5 Signs you Should Replace your Legacy ERP System
January 10, 2023
If your ERP vendor has designed their software properly, and you’ve been able to take advantage of new features as your business has evolved, congratulations. You’re one of the lucky ones. Most companies with an aging ERP, however, begin experiencing problems and find themselves relying more and more on workarounds, spreadsheets and third-party apps.
At the same time, the vendor’s support staff becomes slower to respond to support tickets and increasingly apologetic as your business is hampered by what has now become obsolete software.
Last year, research firm Gartner predicted an increase in ERP investments as more manufacturers push to renovate and replace legacy ERP systems. One of the top initiatives is modernizing ERP systems to bolster critical business capabilities and accelerate business execution. This includes more robust systems and data integrations across platforms1.
Switching to a new ERP is no trivial matter and can be a costly proposition. The adage “if it isn’t broke don’t fix it” certainly holds true for many otherwise forward-thinking companies. These businesses continue to put up with outdated software and poor service in the face of a staff that’s grown accustomed to the software’s little quirks and who are resistant to change2.
If you’re spending more and more time trying to make your legacy software do what it’s not designed to do, or if you constantly resort to a workaround, it may be time to consider replacing your ERP. By using an outdated system, you risk business productivity, IT security, and overall customer satisfaction.
So, when is it time to seriously consider a new ERP?
Here are five signs that the time has come:
1. Your vendor no longer supports your ERP software
Software vendors are under intense pressure to keep their applications competitive. Often, this means wholesale transitions to a new underlying platform or a complete end-of-life (EOL) of your version of their software. As a result, they set a date after which they will no longer offer support, updates and patches on the legacy software that allow it to run its best and respond to evolving security threats. While the product may still work for you on a day-to-day basis, the lack of incremental improvements will eventually cause problems. For example, if you just bought new hardware, like a laptop, and cannot load the ERP, that’s a sure sign you may need to make a change.3
2. Your ERP software doesn’t offer real-time visibility into your sales, manufacturing processes and supply chain
If your current ERP lacks real-time visibility into your inventory or manufacturing processes or if you can’t view data at every stage in your supply chain in real time, it’s time to upgrade or replace your ERP. The best software lets you easily access this critical information to make informed decisions.
Contemporary ERP is delivered as software-as-a-service (SaaS) and is cloud-based software, providing complete business visibility and a seamless transition experience from the office, home, and on your mobile devices. Cloud-based ERP systems are accessed via the internet, allowing your staff to 24/7 access on any mobile device.
Your ERP should also integrate well with third-party systems, such as CRM or accounting. You don’t want your staff trying to manage multiple systems and re-entering the same data multiple times. This can lead to errors and lots of time wasted. Look for ERP software with a flexible Application Programming Interface (API) that lets your team tap into third-party tools to work more efficiently and provide better customer service.
From a compliance perspective and depending on your industry, outdated ERP can put sensitive customer or business data at risk. Look for ERP solutions with built-in information security standards and functionality to meet your industry’s specific regulatory compliance requirements.
3. It’s becoming increasingly difficult to find qualified business systems and technical talent to support your legacy solutions
The inability to find and attract the right kind of talent to support your legacy solution is another key indicator that it may be time for a change. With technology evolving at an unprecedented pace, it can be challenging for your team to keep up with these changes and maintain the professional certifications they need to properly support these systems. Keep in mind that as you struggle to keep your old ERP running, your competition may have already invested and deployed software that doesn’t require this extra effort, giving them a competitive edge.
4. Dated user interfaces and user experiences create employee recruitment, onboarding, and retention challenges
The team you have using and maintaining your current ERP will not be around forever. If they retire or leave the company, you can spend a long time picking up the pieces and dealing with the fallout. New software provides greater access to more people, helping you weather workforce changes with greater ease.
Technology is supposed to make life easier. When it stops achieving that goal, it’s time to make a switch. If you’re fortunate enough to attract new employees, it’s likely that they’ll become frustrated with the software. This can lead to higher staff turnover and difficulty in attracting the next generation of savvy workers who expect newer, user-friendly applications. The best ERP solutions meet these needs.
5. Your ERP system runs on your on-premises server, requiring internal IT resources and risking catastrophic data loss
If your legacy ERP is running on a server in your on-premises computer room and the server malfunctions, you risk catastrophic data loss. On-prem computing also requires internal IT resources to secure, manage and maintain the hardware.
Cloud-based software is faster to implement and doesn’t require in-house IT resources. These systems enhance data security and disaster recovery and provide for rapid updates and upgrades to keep the ERP software up to date. In 2022 and 2023, Gartner estimates that half or more of manufacturers will have ERP remotely deployed, that ERP will be cloud based, and “ERP mega vendor” customers will look at adding to or replacing those monolithic ERP implementations.
Beyond 24/7 availability, the potential benefits of the cloud-based ERP software are enormous. If your current network is self-contained in an on-premises computer room, you’re running the equivalent of your own generator. And with that comes a load of responsibility. Generators malfunction, require fuel, servicing, and possibly additional purchase/installation if demand rises.
Cloud-based ERP eliminates all these responsibilities because cloud providers are responsible for maintenance, infrastructure, and repair, and for meeting surges in demand to ensure service is reliable. That means no more worrying about power outages, hardware failures, offsite backup, and warranty maintenance fees.
Additionally, you eliminate the fees associated with operating system licensing. Cloud-based solutions reduce capital expenses and deployment fees, replacing them with a predictable, budgeted operational expense. Hardware, power, and software costs, along with setup, support, maintenance, and downtime, are cut. Location flexibility and business continuity are also gained, leading to overall savings. As more services are moved to the cloud, more savings are realized through reduced on-premises hardware management.
The decision to move to a new ERP solution is never an easy one. However, if you listen to the issues raised by staff that interact regularly with the legacy software, and you consider your current software based on the change indicators we’ve outlined, the decision becomes a bit easier.
You should begin the ERP evaluation process by identifying your business priorities. Carefully assessing both your company priorities and how well the available ERP solutions can support them both now and over the long term will help you make the right decision about upgrading your ERP software.
ERP software should help your business run efficiently, maximize the service level you provide your customers and drive bottom line profitability. The real costs of continuing to just ‘make do’ with your outdated legacy ERP software can have a real negative impact. Don’t wait too long to make this critical decision.