Should we upgrade our ERPs?

Filed in archive Research on March 31, 2008

There is certainly a business case for a company without an integrated system to go for ERP implementation but is there really an ROI for ERP upgrade?

The answer is not always yes. I read this interesting part in the website of China Supply Chain Council based on an AMR survey:

AMR Research's latest ERP spending survey of more than 200 IT decision makers on both continents found that more than 50% of companies in the United States and Europe upgrade their ERP software about every three years. For major upgrades, companies have to reimplement the core system, which is costly and time consuming.

This adds cost and, in most cases, prolongs the time to ROI. As long as these cycles are as short as three years, the system cannot be stable long enough to yield results. By constantly upgrading for new functionality, however, they are forever adding cost and chasing an elusive ROI rainbow.

These days many ERP vendors have already incorporated e-procurement, supply chain planning and other components in their ERP suite and use the new functionality in the suite as a justification for an upgarde or new investment. What companies should do is to really assess the value of resulting integration with the benefits from best of breed.