The hidden costs of upgrades

‘Mission critical’ is something of a buzzword, but if ever it could be applied to a business application it would be to ERP. A flaky ERP system is the corporate equivalent of a bad heart. Operational efficiency, workforce productivity...

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‘Mission critical’ is something of a buzzword, but if ever it could be applied to a business application it would be to ERP. A flaky ERP system is the corporate equivalent of a bad heart. Operational efficiency, workforce productivity - all these elements hinge on ERP. So it’s no wonder that IT professionals and business owners recoil with horror at the thought of an upgrade. Projects typically cost many millions and are very risky and disruptive to undertake.

This is a hot issue at the moment for organizations looking down the barrel of an Oracle E-Business Suite upgrade. The life-support plug will soon be pulled on EBS 11i and corporations are weighing up the cost of upgrade against the risk of sticking with their current version. It is no wonder businesses are reticent. To start with, the EBS upgrade involves a new set of core financial modules, meaning significant disruption for finance and accountancy departments.

But whether it’s an Oracle EBS upgrade, an SAP upgrade, or any other application upgrade, there are hidden costs that organizations face. And quality assurance is at the heart of it.

The first is the cost to the business. ERP upgrades were once the domain of the IT department - not any more. The business has a massive contribution in terms of verifying and testing all of the changes that are made on their business processes. What this means is that business users can spend an unbelievable number of man days testing to ensure the system is fit for purpose and learning the new ropes. Look at this for a statistic - for every 100 members of staff involved in validating a system, a business can expect to spend 5,000 man-days on testing alone. The time-drag on the business - and the productivity of the department that’s involved in the upgrade - is huge.

The second cost relates to human capital. This validation testing work is laborious, with business users having to repeat these tests time and time again. Boring, right? It’s no wonder that upgrades have been shown to have a negative impact on employee satisfaction and can increase churn rates.

The third cost relates to the margin of error and the risk of defects going live when manual testing could let them slip through the net. Defects can cause all types of problems, for example, causing serious issues for the finance department, where invoices don’t get logged and gremlins affect the P&L. For the sales department, data may get corrupted or sales records disappear.

The hidden costs of upgrades can never be completely eradicated, but there are strategies organizations can deploy. Providing application users with simple technology to streamline testing should be part of that strategy, as it will reduce the time demand on the business. It can also improve defect detection, meaning the organization can go live with confidence.

Upgrades aren’t going away. If anything, they’re getting more prolific. On the bright side, organizations will become much better at dealing with them. So having the right procedures in place, the right tools and the right attitude should help corporates stay ahead in the upgrade and patch lifecycle.

Colin Armitage is CEO of Original Software

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