Who’s afraid of ERP upgrades?

December 16, 2013

The charts below represent the results of a survey by the Aberdeen Group asking ERP decision makers about their plans for an ERP upgrade.

What is wrong with these charts? It’s not a trick question – if you’ve identified nine questions that shouldn’t make sense when applied to your business, you’ve hit the bull’s eye!

Rather than focusing on your core competency, if you are spending too much time asking the following questions of your ERP system(opens in new tab):

  • Is it time to upgrade? Can I afford it? Which customization/integration will break? How many additional resources will be required?
  • Am I being charged way too much for maintenance and support and not getting adequate value?
  • Should the ERP solution be replaced?

And, if these are things you know but simply do not have answers to i.e., known unknowns, read further since it’s probably time for a deeper reflection about your ERP system.

The reason I am starting this post in reverse and not by outlining the compelling benefits offered by a cloud based business system such as NetSuite(opens in new tab) is, I am hopeful that when companies look at the questions and responses in the charts above, they will learn not only from the mistakes of other companies but also their own.

Almost half the companies surveyed by the Aberdeen Group cite a fear of disruption to the business as a reason for not upgrading their ERP systems. Moreover, customizations make upgrading cost prohibitive. This can be a drain on the resources of organizations trying to use capital creatively to grow. Additionally, the resources needed to support an ERP solution may also be limited.

One instinct could be is to rush to sign up with a third-party maintenance/support provider to slash costs. However, some organizations may not have the same clout as large companies and unable to negotiate favorable maintenance opt-outs from the traditional ERP vendors. Experts also caution that going the third party route involves possible monetary penalty by the enterprise software makers, if and when a client chooses to go back to vendor-provided maintenance or at the time of software upgrades. Factor in issues like skill sets, commitment, or if/when a vendor sunsets a solution, trusting a third party organization to maintain an ERP solution can be a risky proposition. These are things you simply do not know – unknown unknowns!

One of the key benefits of cloud based ERP is that upgrades are performed automatically by the vendor. With cloud computing, there is a single code base and the vendor utilizes a managed version upgrade process to minimize disruption.  Customizing ERP applications in the cloud is a lot faster and easier than on-premise because the code base is standards-based instead of proprietary.  As a result, whenever a cloud application is upgraded to a newer version, customized components are carried over to the new version seamlessly without the need for any painful code retrofitting. Since the ERP customizations are critical to your business yet do not automatically migrate to the upgraded version, it dramatically increases the cost and complexity of upgrades with on-premise ERP.

Since 100% of NetSuite customers are on the latest version(opens in new tab) of the software, it eliminates the version-lock problem associated with on-premise ERP systems.  NetSuite upgrades software two times a year migrating customizations to the newer version thus enabling customers to take advantage of innovations delivered with the upgrade. Many companies have eliminated costly ERP upgrades(opens in new tab) by deploying NetSuite with benefits that are practically impossible to match with traditional on-premise ERP systems.  These are things you (now) know that you know – known knowns!

Other NetSuite benefits include:

  • Speed of Deployment: Cloud infrastructure enables deployment of mature, full-featured ERP without additional IT resources.
  • Globally Enabled: Multi-subsidiary enabled, used in 100+ countries across 190+ currencies.
  • Limitless Customization: Tailor the system to your businesses processes without compromising upgrades. Customizations migrate automatically with every upgrade.
  • Packaged Integration: Prebuild integration with other legacy systems through respected partners including Informatica, IBM, Cast Iron, and Dell Boomi.

-Anand Misra, Sr. Manager of Product at NetSuite

NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value. With NetSuite, you go live in a predictable timeframe — smart, stepped implementations begin with sales and span the entire customer lifecycle, so there's continuity from sales to services to support.