A recent study done for Planat (www.planat.com), a specialized travel and accommodations company, found that the majority of organizations polled know they need to, or should, update their enterprise resource planning (ERP) systems; however, they have no plans to do so in the near future. In this particular study, the overwhelming reason not to modernize existing ERP systems was cost. It’s expensive to update an existing system, and many organizations still struggle with tight budgets and higher IT priorities.
The problem with this approach is that, although it’s understandable, it could be flawed reasoning that will eventually lead to higher budgetary outputs to maintain a system as well as decreased income because the competition is better prepared. Budgets are important, but they shouldn’t be the only consideration when evaluating the need to modernize ERP systems. The following three high-priority considerations should play a large part in the decision-making process.
Nothing Stays the Same
One thing about technology, whether it’s ERP or some other application or capability, is that it is always changing. ERP as an application has reached a stage of maturity that makes it essential for nearly all organizations to stay in competition, but aged ERP applications can be as dangerous as not having an ERP application at all. Older systems may not have the functionality that newer systems have. To compound that competitive disadvantage, an old ERP system could be detrimental to newer systems in other areas such as customer relationship management and warehouse management.
If your organization is upgrading any of the systems that rely on your ERP application for data or that tie into the ERP application for functionality, the value of the new system will be exactly equal to the lowest common denominator. That means that your newer system could be restricted by an old ERP application or system that doesn’t have the same level of capability. So, when you are considering whether modernization is a requirement for your ERP application, remember that its functionality may affect other applications.
Winning Is About Staying in the Fight
“If it ain’t broke, don’t fix it.” This common phrase is used in reference to many things, even applications such as ERP. Consider, however, how detrimental a not-broke system that is not efficient can be to your organization. Although modernizing your ERP system might seem costly, if it is inefficient, you need to answer the question: How much is the existing system costing me?
It is costing you. Inefficiencies are expensive. That is the reason so many manufacturing organizations are working to become lean organizations. That is the reason that technology exists—to improve inefficiencies. Don’t be fooled. Just because the system was the most efficient thing on the market 15 years ago doesn’t guarantee that it’s the most efficient solution for your organization today. Take the time to study how much efficiency a new system could create before making the decision whether to modernize. If you still think modernization is too expensive, add the cost of that inefficiency to your operating budget and look again.
Agedness = Feebleness
One last consideration when determining whether modernizing your ERP application is the right option is the security of that system.
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