The Case for Upgrading ERP

In some cases, bringing legacy enterprise applications up to date makes more business sense than starting over in the cloud. An effective upgrade process makes all the difference.

The Case for Upgrading ERP_26_06_2015

CIOs are increasingly taking advantage of cloud computing options for their enterprise software needs. Nearly a third (30 percent) of companies plan to move their ERP systems to the cloud by 2018, according to a 2014 Gartner report. Tempted by the promises of new software-as-a-service options—chief among them an end to costly and difficult upgrades to on-premises systems—business leaders may wonder if it’s worth putting any more money into their existing enterprise software. It’s a notoriously tough sell for CIOs to make to senior management that they continue to invest in these aging systems. After all, the applications may be out of support (or dangerously close to it), may no longer satisfy emerging business needs, or may have become unrecognizable following years of modifications. And the cloud beckons with the offer of a single version of the software, no infrastructure requirements, and continuous improvements.

But traditional ERP software is far from dead. In fact, many enterprises are making a solid business case for upgrading their ERP installations. In some instances, corporate leaders have found that their existing enterprise system actually meets the majority of their current requirements. They’ve likely poured millions of dollars into the applications and cannot justify reinvesting from scratch with a new system. Moreover, the organization may not be prepared to absorb the technology and process changes that switching to new software entails. Add to that the fact that the potential benefits of cloud-based alternatives don’t always materialize, and they’ve begun looking at ERP upgrades as preferable to moving their applications to the cloud.

There are two common options for bringing ERP instances up to date. For those enterprises that are seeking to upgrade legacy applications in order to continue to receive the vendor’s highest level of support, there is the more limited “technical upgrade.” In a technical upgrade, the hardware and software are basically updated in siloes, without any accompanying business process changes or customization—two hallmarks traditionally associated with successful upgrades.

Those companies that are seeking to leverage new functionality available in the latest version or prepare their application for new add-on modules will opt for a “full or functional upgrade.” This more intensive upgrade includes scrutinizing business processes for any improvement opportunities made possible by the addition of new modules and functionality.

A full upgrade is typically more complex and time-consuming than a technical upgrade, although many ERP providers—recognizing the continued value of their traditional applications to their sizable installed base—are taking steps to lessen the negative impact of the upgrade process on IT organizations and the business partners they support. Specifically, some software makers are introducing more robust software management lifecycle tools and processes that can deliver more frequent and less complex upgrades to ERP customers.

Perhaps more important, enterprise ERP customers can minimize the time it takes to complete the upgrade process—and the associated disruption to critical business processes—by adopting an end-to-end approach to improve upgrade performance. Tenets of this approach include treating affected applications and underlying technology as individual components in terms of optimization and upgrade timing; and iteratively identifying and improving performance right up to the go-live date. Steps include:

  1. Determine which technology, tools, and related applications need to be upgraded to be brought in line with applications targeted for upgrade.
  2. Update database software first, if necessary, and use UNIX named pipes or parallel processing to facilitate the efficient transfer of data from the current source to the new target.
  3. Convert and store historical data in advance of the cutover.
  4. Streamline the upgrade process itself by optimizing the order in which certain processes execute, and by taking the processing load as high as it can go without overwhelming servers and associated jobs and processes.

Careful attention to these steps can help CIOs and their IT organizations avoid pitfalls that could undermine business confidence and even place the upgrade at risk. In a worst-case scenario, a botched upgrade may cause business partners to abandon it, and look instead to implement an entirely different solution, leaving the enterprise with no upgrade benefits—renewed support, cutting edge functionality, and improved operability—and the task of finding and implementing an alternate solution. Those enterprises that do incorporate these steps may enjoy faster processing times, business benefits that begin accruing even before the switchover, and reduced upgrade-related risks.

—by Mark Mrozek, director, Deloitte Consulting LLP; Merv Pisueña, technical specialist, Deloitte Consulting LLP; and Michael Burke, specialist leader, Deloitte Consulting LLP

Please click here to know more about ERP software.
This is taken from the article The Case for Upgrading ERP and has been written by Mark Mrozek

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