Since the 1990s, enterprise resource planning (ERP) systems have helped organizations integrate and manage business processes. As companies begin to implement digital transformation solutions, the CIO/CTO will need to examine the current ERP system. Many companies still use an outdated on-premise ERP system to manage HR, finance, and other crucial tasks.
Reasons to replace legacy ERP systems
Your ERP system is critical to your business. Your ERP system should be flexible, easy-to-use, and support innovation and future growth in today's economy.
You should consider replacing your ERP system with cloud solutions if your company faces any of these issues.
High operating expenses
Old ERP systems are not able to handle growing operations. They were not designed for agile business pivots. Your legacy ERP solutions for business need to be modernized if every new process requires tedious workarounds or manual intervention.
Modern businesses cannot succeed if legacy ERP systems are used.
Your company's productivity, day-to-day operations, and strategic planning will be affected by outdated software. While delays or a lack of automation can have obvious consequences, other issues will only be apparent when a serious problem occurs. These hidden problems include knowledge and skill gaps in maintaining legacy ERP systems.
Here are some other issues that can be caused by outdated ERP platforms.
Integration with other systems is limited.
Compliance, auditing, and regulatory challenges
Legacy ERP apps don't provide enough information about user activity or personal data. This includes who, when, and where they accessed it. A lack of detailed user activity logs can lead to hours of manual analysis, lengthy preparations for audit requests, as well as regulatory non-compliance risk.
Methods to overcome productivity loss
Workarounds are often used to replace your ERP software. Your staff wastes time by hoarding valuable information in separate spreadsheets and standalone apps. Then they continue to waste time copying it to your ERP system.
Target Canada, a major Canadian retailer, is the case. The company wanted to import data from its legacy ERP system to its new infrastructure. They decided that all data would have to be entered manually. The company's supply chain was ruined as 70% of the new data was corrupted.
Old ERP software does not give a complete view of your company's operations. This results in poor cross-team communication and collaboration. You also risk losing the opportunity to harness the power of new technologies such as AI and ML by sticking to an outdated tech stack.
Many enterprises only realize that they must replace their legacy ERP system when causing problems in their business and driving customers away. The company will spend twice as much if it has to continue developing its new ERP system and maintain its legacy system.
Legacy ERP vs. Modern ERP
Modern ERP systems refer to new ERP cloud systems. Modern ERP systems can be deployed in the cloud. Legacy ERPs could only be deployed on-premise.
Deployment: on-premise vs. cloud
Cloud-based solutions offer many benefits over traditional on-premise solutions. Cloud software is more affordable than on-premise solutions. You don't have to rent servers or computers in your office, nor do you need to hire an IT team to maintain them.
Without cloud software, data from the ERP system can only be accessed if the user is physically present at the business. In contrast, a cloud solution allows you to make any customizations or updates remotely. On-premise software requires a dedicated staff member to manage changes in your office.
ERP systems can store and manage large amounts of data. ERP systems are the central hub of all information, from customer relationship management information to financials and inventory, so the ERP system you choose must be well-equipped. Most legacy ERPs are not up to the task.
It could be due to a lack of outdated technology, an inability to connect with other systems, or a lack thereof. However, the fact remains that they are simply out of date. Many companies that have bought legacy ERPs are slowly eliminating them.
Advantages of replacing an outdated ERP system
Cloud-based ERP solutions are used by companies with legacy ERP systems to gain the agility and flexibility that Cloud ERP offers. Cloud ERP allows for central data storage, sharing data-processing tasks, and easy access via the internet to services and other resources.
Automation is great for productivity. Using a fully up-to-date system is also a big help. Older systems can be a problem, especially when you try to make them compatible with modern business solutions.
Modern ERP systems automate tedious tasks, so employees don't have to spend time doing them.
A centralized data source
This should be standard in all ERP systems. However, older ERP systems were not very good at integrating with other programs. Clients who use legacy ERPs complain about data silos and difficulty combining multiple data sources into one report.
Modern ERP systems can easily be integrated with other programs, software, and vendor networks. Instead of pulling two reports from different programs, your ERP system will pull all the data together, allowing you to do a thorough analysis.
The new ERP systems are full of automation and can be used by any business.
Automation can automate business functions such as sending invoices, automated billing, and inventory purchasing. Automation is a time-saver for employees. It also makes scaling easier.
Relying on legacy ERP systems can be like steering an old, leaky boat into open water. You never know if it will survive the worst storms. Modernizing legacy ERP systems is essential in today's digitalized business world. It will ensure that the company stays afloat and keeps a competitive edge.
It is possible to upgrade or completely replace your ERP system. This depends on how old and well it scales to your business needs. You will need to step outside your comfort zone to take advantage of these options. Modernization of business management tools can be smooth and stress-free if you have the right ERP implementation partner.
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Advaiya is a Microsoft Gold partner leveraging Microsoft Dynamics 365 Business Central to deliver tailored and comprehensive business management solutions like ERP, CRM, and other business capabilities. Our extensive business applications experience has equipped us to understand and effectively deploy Business Central, ensuring that you receive professional consulting and assessment with error-free ERP implementation and deployment.
You can get help understanding our processes and principles with our free prototyping. You will quickly enjoy the benefits of your postmodern ERP framework with our modular replacement approach and strict adherence to agile principles.