Why You Should Upgrade Your SAP System

For many manufacturers, it’s not always obvious when it is time to upgrade an SAP ERP system. Whether you’re running one or several of SAP’s products or modules, chances are you and your employees have adapted to your particular system’s quirks and problems. Some aspects of the system might work very well for you, but in other cases, entire departments might avoid interacting because of ongoing software issues. One question to ask: are meetings held on a regular basis to work around parts of the program that no longer service your company? Does that mean it is time to upgrade your SAP system?

Requesting enhancement packages or even a complete system overhaul every time a change is made in your company’s operations processes could mean a lot of unnecessary changes. Determining the right balance between updating too frequently and meeting the needs of your business is crucial. It’s generally accepted that any resource planning system should be updated when it loses functionality, and/or a company requires additional capabilities.

Loss of Functionality

One of the most obvious and commonly cited reasons to upgrade a planning system is that the old version has lost functionality. This could be causing a number of issues, including an uncommunicative or system, a system that is based on outdated manufacturing processes, or a program that can’t accept and track new data points on your processes. While it’s possible for your employees to adapt to these “holes” in the program, every workaround means lost production time.

This loss of functionality can be compensated for with an extended maintenance contract. While this service is typically free for a few months after purchase, subsequent years tend to be increasingly expensive. Often by the third year of a program’s life, maintenance fees are at least 4% higher than the previous year, outpacing inflation. By the fifth year of use, most company-supplied maintenance for your SAP system is phased out.

Bottom Line: When your company gets to the point where it’s spending more on lost employee time and maintenance fees than it would on a software upgrade, it is time to overhaul your planning system.

Adding Capability

Another common reason to upgrade is to add capacity to your current system. As your company grows, it’s necessary for an SAP system to perform new functions. For example, an expansion of your manufacturing facility locations will practically require you to upgrade to an SAP ERP that can coordinate production around the world. Similarly, additional product lines, new markets, or dramatic changes to the manufacturing process can make using an old SAP program more of a hindrance to production than a help.

Replacing your SAP program will give you an advantage over your competitors who are struggling with outdated systems themselves. Implementing and adjusting to a new system before your old one becomes totally useless gives your company the ability to produce more efficiently.

Bottom Line: For growing companies, the additional capabilities of new programs and enhancement packages could be well worth the investment costs.