8 tips for a successful ERP upgrade project

When to upgrade an ERP system

Companies often upgrade when their ERP systems are five to 10 years old or more and have begun to have performance and reliability issues, perhaps because the business has grown beyond the system's capacity. ERP upgrades can also be timed to coincide with the start of a digital transformation, perhaps because the new features are an essential part of meeting business goals. Or the vendor might have set a deadline for customers to upgrade from older versions.

ERP consultants said there are a number of other reasons for upgrading to the latest release of your ERP system, including the following:

• Access to a more modern ERP system. Technology is outdated soon after it is released. If your organization is running on legacy technology, you're probably missing out on data insights and becoming more vulnerable to security threats. "Modern systems are more secure, offer greater flexibility through the cloud and are highly configurable," said Kirk Teal, a partner at Information Services Group (ISG).
• Improved software efficiency. ERP upgrades increase efficiency and can boost employee adoption rates, both of which can unlock more benefits for the company. "Improved software efficiency, better user experience and enhanced user reporting tools" are excellent reasons to upgrade, Teal said.
• Vendor support. You don't want to get too far behind on upgrades because, at some point, the software vendor stops supporting older releases. Internal support also fades away over time. "System support personnel for older systems are retiring," Teal said. Soon, there might be no one left on the payroll who knows how to fix whatever goes wrong in the old system.
• More cost savings. Improved workflow and AI tools can save money, according to Teal. The savings can then be optimized, which can lead to a quicker ROI.

Upgrade vs. replace

If you're not satisfied with the ROI the current ERP system is delivering or its cost of ownership, you might want to consider starting over from scratch. It's important to weigh all the factors carefully before deciding which path to take.

On paper, upgrading appears less disruptive and expensive. In practice, that assumption often collapses once companies begin untangling years of customizations, integrations, technical debt and process workarounds layered onto legacy systems.

But replacing an ERP system also has drawbacks, such as high implementation costs, prolonged business disruption, extensive retraining requirements, data migration risks and the potential loss of institutional knowledge embedded in long-standing workflows and customizations.

Despite the challenges, it is crucial to have a modern ERP system in place. It's a fact that many organizations have already embraced. According to a Deloitte post, industry data shows that cloud ERP implementation and system migration efforts are on the rise across a spectrum of industries. "Even private equity, once known for avoiding ERP finance transformation, is jumping on board, Deloitte analysts wrote.

8 tips for ERP upgrade success

Regardless of the reasons, upgrading a mission-critical system like ERP is a major undertaking that requires significant preparation and know-how. The experts offered the following eight tips for meeting your goals.

1. Get executive buy-in

Executives, such as the CEO or CFO, need to understand and champion the value message of an ERP upgrade. They're also the ones who need convincing because they usually have the last word in signing contracts.

2. Identify the pain points and establish benchmarks

Before deciding to upgrade, companies should determine if there are bottlenecks or other trouble spots directly related to the ERP software. It could be in the financial close, poor data integration or low user adoption, to name three examples. The process usually requires collecting benchmark data to quantify the problems. It's also imperative to fully understand the business requirements. "This helps control scope and identify the optimal software product," Teal said.

3. Involve frontline users

Seek participation from frontline workers and other business staff from the outset. "ERP is a business transformation, not only an IT upgrade," Teal said.

Often, organizations present a new system to employees and expect long-held business processes and practices to automatically adapt to the new system, but that's unrealistic. Business users are required to adapt to the new technology and learn new processes at the same time. This dual disruption can lead to discouragement and resistance among users, as well as higher risks with lower returns for the business, according to Teal.

Identifying, understanding and documenting the processes that will be affected by the ERP upgrade in advance is crucial. For example, if employees are accustomed to pulling a specific report each day, will they still be able to? If not, show them what process or document will be used instead. By demonstrating an understanding of the work they do and directly tying the benefits of the ERP upgrade to their specific work, you can alleviate much adoption friction.

But don't stop there. Communicate and plan for transition support from day one of the project, Teal advised.

4. Identify gaps

It is also essential to identify the gaps, which is to say any misalignments between your needs and what the software can do. Every system has imperfections, and it's wise to know what they are ahead of time so you can make a plan to deal with them.

Several options are available: a third-party resolution, internal software customizations, and process changes or workarounds to fit the system.

"Budget for an independent verification and validation (IV&V) firm [an ERP- experienced advocate] to confirm the project deliverables are acceptable and the best practices are being followed to manage the project," Teal said.

Whatever the resolution, you want to identify gaps upfront so you can plan accordingly and have a realistic view of how long the ERP upgrade will take, how much it will cost and how the system will look when you get to the other side.

5. Develop a realistic implementation plan

Go into the project with a thorough understanding of the true nature of the ERP upgrade project and the complexities involved. Obstacles are less likely to be technology issues. Rather, stumbling blocks will typically involve a material change to your core business operations and people -- the two things that will take the most time and money.

Having a realistic implementation plan first requires a full understanding of what the software vendor is offering. Apply a critical eye to the product demo, which often assumes the product operates in a perfect world rather than the one your organization exists and competes in. One of the best ways to fully grasp the system's capabilities is to commit to implementation without modification and to use the software as delivered and configured, according to Teal. It's often easier to see where customization is needed once you can clearly see what works well and what doesn't.

6. Expect to handle data mapping

Data mapping varies from vendor to vendor, but typically the work falls more on the implementing company than the vendor or systems integrator.

"Before the upgrade, I check for vulnerabilities and make sure all relevant data is cleaned up, and it just gets moved through the new system much more efficiently after that," said Rafay Baloch, CEO and founder of RedSecLabs, a provider of security consulting and training services.

During the implementation, Baloch said he tries to control access to the new systems as much as possible and be methodical in how he tests and configures them to prevent any hidden gaps.

"After go-live, I am always on the lookout for areas where the new system may be behaving in a way that was not anticipated," he said.

7. Manage scope creep

Research from Panorama Consulting Group repeatedly identifies scope expansion and weak governance as leading contributors to ERP delays, budget overruns and failed implementations. The firm's ERP research also notes that organizations frequently underestimate the operational complexity that arises when business stakeholders begin requesting changes mid-project.

Without disciplined governance, ERP implementations can remain stuck in a near-permanent deployment cycle where new requirements continuously outpace completion efforts. In some cases, projects intended to take months extend into multi-year modernization efforts that consume far more capital and organizational attention than originally anticipated.

From the outset, make sure the original requirements agreement is rock solid, and have a change management plan to handle change requests, such as how many are allowed, who can make them, and how they affect the implementation costs and delivery date of the project.

8. Educate and train users

You have to educate users, which is different from training them, said Lisa Anderson, president of LMA Consulting Group.

You still want to train people on how to use certain functions, but, more importantly, you want to educate them about why they would be interested in taking advantage of the new ERP features, she said.

It's more about helping people understand the concepts behind and reasons for the ERP upgrade and "how that fits together with the business objectives of their performance or their ability to succeed," Anderson said.

Editor's note: This 2021 article was updated in February 2024 and again in July 2026.

Pam Baker is the author of eight books and hundreds of technology articles published in leading online and print publications. She is also a speaker and industry analyst and a member of the National Press Club, the Society of Professional Journalists, Women’s Media Group, and the Internet Press Guild.