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The Old ERP Dilemma - Should We Install The New Release?

Written By: Olin Thompson
Published On: June 13 2002

What To Know Before You Even Think About It   

Before you even start to decide on taking the release, you need to understand some of the realities set by the vendor. Most vendors have a policy about how long they support an old release, but with most, the practice does not follow the policy. You need to probe beyond the policy statement to find out the truth. Remember that the vendor wants you to continue to pay maintenance and if they stop supporting the release that you are on, they face a loss of maintenance revenue from you and all the others that are still on that release. In fact, most vendors have a very liberal practice on supporting older releases. For these vendors, a loss of support is not a reason to go to the new release.

If you decide not to install the new release, you are, in reality, deciding not to install it at this point. You can usually install it anytime in the future. Make certain that this is true. Also, when the follow-on release comes out, does the vendor provide a path which allows you to easily skip this release or install both at once?

Can you find out information about this specific release? A great starting place is with other companies who have already installed the new release. Perhaps the greatest value in attending user conferences is networking with other companies so you can share information at a later date. Locate a company who has already installed the new release. It is the pioneer that can lead the way for you. How difficult was the installation? What surprises did they have? Where were the problems?

The vendor can also help you, in two ways. First the vendor should be providing information on the installation process. This is important knowledge but is often scrubbed to minimize the negatives. Second, talk to your trusted advisor on the vendor's hot line. They typically know the real life problems that others are having.

With both of these sources of information, you are leveraging the experience of others. That assumes that others have installed the new release before you did. In general, waiting is a very good policy. A CIO friend has a firm policy that she does not even look at a new release for the first six months in an effort to avoid being first.

What's The Value?   

New releases typically have a number of applications enhancements, technical enhancements and bug fixes. The first question is always, what is the value of these new things? Will the application enhancements be used? Will they bring value or just be new features? Will they contribute to the business? If an enhancement is something that you have already addressed as a custom modification, you must trade-off between the technical value of not supporting that custom modification in the future with any retraining and disruption experienced by the user community.

Technical enhancements should include items like security, speed, compatibility or leveraging new database and operating system features, etc. Often, the vendor's motivation for the new release is enabling you to install new modules. If you need those new modules, the decision to install the new module means the new release decision is moot. If you do not need the new modules, it presents no value.

Bug fixes are always a part of a new release. Typically, this is more an issue of catching up with all the patches that have been issued so that everything is at a controlled level, allowing you and the vendor to more easily support the code. This brings value to the IT department, but this value is not typically enough to justify the new release by itself.

What's The Cost?   

How do you figure out the cost? You need to inspect each step in the installation process that impacts either the user or the IT department.

The IT cost includes the impact of any modifications or integrations that have been built. The greater the modifications and integrations investment, the more expensive the installation will be. With or without modifications and integrations, testing will be required. If you are running in a client server environment, don't forget the cost of the physical installation and updating each PC with the appropriate software (the right administration tools can make this cost minimal). A major cost might be expanding the hardware to run the new release. This often switches the discussion from expenses to capital dollars.

User cost is mostly a retraining effort. If major application enhancements are provided by the new release, the retraining cost can be significant.

For both IT and the users, a major cost is disruption. This cost will be very hard to quantify, but is real. What would the IT people be doing if they were not working on the release? What projects will be delayed? How much lost time will the users experience?

Summary   

If you have decided to keep an older ERP system and you continue to pay maintenance, you will (should) be getting new releases from the vendor. Each new release calls for a business decision. The decision is not a yes or no answer as much as a now or later decision. The decision must weigh the value against the cost. If the value does not out weigh the cost, you are usually just deferring the decision until the follow-on release is available, giving you a new value and cost decision on installing the follow-on decision.

About the Author  

Olin Thompson, a principal of Process ERP Partners, has over 25 years experience as an executive in the software industry with the last 17 in process industry related ERP, SCP, and e-business related segments. Olin has been called "the Father of Process ERP." He is a frequent author and an award-winning speaker on topics of gaining value from ERP, SCP, e-commerce and the impact of technology on industry.

He can be reached at Olin@ProcessERP.com.

 
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