steps 1 to 4, above, you’ve defined your various business, budgetary, technology, and project needs. In this stage, you’ll want to evaluate how well the vendor, technology and service providers stack up against those needs.

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