Posted On: April 16, 2014
The ROI of Upgrading Your JD Edwards Software
Few would deny the need for organizations to use the latest ERP running on the latest platform, yet so many businesses are reluctant to upgrade their JD Edwards software until they’re practically left with no choice.
On the surface, this may seem surprising, as the business needs that drive organizations to an upgrade are significant:
1. Leverage New Technology
Old ERP releases often prohibit companies from leveraging new technologies that would allow them to stay ahead of the curve, like cloud computing, managed services, and big data. Additionally, new advantages brought on by mobile computing compatibility allow for greater reach, enabling users working outside the office to remain fully integrated. Without upgrades, many of these are simply inaccessible.
2. Deploy Enhancements
Oracle invests millions of dollars every year developing groundbreaking enhancements to JDE modules, constantly improving efficiency, productivity, and performance. A JD Edwards upgrade allows organizations to benefit from enhancements such as a modern user interface, One View Reporting, new administration utilities, and more. As an added benefit, these enhancements have been shown to improve employee retention, as it allows them to stay up-to-date with modern computing experiences.
3. Reduce Risks
In addition to the obvious improved protection from the latest security threats, ERP upgrades protect organizations from having their systems break down from incompatibility with newer, unsupported components or third-party applications. In extreme cases, this can even require a full ERP replacement, which is far more costly than an upgrade. Of course, present upgrades also have the added benefit of making future upgrades easier, protecting organizations from additional costs and complications down the road.
So with all these benefits, why are businesses reluctant to take the plunge?
What is the ROI?
The principle reason many organizations have delayed upgrading their ERP systems is the fact that decision makers in these organizations lack a clear financial justification for modernization.
In many cases, businesses struggle with understanding the ROI of upgrading their JD Edwards software because the value of upgrade benefits remain murky. The very nature of advanced versions of sophisticated ERP systems is such that the values of these benefits are going to come in the form of several small improvements that may seem insignificant on their own because they may only affect a few users at a time. Added together, however, the sum of each of these small improvements can have a transformative effect on a business’s bottom line.
In order to properly calculate the ROI of an ERP upgrade, it’s crucial to take the time to drill down into each of these small improvements, as this is the only way the benefits can be properly measured. Doing this requires one to consider each and every module of each and every component and compare the difference in time saved between the current version of the software and the upgraded one. While this may seem tedious, it really is the only way to clarify the finances and determine a true ROI for the potential upgrade.
As a simple example, let’s take a look at a manufacturing business running JDE EnterpriseOne version 8.0 on an IBM AIX production server that is over 5 years old, with minimal modifications having been made to the standard function. The company knows it wants to upgrade to version 9.1, but how can it determine the ROI such an upgrade would produce? As mentioned earlier, the only way to get the full financial picture is to consider each module of each component in use and then add them up to get the big picture.
For our example, let’s take a look at this organization’s use of EnterpriseOne’s Advanced Pricing module under the Order Management component. Let’s assume the module is being used by 3 employees who are being paid an average of $70K/year. Thanks to Oracle’s continued investment in improving the Advanced Pricing solution, it’s estimated these users can expect to save about 66 minutes per user per month when using the upgraded version of the module, resulting in a total monthly value of $120. In other words, by upgrading, this organization can reasonably expect to save $120 per month – for this module alone.
Should we do this exercise for each module of each component the organization uses, by the end we would have a clear financial picture of the ROI that this organization can expect from an upgrade. As is evident from our example, $120 saved per month is a drop in the bucket compared to the big picture, but when added to the time saved from upgrades done to each module over time, the total savings can be transformative.
In many cases – especially if an upgrade hasn’t been done in some time – it is not uncommon to see expected ROIs in the range of 400% to 700%. When adding numbers like these to the intangible benefits that drive businesses to upgrade their ERP, it becomes hard not to justify modernizing as quickly as possible.
Call Syntax today to find out more about how upgrading your JD Edwards software can benefit your ROI.
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