ERP (Enterprise Resource Planning) systems allow companies to operate more profitably and efficiently, yet how can you determine when its time for an update or installation of a new one? Here in this blog we explore signs that whether to update an existing ERP or install a new one, keep these criteria in mind as you make your decision.
ERP Definition In Detail
Enterprise Resource Planning (ERP) software systems help your entire organization run more effectively by automating processes in finance, human resources, manufacturing supply chain services procurement.
ERP stands for Enterprise Resource Planning, but what exactly does that entail? A basic definition is considering all the core business processes necessary for running an organization: finance, HR, manufacturing, supply chain services procurement, etc.
ERP provides an effective means for efficiently managing these processes into an integrated system which often serves as the organizational record keeper or system of record.
Yet todays ERP systems are far from basic; in fact, they barely resemble those from decades past. Now delivered through cloud storage using cutting-edge technologies - including artificial intelligence (AI) and machine learning - to provide intelligent automation, greater efficiency, instant insight across businesses of any kind, collaboration among networks worldwide, as well as internal operations with partners that aid agility and speed when competing globally.
What Makes ERP Important?
An ERP software system acts as the "central nervous system of an enterprise," offering automation, integration, and intelligence essential for running day-to-day business operations efficiently.
Most or all of an organizations data should reside within an ERP system as this will serve as the single source of truth across their operations.
Finance relies heavily on ERPs for efficient book-closing; sales rely heavily on ERPs to efficiently handle customer orders; logistics relies heavily on ERPs reliability in providing products and services on time; accounts payable utilizes its use to pay suppliers promptly; management requires instant visibility into company performance to make timely decisions; banks & shareholders demand accurate financial records so rely on reliable data provided by an ERP system as part of accurate records analysis capabilities.
This evidence of ERPs value to businesses can be seen through its increasing adoption rates. It could reach $78.40 billion by 2026 with annual compound and annual growth rates estimated between 10.2% - 14.0% during that time.
Nine Signs To Identify That A Business Needs To Upgrade Its ERP Software
Rarely are businesses static over time; one of the great advantages of ERP software is that it adapts to your company, meaning if you already own an ERP system, you might be wondering, "Why upgrade?".
Customers typically upgrade ERP because their legacy solution failed to adapt to changes within their company and meet all their business requirements. Unfortunately, like any software system, ERP can become outdated over time, no longer serving to meet company goals and needs.
Fifty percent of companies plan or intend to upgrade or update their ERP systems soon, which makes upgrading one an especially wise decision for business.
Here are signs to upgrade ERP software you should look out for if any are relevant to you - anyone could signal its time for an ERP upgrade in your organization.
Your Current ERP System Isnt Supported
When your ERP vendor no longer supports your ERP software, it may be time for a switch. We refer here specifically to products that have been sunset; for instance, a software vendor might replace their solution with something different or may have been purchased by a larger player who plans on discontinuing development on it altogether.
Even if everything seems fine at present, running without proper support for such an integral piece of technology poses a serious risk to business operations.
Your Current ERP Software Doesnt Offer All The Essential Functionality
Your ERP vendors release cycle varies. Depending on their discretion and market developments, new features could arrive every few months or less frequently.
This decision is left up to them alone. Some ERP solutions keep pace better than others with current market changes than others do; if your legacy ERP solution has fallen behind and modern functionality that would benefit your business is lacking, then perhaps its time for you to evaluate a different system.
Your Organization Is Creating Workarounds For Processes
Think back to before your ERP implementation; chances are, you likely found workarounds to make systems function the way they should.
Many companies find themselves back there when their legacy ERP solutions become outdated, trying to run business operations using outdated technology while their needs constantly shift. We frequently witness this when trying to integrate legacy systems with modern best-of-breed solutions - as integration often proves challenging due to obsolete ERP tech.
Your Legacy ERP Cant Support Future Expansion
As your business evolves, a robust yet flexible ERP system should support it by growing with it and accommodating sudden shifts as they come if any of the issues we discussed arise with your current ERP solution, which indicates its inadequacies for supporting you moving forward.
Your Current ERP System Cannot Easily Integrate With Other Systems
Though your ERP system will form the backbone of your business, sometimes integrating third-party apps may make sense.
A full upgrade may not always be necessary as new solutions could integrate on top of legacy solutions that dont offer easy integration mechanisms - giving your solution greater adaptability over time.
Company Growth And Expansion
An ERP update should help your company keep pace with its growth and expansion, whether that means increasing in size, complexity, or geographic reach.
As your organization changes in these ways, a robust ERP solution that supports increasing transactions, data volumes, users, or locations may become necessary - as well as one that supports new business models, products more adaptably & flexibly.
Suppose your system is no longer meeting your current and future needs or you find that extra steps are creating operational inefficiency.
In that case, it might be time for you to find another solution suited to them. Modern cloud-based ERP systems offer greater scalability, flexibility, and agility to support business expansion and growth.
Business Transformation And Innovation
One more compelling argument for upgrading an ERP system is to support business transformation and innovation. In todays fast-moving and competitive business environment, constant innovation must take place to keep pace with changing customer expectations, market conditions, and industry trends - this means having access to cutting-edge technologies such as artificial intelligence (AI), machine learning (ML), Internet of Things (IoT) and blockchain which allow you to automate processes, optimize performance levels, enhance customer experiences and develop unique value propositions for new offerings.
Suppose your existing ERP system is out-of-date or incompatible with modern technologies. In that case, it could be holding you back from innovating your business and driving its transformation and success.
A modernized solution may offer intelligent automation capabilities as well as real-time insights and predictive analytics for enhanced decisions and improved outcomes - something your current ERP may be hindering.
User Satisfaction And Productivity Go Hand-In-Hand
Enhancing user satisfaction and productivity should also be at the top of your priority list for upgrading an ERP system.
Your ERP should be intuitively user-friendly for employees, customers, partners, and suppliers - providing them with tools necessary for accomplishing tasks quickly and effectively. A user-friendly ERP can promote employee engagement, customer loyalty, partner collaboration, and supplier performance - three major goals worth striving toward.
If the current ERP system you use is complex or cumbersome for users, this could be negatively impacting their satisfaction and productivity.
A modern user interface (UI), mobile access capabilities, self-service features, collaboration features, and personalized dashboards may all enhance user experience and productivity.
System Performance And Security Is Of Utmost Concern
Upgrades of ERP systems should also enhance system performance and security. Your ERP should be reliable, fast, and secure for business operations while remaining compliant with applicable data privacy and protection standards and regulations.
Investing in upgrading can reduce downtime errors and risk costs for your company significantly.
Suppose your current ERP system is slow, unstable, vulnerable to cyber attacks or data breaches, and has backup and recovery features that comprise its performance or security.
In that case, it could be harming system performance and security. Consider switching over to one that offers cloud delivery with automatic updates and backup capabilities, as well as advanced security features to guarantee system performance and safety.
Read More: Increase Accounting & Finance Productivity with ERP Software
Advantages Of ERP System Implementation
Modern ERP solutions boast robust feature sets that bring businesses countless benefits, which is why this software has become widely adopted among most organizations of a certain size.
Individual firms will ultimately decide the greatest value lies with ERP; here are key universal advantages of ERP system it brings:
Cost Savings
One of the key draws of ERP systems for organizations is cost savings in various ways. Automating simple repetitive tasks helps reduce errors and staff requirements as you expand.
Cross-company visibility enables faster identification of inefficiencies, which add costs. It allows better deployment of all resources, from labor, inventory, and equipment. With cloud ERP, companies may quickly see incremental value beyond what theyre spending for software licenses.
Workflow Visibility
By consolidating all information and workflows into one system, employees with access can easily assess project statuses as well as business functions pertinent to them in real time.
This visibility may be especially helpful to managers and leaders; searching for documents could take forever while constantly asking colleagues for updates would become tedious at best.
Reporting And Analytics
Data only becomes valuable if companies can accurately interpret and comprehend it; an ERP helps companies do exactly this.
Top solutions feature outstanding reporting and analytics tools to track KPIs or display any other metric of interest to users, including comparisons or KPI tracking. An all-inclusive ERP can show businesses the impact changes or issues in one department have across their company as a whole.
Centralized Data
As ERPs can access real-time companywide data in real time, ERPs provide valuable business insight. This facilitates better decision-making from organizational leaders who now have easy access to all pertinent information.
Regulatory Compliance
Financial reporting standards, government data security regulations, and industry-specific data security rules change rapidly; an ERP can assist your company with compliance by tracking every transaction from start to finish, including required approval workflows.
Automation can also reduce errors that compromise compliance; software provides reports compliant with standards and regulations, while SaaS applications offer PCI-DSS compliance support for companies.
Mobility-Driven Risk Administration
ERP technology helps reduce risk in multiple ways:
- Access controls and approval workflows can strengthen financial controls to deter fraud.
- More accurate data prevents mistakes that lead to lost sales or fines.
- Its visibility allows employees to respond rapidly when business disruptions arise.
Data Security
ERP providers understand that your system houses sensitive, valuable information. Due to increasing cyberattacks, their vendors use cutting-edge security protocols designed to keep data protected and your company safe.
Vendor-managed cloud ERP software offers particularly rigorous protections so your company doesnt become vulnerable.
Increased Productivity
Employees work best when working together effectively. ERP solutions make sharing information like purchase orders, contracts, and customer-support records among teams easier, breaking down silos between departments by giving employees real-time access to real data on related business functions.
Scalability
Your ERP solution must be flexible enough to accommodate both todays needs as well as those expected in the foreseeable future.
Cloud systems easily accommodate minor operational modifications as more data enters your organization and demand increases for accessing it.
Adaptability
Although ERP software assists businesses in adopting best practices, it also gives them the flexibility they need to support specific processes and goals.
Administrators can build company-specific workflows and generate automatic reports tailored specifically for various departments or executives within an organization - ultimately strengthening innovation and creativity within your workplace.
Customer And Partner Management
An ERP is an invaluable way to strengthen partner and customer relations in any organization, providing insights into suppliers, shipping carriers, and service providers.
At the same time, cloud technology enables easier data exchange between the parties involved. When it comes to customers, an ERP provides customer satisfaction tracking through survey responses, support ticket returns, or tracking customer satisfaction rates overall - giving the organization greater chances at customer success overall.
Forecasting
Financial and FP&A departments face increasing pressure to develop accurate forecasts in response to rapidly shifting conditions, with dynamic financial forecasting providing organizations the power to adapt plans based on real-time data and new insights rapidly.
Synchronization between ERP systems and planning software enables finance teams to easily incorporate actuals and information in daily planning/forecasts without needing separate departments to coordinate offline.
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Conclusion
Enterprise resource planning solutions upgrades should not simply be seen as technical transitions but strategic evolutions that position organizations for long-term success in an ever-evolving business landscape.
By following the guidance, organizations can navigate the complexities of an upgrade journey more smoothly while making their ERP systems enablers of efficiency, innovation, and growth rather than mere tools for business operations.
As technology changes, so can the capabilities of organizations that embrace change with clear goals and an organized upgrade strategy plan.
