David Bush over at the E-Sourcing Forum turned me on to the article Does Your ERP System Need a Service? by Sam Graham. Most of his points were fine, if general, but he also claimed that “Most ERP systems are updated at least yearly.”
That’s definitely not what I have seen. When I was at PeopleSoft managing the eProcurement module, I actually researched how long companies generally spend on each version of PeopleSoft Financials before upgrading. Instead of upgrading every year, customers typically upgraded every three to four years.
The question we were trying to answer is whether or not we should offer integration to older versions of Financials. You see, PeopleSoft ERP applications are housed in one of several “databases,” including:
• HCM (Human Capital Management – the cool way of saying HRMS)
• CRM (Customer Relationship Management)
• FSCM (Financials and Supply Chain Management)
Each database could have its own release schedule, which is why sometimes you saw the same release of different PeopleSoft applications occur at different times. Or you have an application suite that has its own unique version number (like HCM 8.3)
SRM applications, which include eProcurement and the Financials suite, both reside in the FSCM database. The problem we had in the SRM group was that our applications were evolving much faster than mature Financials applications like AP and GL. We were seeing that customers were holding off buying or deploying SRM applications until they upgraded their ERP to the current version. Or they would have to implement older, less capable versions of the SRM applications, because applications in the same database had to be the same version (with some exceptions).
We would have liked to have a separate database just for Supply Chain (SRM rolled under Supply Chain at PeopleSoft), but that wasn’t feasible, so the other option was to have what we called “version independence.” As part of my analysis, I determined the time a typical customer stayed on a version of Financials before upgrading.
What I saw wasn’t an annual upgrade parade. It was more like a transition every three to four years, which, interestingly enough, coincided closely with how long PeopleSoft would support that version. If I remember correctly, PeopleSoft supported each version up to five years from the General Availability (GA) date at that time. Since companies rarely go live on GA releases of ERP systems—they usually wait for at least the first major set of bug fixes—the timing made sense.
Fast forward to today. I imagine that we will see the cycles between upgrades grow even longer with Oracle’s Lifetime Support Policy and the emergence of third-party support companies.
The bottom line is that upgrading an ERP system, especially the modules managing the underlying financials of your company, is not a trivial task. It’s not an investment that companies are going to be making annually.
-Henry Hwong
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