10 signs and reasons your company should consider a new ERP system

Like many other programs or IT systems, an ERP system also has its own lifecycle – understanding it is crucial to recognizing three important aspects: early warning signs, key reasons and the best time to change an ERP system.

The lifecycle of an ERP system can be analyzed on two different levels: pre-implementation, leading to the application of a new solution, and post-implementation, the so-called operational lifecycle. In this article, we will be focusing on the latter, as it is slightly more complex, more important from the point of view of daily operations, and unfortunately often overlooked.

ERP System – Operational Lifecycle

Once an ERP system has been implemented and stabilized, it enters post-implementation or its operational lifecycle:

🌔︎ Stabilization & Support – first step after go-live, focused on performing further configurations, detecting issues or bugs, and monitoring data accuracy and performance. The main goal at this stage is for the ERP system to run smoothly, in real environment and operations.

🌓︎ Adoption & Optimization – once stabilized, the focus shifts to ensuring users are fully trained and confident, streamlining workflows that were adapted during implementation, replacing manual workarounds and expanding system usage. The idea is to increase productivity and process efficiency using the ERP’s full potential.

🌑︎ Performance Management & Continuous Improvement – with ERP as a critical system, continuous monitoring is essential both to maintain system reliability, security, and value over time, as well as evolve the ERP alongside business needs and tech trends. It is therefore necessary to control system uptime and speed, keep audit logs and compliance reports, and measure ROI against key business KPIs. System updates or feature releases are equally important.

It might seem that this is where the ERP system lifecycle ends, and that the last phase can go on indefinitely – the system reached operational maturity, the business runs smoothly and it became the digital backbone of operations. Of course, this ideal scenario is possible, but it is worth paying attention to what can happen when challenges arise.

Why you should consider a new ERP system

You should be aware that the lifecycle of an ERP system may one day come to an end –so let’s take a look at 10 common signs and reasons a manufacturing company should consider a new ERP system. And if any of this seems familiar to you, we will then go over 5 of the best times the change an ERP system.

What are the first signs that a company needs a new ERP system?

There are at least five typical and pretty common early indicators that an ERP system may no longer be a good fit for your business. These affect many manufacturing companies and do not need to occur together or all at once to be crucial for taking timely countermeasures:

1. Increasing Manual Workarounds – when teams are relying on spreadsheets or offline tools to perform tasks that should be managed in the ERP system, it is a clear sign that the system is insufficient or too rigid. Production planning that is done in spreadsheets or requires constant coordination between sales, purchasing and manufacturing departments is highly prone to errors and reveals that an ERP lacks proper manufacturing support.

2. Lack of Real-Time Data and Reporting – when users can’t access up-to-date information or have to wait for reports to be manually compiled, it highlights the systems lack of modern analytics capabilities. Frequent stock discrepancies, overstocking or stockouts may suggest that an ERP system can’t maintain real-time visibility of raw materials, WIP, or finished goods.

3. Integration Issues – if an ERP can’t easily connect with modern software (e.g., CRM, BI tools, e-commerce) or does not have those tools built-in, workflows become fragmented and inefficient. It can become difficult to meet customer delivery expectations due to poor production planning or lack of machine/resource coordination, leading to long lead times and manufacturing delays, as the ERP system itself is a bottleneck.

4. User Frustration or Low Adoption – if employees avoid using the system, start complaining about its usability or only use it partially because it's outdated, slow, or too complex, it may be putting your business at risk. No support for traceability or serial number tracking, disturbing monitoring for warranty, compliance, or quality purposes, generate general frustration.

5. Sluggish Performance or System Instability – frequent downtimes, slow response times, or errors point to aging infrastructure or unsupported software. If your team needs to manually update bill of material (BOM) and routing or supplier data outside of the system because of distributions, your ERP is likely too rigid or outdated.

What are the main reasons for changing the ERP system?

The above-mentioned signs are usually accompanied by five reasons to change an ERP system. They are often even more pronounced than the initial, subtle signs and are a clear call for action:

6. Business Outgrowth – businesses grow over time. Manufacturing companies gain new locations, products, services, or international operations. They also expand into new product lines, customer segments, or international markets. If an ERP system wasn’t built for scaling manufacturing operations, it simply can’t scale or adapt accordingly.

7. Obsolete Technology – many legacy ERP systems are slow, non-intuitive, and difficult to upgrade, resulting in poor adoption, error-prone processes and mounting IT costs. An ERP system that is built on outdated architecture, lacks mobile or cloud options and is no longer updated or supported by the provider, affects overall user experience and hinders work.

8. High Total Cost of Ownership – some of the systems often require expensive customizations, external consultants or separate add-ons, driving up long-term costs. Other ERP systems often fail to support industry-specific capabilities and needs, like shop floor control, machine integration, manufacturing waste reporting or subcontracting workflows, leading to endless, costly and time-consuming adjustments. This results in very low profitability.

9. Compliance and Reporting Challenges – if an ERP system can’t handle new regulatory requirements (e.g., sustainability, digital tax laws, traceability), it leads to legal or reputational risks. Whether it's about ISO certifications, any kind of reporting or export controls, an outdated ERP system can’t keep up with modern compliance demands, disrupting the company's operations.

10. Inefficient Operations – slow processes, duplicated data, and system limitations impact both manufacturing, procurement, logistics, and customer service. Manufacturers rely also on real-time dashboards for production efficiency, material usage, lead time analysis, and cost tracking. If an ERP can’t provide this and is not able to structure and optimize processes, decision-making suffers and the company becomes less competitive.

When is the best time to change the ERP system?

If you notice any of the signs and are aware of the main reasons to change an ERP system, this should lead to choosing the right moment to change ERP system. This can significantly reduce disruption and increase project success. Choosing the right time for such an undertaking may depend on several factors:

• Major Business Expansion – a new ERP should be in place before launching new products, entering new markets or acquiring other companies to ensure scalability. Implementing a new ERP system before expanding to new plants or product types also has a beneficial effect on processes standardization, planning, reporting and overall optimization.
• End of a Fiscal Year or Quarter – such a period allows for a successful financial cutover, easier reconciliation, and alignment with accounting cycles. This minimizes disruption and simplifies the transition, especially for accounting, inventory valuation, and MRP alignment.
• Current ERP System Support End – if your provider announces the end of support or critical updates, it’s a good time to change before the system becomes a liability. This is a strong signal to act before you risk data loss, downtime or compliance failure due to an unsupported system.
• Organizational Change – mergers, digital transformation initiatives or management shifts are often paired with modernizing core systems. If you're shifting to just-in-time (JIT), lean production, or circular models, your ERP must support these methodologies natively. Also, if you're investing in machine integration (MI), robotics, or IoT, your new ERP must support real-time data exchange and machine monitoring.
• Regulatory Shifts – upcoming laws or reporting requirements (e.g., sustainability reporting, tax regulations) may also require ERP functionality your current system can’t provide. This should be a clear signal to explore the market for a new solution that will meet all upcoming changes and requirements.

What to keep in mind?

In summary, changing an ERP system is a major decision – especially in manufacturing, where operational efficiency, traceability and planning precision are critical. Knowing that each ERP system has a shorter or longer lifecycle and is more or less exposed to market, regulatory or adaptation conditions, each manufacturing company should also be aware of most common early signals, main reasons for switching and the best time to replace their ERP system. This will enable you to make the right decision at the right time and avoid unnecessary downtime, loss of competitiveness, profitability or excessive expenses.