• When to Replace ERP

How Old is Too Old?

According to research performed by the Aberdeen Group, an ERP system reaches its maximum usefulness after approximately 7 years. At this point, the system is being well utilized and begins to show significant returns on investment. Now this assumes, of course, that the system was well-maintained over the 7 year period including incremental upgrades.

Unfortunately, after reaching peak efficiency at 7 years, the usefulness of the system begins to decline. Regular upgrades to your system can ensure that you never hit that period of decline, should you have chosen a constantly innovating, forward-facing software system. Unfortunately, many businesses, especially small businesses, are running on archaic systems that date back 15 or even 20 years. Unless these systems have made remarkable progress, chances are the software available today will blow it out of the water.

Thankfully, only a small fraction of businesses are running on systems that are over 15 years old – approximately 7% of businesses according to Aberdeen Group. While it is good news that a small percentage of businesses are running on archaic systems, it is not good news for those that still are. Failing to make strategic IT investments on a timely basis can hurt even the smallest businesses. Many managers are beginning to understand the importance of employing up-to-date software, but many remain in the dark.

Our advice: think hard about your current productivity with your software system. Are there any pitfalls? Are you losing hundreds of hours of productivity a year? Have you hired someone new to keep up with the demands of the business whose job could otherwise be replaced by a proper software system? Are your customers looking elsewhere to get quicker answers or faster service? If the answer to any of these questions is “yes” then a new software system will pay for itself.

What are you doing to avoid becoming part of the 7%?