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IT Challenge: Upgrading from ERP for SMBs

In this IT Challenge, we'll explore strategies for upgrading an ERP system for a growing organization.

The IT Challenge of the Month for May 2011 is:

My company has experienced significant growth in the past few years, but our current ERP system is still designed for a smaller business. What is the best way to go about upgrading an ERP system from an SMB model to a large business model? Can this be done seamlessly and without switching vendors?

Do you have a solution to this challenge? Have you encountered a similar issue at your business? If so, please contact the editors and share your suggestions or experiences. 

IT Challenge respondents will receive a free copy of a new book from SAP Press.

And be sure to check back here all this month -- we'll be posting solutions from experts and readers as we receive them.

From ERP industry expert Steve Phillips:

As organizations grow, several changes in ERP business requirements begin to surface. There may be a need for additional ERP functionality driven by factors such as a more diverse customer base, additional product and service offerings, new business units, and shifting geographic locations. Assuming the current software can handle the increased transaction volumes associated with a larger organization, these first factors do not necessarily imply the need for a new package if the current vendor is providing the required functionality with new releases.

However, once you start dealing with multiple business sectors or locations, a package designed for smaller businesses may become inadequate, and may offer little promise of ever supporting these needs. Changes to the program and database to support multiple financial entities, plants, warehouses or currencies are not easily incorporated by any vendor after the fact. It is always best if this functionality was considered in their initial system design. Vendor attempts to fill the voids with retrofits, new modules or bolt-ons often fall short due to existing design constraints, which can result in data integration and software usability issues for the company.

For these reasons, business growth typically involves a new ERP package, is not seamless and normally requires moving to a different vendor, depending on your current vendor’s product offerings.

From industry analyst and CEO of Constellation Research Ray Wang:

The question may seem simple, but the answer is quite complex. Examining a few factors will determine whether or not you can use your existing ERP system:

1. Specific functionality: Do you need multi-company consolidation?

2. Global capability: Do you need multilingual capabilities?

3. Scale: Do you need to support more than 1,000 concurrent users?

These are just three questions that can help you size what you have for ERP capabilities versus what you need.

If you are moving from JD Edwards to Oracle or from SAP Business One to SAP Business Suite 7, you will most likely have to rip and replace your ERP systems, because those suites use different data models, architectures and programming languages.

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