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Why organizations should upgrade their ERP systems

(Image credit: Image Credit: Rimini Street)

Enterprise Resource Planning (ERP) systems are part and parcel of the day-to-day operations of businesses and take up a significant amount of investment. Last year the average cost per user for implementation alone was $7,200 USD. Adding this to license fees, maintenance costs, management, support, and training, the total cost of ownership of an ERP system can be fairly significant. 

ERP systems are used by organizations across all industries looking to manage their staff, customers and inventory within a centralized and integrated system. Crucial to the running of key departments such as Finance, HR, CRM, Supply Chain operations, Risk Management and many more, ERPs streamline tasks and procedures. Ninety-five percent of companies reported an improvement in processes following an ERP deployment. 

But organizations can often be guilty of neglecting these back-office systems when there is significant scope to upgrade and optimize their ERP investment. As businesses bare the economic brunt of Covid-19, ROI is more important than ever. 

Why upgrade ASAP?

Large organizations often use ERP products from vendors such as Oracle and SAP. These software vendors provide product support for their most recent software releases. As well as ongoing product feature enhancements, this includes legislative and security updates. When you consider that in July 2020 alone, Oracle patched 29 security issues on EBS, the need to stay up to date becomes apparent. 

The penultimate version of Oracle E-Business (“EBS”) R12.1 goes out of Premier Support in December 2021. EBS users need to upgrade to R12.2, which Oracle have guaranteed to support for the next 10+ years. However, according to our most recent survey, 70 percent of EBS users are still operating on prior releases. 

While businesses may think they have 15 months to make the upgrade, there are only a finite number of partners with the skills necessary who can help businesses perform the upgrade. Selecting these partners can be a time-consuming process in itself and there is a very real danger of expert resource scarcity if companies all look to upgrade at once. 

Key considerations 

There are a number of elements that enterprises should consider when upgrading their ERP system in order to optimize their investment.

New features – Inevitably there will be new features to improve functionality in the latest releases of ERP systems. EBS R12.2, for example, delivers 30 new Enterprise Command Centers for real-time reporting across different modules and online patching to allow patching to take place with minimal downtime. Additionally, there are a whole host of new features in each application to consider. 

Customizations – Nearly all ERP systems are customized. Businesses need to be sure they understand the purpose of each customization, whether they can be retired or replaced by new functionality and what the impact of moving them to new releases will entail. 

Infrastructure - As part of ensuring that the path to the “to-be” upgraded technology stack is understood, organizations need to examine what infrastructure they need to support the new version of the software.  It could be a prime opportunity to move “on premise” ERP solutions to an infrastructure cloud, in line with a “cloud first” strategy. According to Claremont’s latest managed services survey, 69 percent of Oracle EBS users currently host on physical servers rather an infrastructure cloud, but around 40 percent are looking to move to cloud to enjoy the flexibility it offers. 

Database - If you are running Oracle Linux prior to version 7 then an operating system upgrade will be required before upgrading the database. With Premier Support for Oracle Linux 6 finishing in March 2021, many organizations will be looking to upgrade soon or will risk running on another unsupported platform.

Tips and tricks 

To preserve their own IT staff’s time, enterprises should choose a partner to assist in an upgrade. They will have the experience and the skillsets to ensure that businesses avoid common (and sometimes expensive) pitfalls.  And businesses shouldn’t wait until just before the de-support deadline, as a partner will be more difficult to acquire amid the rush.

The importance of planning an upgrade properly cannot be overstated. Organizations need to fully understand the scope of what’s involved and the costs of undertaking the work. Depending on the scope of your upgrade project, it could take 6-9 months to complete, and each stage of the process from data migration to implementation needs to be meticulously understood. 

Choosing the right partner

Using a complex piece of software is a bit like running a Formula 1 car. It requires a team of expert engineers, with differing specialties, working on it in order to optimize it and make it perform at its best. This is where partnering with a managed service provider (MSP) can make a big difference.

A partner needs to have as much knowledge of the requisite product as it does upgrade experience. This is key to ensuring that the upgrade is completed efficiently, and also that opportunities to embrace new features are taken, potentially improving ROI.

Organizations need a partner that will work with them to ensure their team is involved wherever possible. Most organizations lose "tribal knowledge” over time as the original implementors leave the business and new staff learn the bare bones to get by day to day, slowly diminishing capability. Upgrades allow businesses to reset and use the expertise of an MSP for the highest standards of training. 

Claremont has developed an Upgrade Assessment for Oracle E-Business users that to help enterprises understand each of these aspects, plan and budget for their forthcoming upgrade, and help them to raise their business case. 

With multiple ERP systems becoming de-supported - particularly Oracle products - now is a good time to start to plan for the future and consider upgrade options, including database, cloud infrastructure and customizations. This will deliver long-term support, stability and a functionally rich business environment for organizations at a time when they need it most.

Mark Vivian, CEO, Claremont