Posts Tagged ‘ERP upgrades’

We borrow today from a pretty basic but very worthwhile article penned by ERP consultants Panorama Consulting, in which they give company managers five good arguments for persuading those Powers That Be of the need to upgrade their frontline ERP systems – you know, the ones they run their businesses on every day.  We’ll reprise their five suggested pathways here today.  We thought their comments were smart enough and succinct enough to quote nearly verbatim, but to give due credit, you’ll find the original article here.


  1. Return on Investment. Executives need to see when, how and where a new system will start paying dividends. Collecting actual data on costs of time-consuming workarounds (e.g., one full-time employee spending x hours/week hand-counting inventory at $x cost) and showing how the system will increase efficiency and free up staff to generate returns via other efforts.
  2. Measurement Tools. People can be (rightfully) nervous about bloated ERP projects that suck time, energy and money and never meet expectations. Show that a new ERP system will have quantifiable results by identifying and describing key performance indicators of the project. Determine how success will be monitored throughout the implementation and beyond.
  3. Standardization Strategy. One of the great benefits of an ERP system can be realized via standardization across business units. Identify departments wherein standardization could be most easily achieved (human resources, accounting, customer service, etc.) and develop a strategy to blueprint processes in each of them. ERP consultants like can help you sort through “current state” processes to build the “future state” processes needed for enhanced business benefits and ERP system utilization. Documenting and mapping processes is essential prior to software selection.
  4. Change Management. Investigate and document previous training and organizational change management initiatives conducted by your company. What worked? What didn’t? What do end-users need to increase usability, or to save time or money? Create channels of communication with end-users to start achieving buy-in and determining change management strategies from the beginning. Document what they say and communicate it to the executive level.
  5. Total Cost of Ownership. Executives should have a clear picture of the total cost of ownership (TCO) for their purchases. Panorama suggests TCO should be quantified for at least seven years. Sounds about right to us. Executives don’t like surprises. Work with your consultant to determine the true TCO including licensing, resources, integration and customization.

All in all, doing this is not easy, but it’s actually very manageable when viewed as steps in a process.  You can do it, and a little help from your consultant will easily cap off a reasonable proposal if everyone keeps the end goal in sight and moves efficiently.  You won’t be the first, nor the last.  And early in the year is the best time to begin.


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erp-upgrade-pic_2Our prior post attempts to answer the question captioned in our title by suggesting the first three, commonly accepted steps in the process: Preparation; Process Review; Fit/Gap Analysis.  Today we’ll conclude with the last three steps.

Step Four: Architecture.  In this step, which may be a part of one of the next steps, you identify the hardware foundation for your solution.  It could be cloud based for certain well-defined verticals and for more generic (i.e., pure accounting) solutions, or it may consist of hardware, either on-premise or off, that will serve as the underlying architecture for your solution.  The hardware however is always a byproduct of – and dependent on — the desired software solution.  This step is the natural follow-on to any potential solution identified in the earlier fit/gap analysis.

If you’ve decided on standing pat or upgrading your current solution, you still need to ensure that the hardware it runs on is up to the task and offering you the speed, functionality and scalability you require today.  If you’re considering new technology, new or upgraded hardware will be a part of that overall consideration.

Step Five: Scope definition.  Just as it’s important to define what your choices will do, it’s important to define what they won’t – at least initially.  Here you determine the bounds of your new implementation.  This is the place to look at where you potentially will, and will not, modify the workings or code of the proposed new solution.  We often advise clients to work as much as possible with their new software “out-of-the-box” and to forego all but the most critical, business-necessary modifications until they’re up and running and have had time to truly understand the capabilities of their new system.

We find most companies are a bit overwhelmed initially with what their new system can do for them.  It’s almost too much to wrap your head around all at once.  So initially, take it one step at a time.  There’s plenty of time later to decide where you want to fine tune your system (assuming your selection can be fine-tuned and modified – some systems are better at this than others).

Finally as to scope, remember, this is where you can best identify and control costs.  A good, tight scope definition helps your software partner quote more accurately, and helps you ensure the budget is both realistic and achievable – in both dollars and time to implement.

Step Six: Proof of concept.  Once you’ve reviewed your processes, identified gaps and potential solutions, defined requirements, hardware, scope and acceptance criteria, you need some assurance that the proposed solution will work.  If you’re already familiar with a trusted adviser and software partner, they can step you through this process with either basic PoC demonstrations, or a combination of referrals, conversations and software high-level reviews.

This is not user training and does not involve porting over of existing data (aside from perhaps a few sample records for demo purposes).  It’s not a full prototype or a complete system test.  Proof of concept simply means a general acceptance that the overall processes you have identified as key to your flow can be accommodated in the proposed solution.  There may be some cost associated with this step, depending on the depth of your requirements for proof.  The key thing is to have established trust between your firm and your implementation partner for the long road ahead.


There are any number of variations on the steps and flow of your selection process, but the outline we’ve provided covers the fundamentals of an accepted method for determining your requirements, and whether your current solution will get you through, or a look at new technology is in order.

In all cases, keep an open mind… be honest and open about your expectations and your budget… and remember that ERP is, above all, a strategic investment in business improvement.  We may be biased after 30 years of doing it, but the relationship with your provider – and their business and technical capabilities and understanding of the business environment in which you operate – are the keys to success.  Remain honest and open with one another throughout the process, keep the expectations realistic and the lines of communication open, and you will ultimately be one of the success stories.



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ibm guideWe recently came across a very simple but pretty valid list of questions you can ask of your own firm to see whether the business software you run today is in need of upgrading.  The questions come from a white paper first published in 2013 by IBM, entitled “Integrated ERP Guide.”

  • Are you having problems getting access to information about your business?
  • Is it taking too long to close your books at the end of the month?
  • Are your customers finding it hard to get information about their orders?
  • Do you have inventory management issues?
  • Does accounting take too long to do basic processes?
  • Do you have outdated processes – manual data aggregation or paper-based documentation?

Additional questions you should be asking and answering are:

  • Are your IT resources too time consuming or costly?
  • Do you have disparate, stand-alone software systems?
  • Do you have a number of different software applications for different purposes?
  • Is your company’s growth complicated or hindered by software integration issues?

Aberdeen Research’s Nick Castellina suggests starting the conversation by looking internally, with  IBM’s Luis Gallardo adding that it’s important to “focus on your culture, what is important to you in terms of value, current pains and needs.  This will provide core values and a needs-based set of questions.”

And their paper highlights one key tip that we at PSSI would put above all others:

“Strong project management correlates very strongly with a successful ERP implementation.  An ERP implementation should be viewed not just as an IT solution, but also as a business solution that will transform your organization, helping it to become more effective and efficient.”

We could scarcely have said it better.




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Rick_Cook_ PicA co-worker passed along a great little article worth reprising in capsule form here today, on the merits and mistaken expectations that come with upgrading your ERP system, which all companies must inevitably do (and which, for many, may we dare suggest, is long overdue).  The comments we reprise today come from an original article by Rick Cook, whose bio notes that he “has been involved with computers since the days of punched cards and magnetic drum memories. He has written hundreds of articles on computers and related technology as well as a series of fantasy novels full of bad computer jokes.”  His article can be found here.

Cook reminds us that ERP systems have a finite lifespan, and typically require upgrading every 5 to 7 years just to keep up with changing tech trends and business practices.  In the long run, he notes, this is good as the upgraded system “will be significantly easier to use and more powerful.  Further, it will provide much greater support in areas such as analytics which are becoming increasingly important in modern business.”

But in the short run?  Not so much, he quips.  There’s all the associated expense and pain, and even if it’s your second (or fifth) upgrade effort, there is still pain and expense associated with the process.

And so, Cook notes, it’s particularly important to approach the process with the right attitude.  You have to manage your collective expectations.  So, Cook says aptly:

“There are two common mistakes in expectations when upgrading your ERP system. The first is expecting a major improvement in business processes without re-engineering the business. The other is to expect the implementation to be an IT project with minimal disruption of the other parts of the business.”

Cook points out what we all should remember: that an ERP upgrade represents a prime opportunity to improve not just your ERP system, but the overall functionality of your entire business.  Take into consideration changes that have occurred within the business since your last upgrade.  Also note the changes that ERP vendors have wrought in term of the huge strides made in improved functionality and features.

As well, be sure to take the time to review your business processes.  An ERP upgrade is the absolutely perfect time to do so.  Too many companies blow this opportunity.  It’s the perfect time to analyze each process and then “lean out” all you can.  You can look at existing procedures and take advantage of new features and advanced capabilities of your new software, and marry them together.

And remember that as processes change, and software too, so do people.  Take time to talk through the changes with your team, and earn the full company buy-in.  Doing so will ensure that you are maximizing that ERP investment and ensuring that in the long run it will have been a very profitable move for the company.  And that, notes Cook, puts you well on the way to a “positive experience for the company.”

We couldn’t have said it better.


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NAV 2016 LOGOThere are a number of solid reasons why clients should, and do, upgrade their ERP software on a regular basis – some obvious, some less so.  Today we’ll look at a few of those for the benefit of those users on the fence.

One key reason of course is simply keeping up with surrounding technology.  Put another way, the longer a company forestalls its upgrade, not only is it more costly when it does, but without such upgrades, companies run the risk of missing out on important new features with real ROI.

Then there’s the risk of being on an unsupported version (usually described as more than two versions old).  On top of this, over time, as background technologies like operating systems, productivity tools (like Microsoft Office), hardware, or the web undergo changes, it’s less likely that your software will interact optimally (or at all) with them.

In the end, there must be a business driver to upgrade.  Whether that amounts to avoiding the pitfalls noted above, or taking advantage of the newer features of the upgrade, a company must think through the pros and cons of staying put or moving forward.

A Lithuanian company that specializes in Dynamics NAV upgrades was recently profiled by MSDynamicsWorld.com, and noted for example that Dynamics NAV 2016 was “a huge release with a large number of improvements to the platform and on the application side… the new Workflow functionality on the application-side, and the eventing functionality that powers it, are the biggest improvements. They change the strategy of both NAV user behavior and future development direction.”

Editor Dann Maurano also notes in a recent article at MSDynamicsWorld.com that “Since Microsoft is releasing more tools to automate and make the upgrade process easier, the price of upgrading is getting lower over time.”

Simplanova notes some of the costs of running an unsupported (i.e., more than two versions back) version of Dynamics:

“Customers who are running an unsupported version would eventually start experiencing problems with integration with newer systems, so your work will get less efficient each year inevitably. Unsupported versions are harder to maintain due to inability to use new platform advancements such as automated testing and .NET interoperability. Users are not able to benefit from productivity improvements in Microsoft Office, Office 365, Microsoft CRM integration, and NAV clients for multiple platforms.”

Finally, the article touches on the importance of a little ‘booster shot’ of training after an upgrade, noting that end users typically require about a day or so to get used to the new versions, and “about two days of on-site assistance.  Training on using new features of Dynamics NAV would need additional time. Each major release adds new important features, thus annual training is important to get the most of a new version of Dynamics NAV.”

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Apropos of some of our recent posts (like this one and this one) about the increasing need for access to current financial data, quickly, in volatile times, comes a recent article from the “CFO Journal” section of the July 24th Wall Street Journal.  In the article, The Journal’s Senior Editor Emily Chasan [pictured at left] points up the dilemma facing many large company CFOs that we, in our practice, find confronting financial execs at much smaller companies today: namely, the need for more timely and uniform financial information to help them react quickly to fast-changing conditions.

They face a tough choice, as Chasan notes.  Either spend “serious time and money to unify their financial systems in one fell swoop, which can entail consolidating… general ledgers, processes and legal entities, or take a piecemeal approach that will address specific needs but may not bring major benefits.”

Some opt to do nothing.  But increasingly, experts say, companies are taking action to get better financial data.  According to the International Data Corp., businesses spent nearly $16 billion on financial-accounting applications worldwide in 2011, up 10% from 2010, and about double the growth rate from a year earlier. 

While the pain of these changes is always a major factor, businesses are finding benefits from eliminating costly consolidation processes, and “getting more real-time business information that can help identify areas of stress.”  The recent recession has taught businesses that “too often they didn’t have the information they needed and they didn’t have an ability to get that information,” said one leader of a business intelligence team at KPMG, LLP.

Compounding the problem, acquisitions can often complicate reporting problems.  As one corporate accountant reported, “we don’t replace systems immediately unless the business needs it right away.”  But eventually, companies want divisions “speaking the same language.”  And since investment in financial and accounting systems has long been considered a cost center, Chasan says, “companies have been led to budget for upgrades and maintenance each year rather than tackling major overhauls.”

So, when it comes time for an overhaul, as the North American CFO of BASF said, “If you are making a change, you cannot go big enough.”  His firm had made a number of acquisitions that left them with disjointed systems, so it aligned its accounting, payroll and benefit systems during an upgrade to its ERP system.  Today, the company reports that it can now produce more comparable data and spend more time on activities that support the company’s growth strategy.

And in the end, that ‘ability to support a firm’s growth’ is typically found to be the number one underlying reason for the investment in ERP.  And that’s a fact whether you’re a very large company like BASF, or you run a smaller firm like, say… yours.

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