Upgrade or Migrate? How to Tell Which Your ERP Really Needs

Peter Nicholson (00:24)
it.

And welcome back to the ABCs of ERP and Beyond, the podcast all about ERP systems and how they shape the way businesses operate, grow and succeed in today's world. I am Peter Nicholson and joined as always by Nirav Shah and Emily Browning. And today, well, every ERP project has an origin story.

Somebody somewhere walked into a meeting and said, you know what, we need to do something about our systems and our ERP. And the entire shape of that project that follows the budget, the conversations, the decisions, the timeline, even the politics, and also whether you end up deciding to upgrade your systems or migrate to something else. It depends on.

who that somebody was, where that came from and what has triggered this whole conversation in the first place. So today we are kicking off a mini series on the upgrade versus migrate question and everything that goes in with it. So today in this first episode, we're just going to talk about that as an overall framework and the following episodes will deep dive in some of the most important and key areas during this. So welcome, let's get into it.

Are we excited for this one both?

Emily Browning (01:35)
super excited!

Peter Nicholson (01:36)
That's what I like to hear.

Nirav Shah (01:36)
This is

more relevant than ever in this day and age. You know, I think since post COVID, SaaS software has just kind of been in this, you know, upward trajectory, rapid growth. We're seeing it across all industries. And I, I think in my opinion, six out of 10 companies are thinking about this right now. You know, remote workers and, you know, new software, modern software, AI capabilities.

A lot of things to unpack and this one I think is great. It's going to affect a lot of people today.

Peter Nicholson (02:07)
Emily, are you super excited as well?

Emily Browning (02:10)
I am.

this particular topic, should I upgrade? Should I migrate? It comes up in my day job frequently as an IT manager. It's a strategic decision. And I think it's often one where the people that make the request, the original request, we need to do something, may have an idea of what they want. it's

your job, whoever you are, whether you're an IT manager, finance manager, whatever, whoever they came to, to make that assessment and make your recommendations, even if it goes against the thing that they actually asked you to do. Maybe they said, we need to do an upgrade. We know there's this new cloud version of the ERP that we're currently on. Let's upgrade to that. You may need to push back. So what I am excited about is giving a little bit of a guide on what

what things should you consider when making that decision and then it goes hand in hand with then how do you then make that argument to the people who made the request?

Peter Nicholson (03:11)
All right, so let's talk about this request then. I guess let's talk about this from the origin story, right? Someone said something to kickstart this whole conversation off. So what's the common things that we see? I know that we're chatting beforehand and we said, well, it could come from lots of sources, both some of them externally. It could be something as simple as the systems you're on at the moment are end of life or coming up to end of life.

but we also said that a lot of the times it comes on, on, it comes through the business itself, right? Nirav, you said that it could be a new CFO, right? Someone walks in fresh. They, they look at everything. They might look at the business with a fresh pair of eyes and go, Holy shit, what are you doing? You need to get off onto a new system. Or it could be that, you know, they've come from somewhere on a much better system that has recently done a migration and they're, seeing the benefits of that. So.

Nirav Shah (03:53)
Yeah

Peter Nicholson (04:04)
That's one aspect that could cause this trigger and this origin of why we're even talking about this. What other kind of sources would we say that this is coming from? And more importantly, who's driving this? Because we said before, you know, it could be an IT decision, it could be a business decision, it could be just the CFO coming in and trying to lay the law down. So what do you see out there for businesses?

starting this conversation in first place.

Nirav Shah (04:30)
Yeah, think one aspect that you didn't mention here, Peter, is people listening to our podcast and saw some of our demos and said, we need to upgrade and we need to get into a modern system. Right. But yeah, I think ⁓ those are reasons, absolutely, of why this conversation appears in boardrooms and conference rooms every single day is our systems,

Emily Browning (04:37)
you

Nirav Shah (04:51)
software mature to manage our business the way it's managing right now. any business management software, ERP or whatever, the tendency is you set it up and you forget about it. And that's just the way you run for many, many, many, many years, right? And then people come and go, people inherit some of same processes over time, and then somebody comes along and...

you know, could be a new CFO, could be a new plant manager, right, and says, hey, you know, based on their previous experience, so like, we're not doing things efficiently here. They see room for growth, and then this conversation comes on the conference room table, saying, hey, let's think about upgrading or thinking what our next system should be. It's an evolution of a business. So, when you don't,

keep your current system up to date, sometimes what happens is the time to spend to reconfigure it to the way you're operating now, right, could cost more, and your system, your current system might not be able to support the advances you've made as a business So those are points where you get

executive, the executive team, or even the end users. Let's not forget about the end users because these are the people that are using the system day to day, right? You have people bitching about this particular module is not working really well or is always crashing or they're not getting the right data or it's not reflecting what they're doing every single day. So it's all hands on deck conversation. And it could be that you're just

You need to start the conversation. You need to just put it out there saying, you know, what we have right now, is that enough to run our business successfully?

Emily Browning (06:33)
Yeah, think pretty, I'm thinking along pretty similar lines, but I think is from from inside the business, it's it can be when I start saying no to requests, which could be for a couple of reasons. It could either be one, maybe it may be the system we have is not fit for purpose, really. something that sounds like a simple request, actually, in this ERP is not because this is not a manufacturing ERP or

this is an ERP that is not very good with e-commerce. So no, we can't really do that, not without doing something very significant. Or as is what I normally see, it's that the ERP is very, very old. It could be very obscure. So when the business is saying, can we automate invoicing? Can we do these little improvements, little automations here and there? The answer is yes.

but it'll cost you because this is really old, really niche. There's just two guys that know how to do this and they're about to retire. It tends to become expensive and difficult to start making those changes. And we are hearing lots more about businesses getting more tech focused, AI, obviously the big buzzword, but automations as well, generally optimizing things.

making it so that lost... I've been distracted now because we've lost Nirav.

Peter Nicholson (07:49)
Yeah.

Emily Browning (07:52)
Fingers crossed he'll be back.

Peter Nicholson (07:53)
peace.

Nirav Shah (07:54)
I completely put it out. Sorry guys. Seriously. Oh my god. Sorry about that. I have no idea what happened. Okay.

Emily Browning (07:57)
Welcome back to the ABCs of ERP and beyond.

So yes, to sum up, when I start saying no to requests because they're too expensive, or they take too long, it's unreasonable. It's something that should be simple, but because of the ERP that we have for whatever reason, it's going to be, it's just not going to be worth the time, cost, resource that it takes. That's when the questions start coming up.

Additionally to that, if it's very old, you could be stuck on very old servers, in which case you have a big cybersecurity risk. And not necessarily even the servers. It could be if you have an old ERP that is not maybe in support anymore, or the version is end of life, then you're not getting security patches anymore. And ERP is the heart of your business. So that is definitely something you want patched up, up to date. And I think that's why we get

there's a lot more thought about cloud as well because it tends to be kept upgraded, best in class cyber security, and cyber attacks are getting smarter and smarter. So I see that kind of drive for ERP changes as well.

Nirav Shah (09:07)
a car gets so old, it gets to a point where you decide, hey, the transmission just blew. Is it worth replacing the transmission or should I just get a new So there's going to be a point where your ERP system is just going to be, you're going to get diminishing returns.

on it, the more you keep investing in it. if there's an enhancement that the users are requesting, is it worth doing and pursuing? Because you're just going to keep dropping money into that bucket that's never ending, ultimately. And is it wiser just to bite the bullet, get into a more modern system, and some of the enhancements that are being asked for are standard in the new system that you're looking to possibly get into. So I think that was a fantastic point.

Emily Browning (09:50)
you.

Peter Nicholson (09:50)
I think that

next point quite nicely in so much as there's another decision that we can make here and that is doing nothing. That is a decision. It doesn't often feel like a decision because no one's there with a sales pitch or no one's signing a purchase order. So it doesn't necessarily feel like a decision, but there is a decision around just simply staying on.

system and to think about back to your analogy there about the car is it's like the boiling frog problem right the business is operational every single day but that system is just getting one you know one degree worse every every month right but nobody flags it you know people adjust accordingly apply patches here and there a couple of bits of processes end up coming out of the system and into excel

but one day something's gonna happen, right? You know, you have an audit and then the audits that gets curious and starts digging in and you're into a world of pain or, or someone with all of the tribal knowledge just leaves. and then suddenly the water's boiling and you really have to do something. there's two parts to this and I want to do the first one, the consequences of doing nothing. because that's, that's the cheapest option, on paper.

But there is going to be a cost later on when you start looking at it could be tech debt. It could be it could be the cybersecurity side. It could be that people bogged down in admin. It could be limiting your growth of the business. So what are the consequences of of doing nothing?

Emily Browning (11:19)
I'd probably just reverse that back to everything we just said and where does the request come from? This point in your assessment would be, there a legitimate reason to make a change? Because I think we've also spoken quite sort of...

not quite catastrophised, but you know, with talking about, if your ERP is 15 years old and you've not been doing anything with it, then you know, you have all these problems. Maybe that's not the case. Maybe you've been managing it fine. Maybe it's overdue and upgrade by a couple of years, but that's not, that's not the end of the world. It could be that the request that came in was actually just someone new that loves SAP because that's what they used to use in that old job. And it would be on you to then

make that assessment of, well, is what we have good enough? And maybe it is. So I think the consequences are for me, the things we just said, whatever risks there are, whatever limits there are to the growth of your business, because you can't automate optimize whatever, if those don't exist. And there aren't any real consequences, not yet. An ERP upgrade or migration is a huge project. So

Is it the time to do it? Or one of the consequences of doing nothing on the positive side is that you have more time to focus on growing your business and focusing on those other activities, not using all of your people's resource on testing and designing and UAT and training and all of this. It's a lot. that is a consequence of doing nothing. You don't use all of that resource.

and maybe at this point in time there's something better that you could be doing with that.

Peter Nicholson (12:53)
Mm-hmm.

You're up.

Nirav Shah (12:54)
Yeah, the cost of doing nothing is easy and hard to measure at the same time. you know, as a partner, we get into this conversation with customers saying, okay, know, an upgrade, let's say it's $60,000, right? Versus you're just paying maybe you're on on-premise software, you're paying an annual enhancement.

20%, whatever your software was, you're only paying $15,000. But now you got $60,000 upgrade as implementation. And now you're on a SaaS license, which every software company is now. Now that SaaS license is $25,000 a year. So there's no end point to that license. It's just going to continue in perpetuity.

and you have a $60,000 implementation. When you look at it from that lens, most customers are going to say, no, we don't want to upgrade because we've already paid for the software. Things are running as is. We're still profitable. And we'll just keep everything the way it is. But the cost of not doing it, and you mentioned a lot of this, Peter, is your team is doing redundant work.

they're entering the same information two or three different systems. Maybe you can't take on new business because let's say there's an EDI requirement for a new customer and your system just doesn't support it. Maybe you need to get, if you wanted an EDI, you have to get a middleware potentially. Now that's an extra cost versus maybe another system already has that middleware in place, right, to accept EDI orders. Maybe you need the ability to hook up an MES system.

right, manufacturing execution system because you got new equipment and your current system can't integrate to that level. You can't really tell whether that machinery is being properly utilized on the manufacturing floor, right? You have people literally still out there with clipboards looking at time, writing down time, pen and paper.

But as quick as technology is moving, I think the question is, what is the cost of moving out of your old system? And I think if the business is not already thinking about growth and they're not thinking about scaling at the end of the day, they're going to stay where they are and be limited versus a company that's

Deciding that hey, you know, we want to embrace AI. We want to go and embrace, you know, this new technologies out there We know that people are doing the work same same thing two or three different times and you know We got to find software that's gonna make it easier for them. So they're more productive You lower your margins you think you think in those lines you break down your cost Then you can start measuring Instead of just measuring just pure software cost measure what people are gonna save from upgrading

on a day-to-day basis and look at it from an individual user and then look at it from the whole organization. I pretty much guarantee you the cost you're going to spend for a new upgrade is going to, you know, what you're going to save is going to outweigh the cost at the end of the day is what I'm trying to say. So that's the piece I think that sometimes gets lost, you know, whether we upgrade or not. And maybe it's not true in every situation, right? You kind of have to really analyze this. If you're a business out there that's looking to

Peter Nicholson (15:42)
Mm-hmm.

Nirav Shah (15:54)
answer this question and really say for 100 % certainty, are we ready to upgrade or move to a new system or stay where we are? That takes some planning and it takes some time studies of what everybody is doing in the current system to quantify that. And I think the more you could quantify this, you get the answer quicker that what is the cost to really fully upgrade at the end of the day.

Peter Nicholson (16:16)
Yep.

Yep. I think it's just.

Emily Browning (16:17)
So I think.

think all of this boils down to do you have a business case? And that's really point number one. This request comes in, it might sound very legitimate, it might come from someone very important, but it's still on you, the person who has been tasked with this to assess, do we have a solid business case to do something? And everything that we've just said, think ultimately lends itself to that.

Peter Nicholson (16:40)
Yeah, I think those two points, they kind of merge when we are assessing our business. As you said, Nirav, you know, we need to assess our business that helps feed into the business case, putting it to, you know, senior management of why we're having to make one of these decisions. And when we think about that, we have to also look at the current system and say, you know, what's missing from the system or...

Is my current system fit for purpose? And if it isn't, why isn't it? What part of my system is missing? It might be your business has changed internally over the years, or it could be a market shift. It could be an external thing. It could be a new regulatory reason.

It could be a whole host of reasons, and that's going to feed into the business case. Of course, Emily, said earlier around Cloud ERP and from a cybersecurity strengthening point of view, it could be that, right? You know, this whole move from on-prem to the cloud, you're going to see more and more cases where on-prem now is such a cyber vulnerability that it's almost like...

Nirav Shah (17:30)
Mm-hmm.

Peter Nicholson (17:42)
the business case is done, right? We have to do this. Otherwise, we're going to be exposed and we're to have major risk from a cyber point of view.

And I didn't want to say it, but I will. It could also be that it's not a decision either we don't do anything, we migrate or we upgrade. It could be we need a satellite system, right? Nirav, you said it. You could find that you think your system isn't fit for purpose because actually you need an MES system, right? It's not a new ERP is not going to...

Nirav Shah (18:02)
Yeah.

Yeah.

Emily Browning (18:10)
Mm-hmm.

Peter Nicholson (18:13)
handle the things that an MES system is designed for. It could be you've branched out into e-commerce now and actually you need Shopify and a connector and your ELP is going to be fine. It's the core isn't it? I don't want to advocate for having lots of disparate systems but it's another thing that maybe you need to consider when you're looking at whether your current system is fit for purpose.

Nirav Shah (18:19)
Yeah. Yeah.

Yeah, I have a small example currently that we're going through. And we were talking to a prospect who's not our customer. They're coming off an old system called Passport, literally DOS based system. And it took an hour and half to run an open AP report. That was a pretty easily.

Peter Nicholson (18:55)
Mm-hmm.

Nirav Shah (18:56)
Identifiable scenario where, we need to get out of passport and now we need to get into a more modern system. That was a very easy sell. think the challenge there was to convince the owners. It was like a mom and pop business that, you know, the parents owned the business for like 50, 60 years. They were exiting. The new generation came in and basically said, Hey, mom and dad, this system's not going to work for us.

You know, we need to scale the business We need to go ahead and find better systems that we're going to be able to move the business forward that we could manage both hands on in the office and all you know outside the office that type of thing and then they're able to sell that and pitch that to their their parents ultimately and they moved on to a Modern system, but you know that happens a lot right? Where you have older founders for example that aren't particularly clean keen in in

moving even though there's a big wave internally that we need to move to a more modern software. So those are always challenges internally, but I've seen that in the past where when you have really old systems and the new generation comes in and the new generation is really, they're the more sophisticated buyers, they want technology, they want things fast, right? And those are ones that actually push for a migration to a

Emily Browning (20:11)
I would add in terms of assessing what's fit for purpose, and it doesn't necessarily mean is what you have right now fit for purpose, it could be is what you have now or is the upgrade of it fit for purpose. I think maybe something that perhaps the casual ERP is not necessarily aware of is that not all ERPs are made equal, they're made with different specialties and focuses, so that is something that I would definitely

definitely be considering if I was given this task, the type of business that we do, whether it's, you know, services, could be primarily financial, it could be discrete manufacturing, whatever, what is it that we're doing? And is my ERP the one that I have now or the upgrade of it? Is that made for my business? Or actually, is it a good ERP, but maybe it's a good ERP because it's great for field service.

but not necessarily rated so high for me in manufacturing. So that is definitely something I would be considering when it comes to upgrade or migrate. Is this ERP aimed at my industry?

Nirav Shah (21:16)
Yep. Absolutely. A lot of times, and we kind of mentioned earlier, what the initial business was when they implemented the ERP could be now very different when you're now discussing whether you stay on your current system or move to a different system is very, you know, you need to evaluate that. Like how much has the business changed now and does this ERP still meet our needs like it once did when you first implemented it? I think that's a great.

Peter Nicholson (21:43)
Yep. Yep. I think the cadence of people going through this whole project. So it's like on average, what eight to 10 years. That's probably a little bit longer than that. But I think it's when you're on something that old, it's easy to call it a legacy ERP, right? We're on this legacy ERP. And then you often hear like almost every single time someone calls, someone uses the word upgrade. Someone else says migrate.

They think they're talking about the same thing, but it's actually two different projects. So when we talk about, you know, is it actually an upgrade or is it a migration? What are the differences between them? Because we could say, you know, we spoke about this beforehand, Nav to business central, right? Is that.

actually an upgrade or is it a migration? Especially on an older nav 2009, know, Microsoft will tell you yes, there's an upgrade path. You just go through this. anyone who's actually seen the difference between nav 2009 and business central, it's a whole different framework underneath the cow framework, you know, of yesteryear. It's for me, it's a re implementation.

You could say the people on GP, same thing, GP to business central. Is that an upgrade? It's probably a big enough jump that it's just a, it's a, it was really a migration to a new product. Sage going to Sage 52 intact or something. Maybe that's more than upgrade. So, so what defines, are we actually just upgrading or are we migrating? And it could be migrating within the same, same company, right? It could be migrating from.

as I said, Nav to Business Central. So what in your eyes is an upgrade versus an actual migration?

Emily Browning (23:22)
Okay, so what defines whether it's an upgrade or whether it's a migration? On one hand, it's what the vendor calls it. They might call it an upgrade and I see my job as being the person to challenge that and make sure we understand the consequences. So it's a big upgrade, if you're on a very, very old ERP,

It could be that it's an entirely new system with a new name because they've had some big overhaul. Also in my experience, it could sound reasonable. You could be going from version nine to version 10, but version 10 actually was a full overhaul of the structure of the database and it's moved from one type and now it's in SQL. So part of that assessment from

as the person responsible in the business for this project would be what is that upgrade? They're calling it an upgrade but what does it actually entail? And you may need to dig a little bit into the technical as well. have definitely seen genuinely version 9 to version 10 is just a completely different product. Okay the front still looks the same but that's not really what the upgrade is. The upgrade is the back end and if that's completely different

it's close to a migration. So then if I'm being more subjective, I would say it comes down to how much money will it take and how much resource of mine will it take, how much effort, and if it's the same, if it's looking similar.

because that upgrade is so significant because we need a full round of testing everything because it's so different now, no matter what the vendor is calling it. The structure of the front end is now different, so all of our custom windows, we have to redo all of those. In my mind, I'm not calling it an upgrade, it's essentially a migration. And if that's the case,

then that's the point at which I can really start making the argument on, well, is what we have fit for purpose as we discussed in the last point and is there something better because it's going to be just as much effort to move to that something better. So why don't we do it? And I would also add into that, I don't like it when an ERP

kind of slaps the word cloud on the top of their old product with all of its problems. That's not good for me, so that's definitely something I would want to assess as well. I think now it's quite common for upgrades to be a full overhaul because now their new product is in the cloud. So have you innovated? Or did you just, you know, shovel the crap into cloud and now you want me to spend more money on subscriptions and everything?

for something that's still not very good. So those are all the things I would be considering on, you know, is it really an upgrade or actually is the upgrade so difficult? I'm going to look at migrating as well.

Peter Nicholson (26:04)
Mmm, you're off.

Nirav Shah (26:05)
Yeah, no, I think those are Emily you kind of said everything that I wanted to say but you know just just to put a few more examples in that Nowadays with vendors They're they're releasing two major upgrades a year right and if you're already on SAS You're already operating a SAAS and you're going from and you always have to be current some publishers require you to be current. You can't be too far

back in previous versions. So that to me is an upgrade. That you're just going to upgrade from, know, take Actomatica for example, 26R1, right, to 26R2. Maybe you may miss and skip 26R2, but you're going to do 27R1. Right, you can't go further past that. That's like, feel like that's an upgrade. Migration, however, it's like you're saying in my eyes that you're moving from Apple to a Samsung device.

You're really kind of ripping apart what you already have in place and redefining the wheel that's making you more efficient. That's like a migration. You're migrating to a solution that's better suited for you, that's fit for purpose. You're migrating to a third party solution and integrating that into your current ERP. I think that's kind of where I see the line between upgrade and migration.

If you don't have to change too much of your underlying setups and configuration, that's like kind of an upgrade. You're keeping things as they are, you're just getting some new relatively features. Versus a migration, you are changing the underlying configuration, some of the static data. You decided that hey, instead of you using direct UPS links or FedEx links for small parcel, you're going to start using a broker and you're going to go through something like an easy post or

Something else like that, right? Which is a pretty decent change. you know, and maybe your current ERP doesn't support that. Now you're looking at, let's look at a different ERP that supports us going through a broker, or you want to integrate to ShipStation. And, you know, your current ERP doesn't do it. So that's like a migration, I feel like, more than an upgrade. But you said it great, that sometimes these companies, these publishers will just slap cloud to their name, or

or cloud to the next version, but it's the same thing. You're not getting anything different. Maybe you don't have to change your data. Maybe you're not actually redefining your business processes. You're using the exact same thing, but now there's just a, you could access it through a browser instead of a VPN, right? Which to me, I don't think it fits into, maybe it's just a partial upgrade. Maybe that's a platform upgrade, right? More than a functional upgrade.

And maybe that's setting them up to do more application upgrades in the future. you know, it all depends on where the vendor is in the life cycle, in embracing cloud, not embracing cloud, right? You could kind of see some of the areas that they're investing in, like if they're putting in more dropshipping functionality, right? And that's part of your business that's important. Hey, I want to probably stay with this vendor.

Peter Nicholson (28:43)
Mm-hmm.

Nirav Shah (29:02)
and continue along the path that they're going in. Maybe they just got their solution on the cloud and now they're starting to roll out, drip out some better functionality in your specific industry. Fine, that makes sense. Continue to upgrade that path. Or that they just put themselves on the cloud now, they're hosted by AWS, but they're not doing anything with the product. Exactly same thing. And the same headaches and stuff like that you're getting. yeah, upgraded migration gets used interchangeably, but I do feel that there's some...

clear differences between both those.

Peter Nicholson (29:30)
I think final point that we got is going to be cost, right? I think it would be a mistake to compare the cost of an upgrade versus the cost of a new system, right?

which one will probably come out cheaper, but it's just simply for me, it's not the right comparison. It's too shortsighted It's when we talk about ERP, especially if it's an implementation, if you're coming off of something like QuickBooks, you won't be looking at the cost of just this project. You're thinking of the total cost of ownership, right? Over the lifespan of the piece of software, over the next five, six, seven years. I think that's where you find

the value of comparing like, okay, because you might legit be in a position where you can either way is a good way to go. It could be, well, we have an ability to go down the upgrade route and that's going to be fit for purpose and it's going to work for us. But we have an opportunity to migrate to something different. And I think when you look at the cost as total cost of ownership, you're going to get insights from that process. They'll help steer yourself towards one route.

or the other? What's your thoughts on when we're comparing costs of an upgrade versus migration?

Emily Browning (30:41)
I would add a counterpoint to what you've said. In my experience, if you've if you determine that your upgrade is essentially a migration, it's this huge step, this big sweeping change. You're still doing all the same work as a migration. Actually, I found the cost is quite comparable or it could end up actually being that it's cheaper to migrate if I find, you know, the right the right system for the right cost. So

I think this is something that can be surprising. There's maybe this assumption, we should upgrade, let's just stick what we've got, it'll be easier, it'll be cheaper. It might not be actually. And in my experience, the case more than once has been, no, actually it will be easier and cheaper to migrate because what we have is this clunky, know, specialized system that we'd be better off just leaving.

Nirav Shah (31:29)
Yeah, absolutely. think, you know, this post COVID era now, right? Everyone's, a lot of people are working remote. And like you mentioned, the clunkiness is, you know, going through VPNs. Sometimes VPNs drop, you know, you don't get good, you know, signal people, you know, you can't get good talent because you don't got the right system at the end of the day. So.

I think that's a strong factor is your resource pool as you're growing it, people want more modern systems. But the cost side of it, and from my perspective, when we're talking to customers, is there's a cost to upgrade, but how well prepared are you? That's the part you really can't put a cost on. That's an internal cost. And I feel like the more the customer's prepared,

Make a decision, upgrade or not upgrade. That should be pretty straightforward, if not easy. But then be prepared for it. Take time to properly identify your business process flows. Not just go to market, find the next solution, go to market or upgrade with the current vendor or find the next shiny thing out there. But really take a look at your business processes. Where can you remove the system? Take it out of place, take it out of play completely.

Just internally, where can you remove it? Redundancy in the process. Document that. Get that together. Understand where you're moving your resources, what they should be doing, where they add most value, right? What is that value at the end of the day? Now when you have that, you're gonna save a lot more money in the long run instead of you doing exactly what you're doing and putting that into a new system.

and trying to upgrade or migrate or move into a new software, right? Because it could pretend you could have the best software, but you're going to have some of the same problems. So you want to try to take all the knowledge and all the headaches and everything that you have from your current system, all your pain points, how to use your resources better, get the highest return dollar for dollar on your asset, right, which is your software here.

then go and try to make a determination. Yeah, software's gonna cost us $120,000, $150,000, but you know what? We know we're eliminating $300,000 worth of waste with the processes and how they've understood what their processes should be, and now they're gonna go and find the right software, which is gonna pay off a lot more in the long run than just thinking that you need to upgrade without doing that pre-work at that point.

Peter Nicholson (33:53)
Yeah. And the risk. It's not just going to be the $300,000 of savings from a more efficient way of working, but it's going to be the removal of the risk and the cost element of that risk as well. It's one of those questions that you can, as you said, take away from out of the platform, right? Because it could be that you find that

Nirav Shah (33:55)
Mm-hmm.

Peter Nicholson (34:17)
your system right now, going back to our earlier point, is fit for purpose, is fine. Actually, it's just badly implemented. And just going through implementing the same thing again, it's almost like a re-implementation, but it's not a migration or an upgrade. It's just, you know, let's fix it properly. Let's actually have this working for us and built around our processes. Could just have been a bad implementation.

Nirav Shah (34:33)
Right. Right.

Yeah, there is

a cost of transaction and you gotta look at the benefit, right? The benefit that you're getting out of that transaction has to outweigh the cost of the transaction. Because ERP systems, business management systems, at the end of the day, they are basically the brains of the business, right? It's holding data. the end of the how does the data get in there? How many steps does it take? How long it takes somebody?

How many times are they entering the same information in? You have to be able to measure it and come up with what that number is and see if you're actually going to save when you go to the new system, where you upgrade, you migrate, or what you're doing. Because as a business that's always looking to grow, numbers are important. Even when it comes to this, people look at software that way. And I hope people that are listening to this podcast could take a step back and say, hey, we have QuickBooks, and then we have

you know, a Google spreadsheet. And then we have, you know, another third party tool managing our shipping, right? Like how many extra times are you making that touch point and then thinking, wow, it's costing us $15 a transaction versus you moving into an ERP system, right? Or your ERP system so old that the time you wait, but it takes to process, it takes maybe a couple seconds or five minutes or so, right?

And then you gotta wait for an output and you take that output and have to do another task and you have to do it three, four different clicks. Now your cost of transaction for that one order could be up to $10 versus moving to a new system. Now your batch processing and it goes down to maybe 50 cents in order,

Emily Browning (36:14)
what do you do as the person in the business when the business comes to you and says, let's upgrade, let's migrate, whatever they're requesting of you, where do you start? First of all, you want to verify that business case. Is there a case to do it? What is the problem we are trying to solve?

what are the consequences of doing something or doing nothing? you've got your answer to that. Then is my current system or the upgrade of it, the piece of software that we are currently invested in? Is it aimed at my industry, my size of business?

the number of users we have, number of transactions we have, whatever it is, how does that piece of software rate for the business that you do? Then, is it really an upgrade or is it actually secretly a migration? Because it's such a big difference between the old version that you are on and the new version, or it might not even be that old, but the new version is cloud, so it's super different. You've got to do that.

verification for yourself because it may be called an upgrade but it isn't really, it's more than that. And finally when you have all of your answers to that and maybe legitimately you could upgrade or you could migrate then you assess the cost and that's both the money and the resource that you're going to invest but it's also the risk and the return on your investment, the benefit to your business.

And if you do all of those things, you're in a pretty solid position to make a recommendation of whether we should upgrade, migrate, or do nothing.

Peter Nicholson (37:40)
I hope that today's episode raised more questions than it answered. That is the purpose. I think it's good to get people talking and thinking about this in more detail than they might have struggled if you're finding yourself Googling and not really finding any information or concrete advice on how you tackle this particular subject.

Make sure you subscribe. We have an episode coming out every two weeks. We post it on all of the audio podcast channels, Apple Podcasts, Spotify, and every other one. And we also post it to YouTube as well. So you'll find us. Just search ABCs or ERP and beyond. And if you still don't find us, you bet we'll be slamming it all over the place on LinkedIn as well. So ⁓ with that, thank you. Thank you.

Nirav Shah (38:24)
Yes, yes, yes, yes.

Peter Nicholson (38:28)
to you both for kickstarting this one off. And let's see where this takes us. I'm gonna enjoy deep diving on some of this stuff because I think there is a gap on this particular subject out there. And it's nice to get away from some of the cherry picked vendor demos you see, where they're kind of showing, maybe showing us a CFO, a shiny new system and.

You're hearing them going, wow, we need this system. There's more to it than that. So it's going to be fun uncovering some of those and helping companies steer towards the right decision for them. That's it. Thank you both. And I will catch you on the next episode.

Emily Browning (39:04)
Great conversation. Thank you.

Nirav Shah (39:05)
Thank you.

Yeah.