3 signs legacy ERP is holding your business hostage, and why it’s time to move on (to the cloud)
When was the last time you upgraded your ERP system? Not just a patch up or quick fix to work around the issues of your legacy system—but a substantive effort to establish the technology infrastructure that is capable of supporting real business innovation? A Forrester survey focused on ERP customers revealed that nearly half of the respondents were on ERP releases two versions behind the current release which had been released at least four years ago, if not more. Today’s businesses require an ERP that supports real transformation. While most business leaders do recognize that becoming “cloud first” is the no longer an option, but a mandate for digital transformation, many continue to choose the path of least resistance. The familiarity of using the same legacy systems they’ve had for the past 10 to 15 years, often tends to lull businesses into a sense of false security—one that can be the death knell for innovation and business agility.
Legacy ERPs and the cost of complacency
While cloud migration is an imperative, it doesn’t mean the path to the cloud is an easy one. The fear of internal resistance, the legwork required to get buy-in for the move to the cloud, the financial and manpower investments, and the fear of failure can often seem daunting to leaders. Truly deriving ROI from cloud investments means that the C-suite must re-visit multiple dimensions, from strategy, business processes and organizational design, to technology and skills development. It’s no wonder that businesses are trying to put off the inevitable. However, the fact remains that staying on an outdated legacy system costs your business more in the long run. So, what are the hidden costs and impacts of working with an ERP that is no longer serving your needs?
- Maintenance of legacy ERP drains tech budgets
Have you considered how much of your IT budget is spent on maintenance and how much of it goes towards true innovation? Deloitte reports that day-to-day technology maintenance spend can take up as much as 59% percent of a typical IT budget. With a bulk of the spend going towards recurring maintenance costs of maintaining an aging ERP, patches and fixes, only 15% of the budget is invested in business innovation initiatives. Simply switching up the equation to re-allocate IT budgets towards innovation rather maintenance is not easy, because legacy ERPs often need constant attention and resources to prevent a system failure.
- Inhibited agility and business growth
Has your business environment changed, while your ERP has stayed the same? In today’s globalized world, companies run operations in multiple locations and look to maximize efficiency with offshoring and remote workers. Legacy ERPs were never designed with today’s businesses in mind. Legacy ERPs often require businesses to deploy multiple systems in each market, which meant the business had to bear the cost of hiring tech talent and set up software and hardware in each of these locations. This type of centralized structure is not only expensive but also cripples growth. The businesses of today need to maintain visibility and control while decentralizing their structures.
Unlike on-premise ERPs, cloud solutions like Infor CloudSuite enable businesses to do just this. Moving to the cloud allows businesses with teams across multiple geographic locations to easily access the data and tools they need from anywhere, at any time, and using any device. This boost in accessibility and access to real-time information means that businesses can become more agile and adapt to market changes sooner, rather than later. It also spares businesses from having to worry about exorbitant capital expenditures related to tech infrastructure and resources.
- Legacy ERP is a drag on innovation and access to data
The divide between a legacy ERP and the actual business operating environment is often filled with loads of spreadsheets and headcount as businesses struggle to integrate legacy ERPs with their CRM and other existing systems. Businesses need to tap into diverse data sources, from marketing, finance and sales data to inventory, production and shipping data. All of this data needs to be accessible to the right people, at the right time so they can make smart decisions. Running on legacy ERPs means that key business users spend their time sifting through spreadsheets and manually compiling reports as they are unable to access the data that’s locked away in an outdated ERP and disconnected systems. This disconnect forces leaders to rely on out-of-date, incomplete and erroneous information when making strategic business decisions.
Cloud solutions offer extensive integration points which enable legacy data to flow freely between new cloud applications and your system-of record so there is no disconnect. With the cloud, leaders get real-time visibility into their business as all the data is updated in real-time on the cloud. By integrating a business intelligence (BI) solution, businesses can also establish a single source of truth and translate all these data points into meaningful insights through reports, charts and other visual aids.
3 signs you have outgrown your legacy ERP
It is clear that staying on an outdated ERP system may not just be slowing you down, but also might be holding you back. From the cost and resource drain that comes with maintaining a legacy ERP and the lack of integration with other systems, to the limited access to the data and the inability to collaborate with customers, suppliers and partners, the reasons to ditch your legacy ERP are many. While it may seem that your ERP has another couple of years of usage left, it’s important to understand what you’re missing out on as you weigh the options. But how do you know when it’s time to make the switch? Here are three signs that you’ve outgrown your current ERP system.
1.Your team is feeling the hit
92% of current ERP systems represent a bottleneck for CIOs, and require manual/programmatic intervention to enable data sharing, reports Accenture. As legacy ERPs fail to meet the needs of the business, internal teams often have to pick up the slack by sifting through spreadsheets and building manual, time-consuming workarounds to aggregate data for decision-making. While some businesses make do with old, incomplete data or rely on tech teams to generate reports manually, others may choose to simply abandon data-driven decision making as it becomes too tough or expensive to access the right data.
Internal tech teams also have to work around the clock to pick up the slack of outdated systems as legacy ERPs don’t tend to easily integrate with other business applications. For example, when the business wants a new feature, needs to create an integration, or even generate a simple report, the tech team has to step in to customize the outdated system. Over time, these customizations can turn older ERP systems into a one-of-a-kind puzzle that only those who’ve worked on it for years can manage. If these trained resources leave the company or if the system breaks down, the business would have to scramble to fix these issues, resulting in downtimes and mounting expenses.
2. You are struggling to comply with regulations and ward off security threats
Legacy ERP systems are often incompatible with the newer security features that protect system access, such as multi-factor authentication (MFA) and single sign-on (SSO). These outdated systems may also lack sufficient audit trails or encryption methods which make it tough to identify a breach when one occurs. As cybersecurity threats are constantly evolving, legacy systems built for the security threats of yesterday mean that they are vulnerable, especially when they are not regularly updated. As traditional on-premise ERPs reach the end of its lifecycle, vendors may also stop creating updates and pare back their support. This lack of timely updates can leave your data, workflows and operational assets at risk.
Another challenge that legacy ERP systems pose is its inability to complying with recent privacy regulations, such as the EU’s General Data Protection Regulation (GDPR) or the various updates to international regulations such as the California Privacy Rights Act (CPRA) or Canada’s Consumer Privacy Protection Act (CPPA). Legacy systems’ reporting and auditing capabilities necessary for compliance are simply not suited for today’s regulatory environment. Older ERP systems often come with restrictions which means that during audits your team is scrambling to access data for reporting purposes. While patches and add-ons may work as a temporary fix to facilitate audits, they can only take you so far and will soon create a drain on your resources.
3. You are unable to leverage new technologies
Think of all the new technologies that leading global businesses have adopted in the past decade. From data analytics, industrial internet of things (IIoT) and manufacturing execution systems (MES), to artificial intelligence (AI) and robotic process automation (RPA), leaders are leveraging innovative new tech to drive business growth. But businesses cannot simply put “new” technology on top of an outdated core. Whether you are looking to harness intelligent automation to automate tasks or leverage Big Data to better serve your customers, the health of your core ERP matters. While a legacy system doesn’t prevent you from adopting these new technologies, it can severely limit how you integrate these solutions with your core ERP and will be more difficult and expensive.
On the other hand, a cloud solution like Infor CloudSuite enables pain-free adoption of new capabilities and technologies. Take the case of a leading Australian frozen food manufacturer which replaced its legacy ERP system with the integrated Infor CloudSuite Food and Beverage solution – the move to the cloud enabled the manufacturer to leverage standardized integrations such as an EDI system, Third-party logistics (3PL) system, financial reporting solution and a Business intelligence application to improve its speed and accuracy of data exchange and reporting.
The cloud advantage
Migrating from a legacy ERP to the cloud is a path that more and more organizations are choosing today. Switching to a “version-less” cloud ERP means that your technology infrastructure is always aligned to the changing business operating environment. Business leaders do not have to worry about about playing catch up with patch fixes and customizations to conduct basic operations. Leaders can also ditch worries around high maintenance costs, lack of support, data inconsistencies and duplication, and performance issues related to outdated technology, and instead focus on innovation. From better mobility and scalability to access to real-time insights and better security and regulatory compliance, the benefits of the cloud are numerous. While the move to the cloud may appear daunting, working with an experienced, Infor certified implementation partner like Fortude can help your business get the most out of your cloud investment.