ERP upgrade planning best practices demystified

Learn how to make your ERP upgrade project successful by following these four ERP planning best practices.

As a veteran of five ERP upgrade projects in 10 years, Dave Ruetz knows it's the small things that can get you

every time. Disk space, for example. During testing, you can easily run into problems if you don't have enough space to copy many instances of the application, according to Ruetz, MIS manager for Driv-Lok, a 150-person maker of press-fit fasteners in Sycamore, Ill. It is easy to overlook the fact that you will probably need to copy the application more than once, especially during testing.

"Sure, you can always plan to use tape backup if you run out of space, but that can be dicey. I don't like to take those chances," he said. "When I first started, I used tape backup on the advice of some consultants, and some of the data got lost." He won't make that mistake again anytime soon. Driv-Lok has amply upgraded its hardware since then.

Ruetz reports that his current ERP upgrade project, to QAD Enterprise Application 2008 (from the previous QAD version), is going smoothly. This upgrade will take several months, as it involves a major new software release.

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Ruetz is unusual in that he was eager to get up and running on this new QAD version as soon as possible. Many midmarket manufacturers try to put off their next upgrade as long as possible. That approach is not likely to serve them well, according to Jim Shepherd, senior vice president at Boston-based AMR Research. Modern ERP systems are constantly being enhanced with new features and capabilities. Not upgrading means manufacturers may be missing out. Once an organization decides it's time for an upgrade, the real work begins.

Read on for four planning steps to an easier ERP upgrade:

Step 1: Decide whether the ERP upgrade will be just a version upgrade or will add major new functionality as well.

Shepherd encourages his clients to decide upfront whether their upgrade will be just a technical upgrade or one that includes major new functionality as well. If an organization is dealing with just a version upgrade, the project team will be mostly people from IT, with some user involvement for testing. But for companies adding major new functionality, the scope of the project will be much greater, and they must include business users from the start. It's axiomatic enough to be cliché, but any ERP project will be doomed to failure without solid user buy-in. Don't proceed without it.

Shepherd said, however, that "if the business has the appetite for it, then you should take advantage of the upgrade to incorporate new functionality, revisit business processes and look for any modifications or extensions that you can get rid of."

At Driv-Lok, Ruetz will be switching half of the 90 users to a graphical user interface (GUI) for the first time. The company had been managing just fine with green screens but now has a business need to upgrade the interface. "We wouldn't do this just to have a good-looking screen," Ruetz said. It is worthwhile because of the functionality -- such as the ability of users to create for themselves custom "browses" that hide unused fields and screens, helping them focus better on their work.

Step 2: Rely on ERP vendors and user groups to gauge project costs.

Software vendors or user groups should be able to provide an idea of how much the upgrade will cost, depending on company size and the scope of the project. As for cost justification, it is often less than precise.

"Your ERP is a big, expensive asset," Shepherd said. "It's like the roof on the building. You can't afford to let it deteriorate."

If management is pushing for a harder ROI analysis, decision makers should include risk as an element of the equation (i.e., the risk of running the business on a software product that is no longer supported, as well as the risk of not having the functionality to remain competitive). In a functional upgrade, users in the affected area should be consulted in order to get an idea of how much they value the capability. If they don't, then don't go ahead. Wait to implement the latest version of the software until the business need is clearly established.

Step 3: Create a formal ERP upgrade project plan and team.

Midsized companies often skip this step, but that is a mistake, according to Shepherd, because things will get overlooked. Manufacturers undertaking an upgrade are much better off creating a plan with an outline of specific tasks. That includes such things as data conversion, database loading, identifying needed testing, creating the test scripts, creating a test system, getting users to do the testing and, eventually, performing the cutover activities. The upgrade plan should also include a timeline and the resources required to accomplish each milestone. Be sure to list all the team members, including those whose involvement is limited.

"They don't have to be on this full-time, but you need to know who will be involved in the project," Shepherd said.

At a high level, the project plan lays out all the discrete activities involved in an upgrade. Changes will occur, but keeping the upgrade as close as possible to your timeline is key.

"You can't be casual about the timing," Shepherd said, "or you may miss your window."

Step 4: If a system has heavy modifications or customizations, increase the ERP upgrade costs and time windows proportionally.

"If there are a lot of modifications in the existing system, dealing with those adds a tremendous amount of time to the upgrade," Shepherd said, because they will require a lot of recoding and testing. Review your project plan and ensure that you have accounted for this complication.

Driv-Lok has been steadily decreasing the amount of ERP customization over the years. When Ruetz came onboard in 1998, it was common practice to have 200 or more screens custom-programmed to suit individual users' needs. Over the past decade, Driv-Lok has been able to winnow that down to about 50 screens, and that number continues to drop. "Our users spend a lot of time in the test environment, interacting with the new system to see how they are going to do their job," Ruetz said. "We have a lot of reports that we used to do custom, but now many of them are there in the new version. That saves me from having to customize something."

Perhaps the best advice that Ruetz offers is this: Don't put off your upgrade if there is major new business functionality that can make a difference to the company. "If you stand still, you become outdated," he said. "The benefits far outweigh the disadvantages of not upgrading."

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