ERP Life Cycle – Know where to avoid pitfalls!

The ERP life cycle starts when you purchase the software and last until the ERP is decommissioned.

Hopefully, the ERP should support the business for decades. But for that, it needs to be maintained and upgraded as the business grows.

ERP Life Cycle

Acquisition & implementation

The ERP implementation phase is crucial for a healthy life cycle. The best way to have an ERP that supports throughout the years is to have a good implementation (especially a good business analysis and a good ERP system integration).

You can see the complete ERP system implementation guide here.

The life cycle of an ERP should be of least 5 to 10 years. So plan your acquisition and implementation accordingly.

Maintenance – ERP life cycle

The vendor should continuously upgrade its software to fix bugs and security issues, especially if the software is not mature (if it has been on the market for less than two or three years).

Managing Upgrades

Throughout the years, the vendor will supply most new developments made for other clients free of charge (you already pay for this with the annual licensing fee).

When they make changes, be aware of the ones that impact your business and check to make sure that it still fits your needs. The vendor shouldn’t make any change that negatively impacts your business. He should consult its client before doing so.

Having a good relation with you supplier is essential for this. But this kind of changes usually affects positively the ERP life cycle.

Managing new needs

Whenever a new business need emerges that isn’t filled by the ERP, you have two choices: develop a custom module on the side (if possible) or ask the supplier to develop a new module or adapt an existing one. The latter is the best option, even if it’s often more costly.

Before meeting with the supplier, make sure your business needs are well analyzed and make a good business case. After that, meet the vendor and present your needs.

You are going to either be charged by the hour for smaller developments or the vendor is going to make a package deal for bigger ones. Note that this development is at your charge and will be provided free of charge to other clients. Sometimes it may be beneficial for other clients; in that case you may negotiate a “rebate” on the development cost. Often, the vendor will accept to absorb of 50% of the cost.

Revisions

The ERP software companies should deliver revisions to their ERP a couple of times a year. There are two types of revisions

  • Minor revisions
  • Major revisions and service packs

Minor revisions

Minor revision can be delivered a couple of time a year and does not have a big impact on the ERP. They normally include bug fixes and minor changes, sometimes adding small functionalities. Unless they correct a security threat, they don’t have to be installed immediately.

Major revisions

Major revisions have a significant impact on the software. It can be anything from a major change in the user interface, new modules or major functionalities.

They’re normally released once or twice a year and installing them is strongly suggested. Note that I also suggest, if possible, to wait a couple of days or weeks before installing them to make sure that there was not any bug in the correction – yes, it does happen – and to let other companies try it first!

A well-maintained ERP will increase the lifespan of the ERP.

Decommission (or re-implementation)

You want your ERP to last for decades, but for various reasons, it may not be possible.

Your business may have out-growth the ERP capabilities, the vendor may close or your relation with him may have degraded to the point where you need to look elsewhere.

Once implemented, the ERP life cycle comes down to two things: the stability of the product and the continuity of your own business.

You should expect the ERP to last at least 5 to 10 years. An ERP implementation is a big investment in time and money. No ERP should be bought if you expect to use it for less than that (of course, exceptions exists).

Stability of the product

Supplier

The stability of a supplier is of prime importance. A supplier that closes will greatly affect the ERP life cycle.

Make sure the supplier is stable financially and that they have been in business for a while. Nobody wants to invest millions in an ERP just to see the supplier go bankrupt.

If that happens, you’ll still be able to use the product, but no more updates will be done and you can expect to have problems within months. Of course, a competitor could also acquire the ERP from the bankrupted business.

ERP acquisition by another company

The ERP market was in consolidation during the 2000 decade. This kind of activity affects the customers of those ERP. While most vendors will continue to develop the bought software “as-is” for a few months, maybe a few years, eventually they will probably want to merge both products into one, which may lead to major changes to your business.

While customers shouldn’t lose any functions, they still will have to go through a new adaptation phase, maybe a new integration phase as well.

Continuity of your own business

Your own business activities also affect the ERP life cycle. If the company is stable and does not change its operations over the years, the ERP can be used for decades.

But if its processes drastically change, the ERP could become obsolete. For example if you have a manufacturing company that becomes more of a distributor over the years. It’s important to notice those changes before they happen to make sure the ERP can follow the new company direction.

New modules may need to be developed or a completely new ERP may need to be bought if the current one does not comply with the new direction in which the company is heading.

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Erik

Erik

Erik is the owner and main editor of bizNsoft.net. He has been working in computers and information technology for more than 20 years. He's a business analyst, developer and avid traveler.
Erik

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