ERP Systems: Does the expected v/s derived business benefits outweigh the cost implications?

AMR recently stated.

“Buying and deploying a new ERP system typically costs millions of dollars. The justification, selection, and implementation process can take as long as two to three years. In today’s economy, it is nearly impossible to get approval on projects with such a large scope and cost, so some companies are exploring an alternative: rehabilitating their current ERP system. However, the decision is not a simple either/or choice.”


Should You Rehabilitate Your Current ERP System Rather Than Buy a New One?


1. STAY WITH WHAT YOU HAVE.
If your ERP is stable functionally rich core ERP and the Vendor states its commitment to continued support.
Many companies therefore go for the ‘if it works, don’t fix it approach which is very sound if competitive advantage can be maintained.
However tuning may be a good idea to create a go faster system and ensure optimum use of core modules available.
Non-core but essential business functionality may be added by considering either vendor add-ons or indeed niche products from specialist companies in areas such as Financial Reporting, ERP links to Desktop, BI, CRM up to and including quotation and order configuration. All of these, including tuning can be sourced by 3rd party Vendors at prices that ensure increased ROI on current systems, no sunk costs, and lower TCO going forward. Any investment made in these solutions should be upgradable to next releases of your core ERP and indeed other core ERP solutions.

2. UPGRADE TO VENDOR'S NEXT MAJOR RELEASE
Many companies have moved this way with eventual success. 3rd Party Service Vendor's like T/DG(http://www.thedigitalgroup.com/) has access to resources to assist customers in evaluating the specific pros and cons of this move to your organisation.
We also recommend as above if this route is chosen route is chosen, non-core but essential business functionality may be added by considering either vendor add-ons or indeed niche products from specialist companies. The latter should always be considered.

3. CHANGE ERP VENDOR
Most of our Client's experience with generic Off-the-shelf ERPs would shy away from this course of action in a very high number of cases. There are exceptions.
However on the whole, if implemented and serviced correctly, including value add best of breed (back in vogue) add-ons, reasons to move have to be very convincing in view of the costs and business disruption ( high risk) involved. Most of the times these decisions are based on long-term cost implications, maintainability issues, high cost of upgrades and technology obsoleteness.