Your Legacy ERP Software is Damaging Your Business: Ditch It And Grow Now
There simply no denying it; enterprise software is expensive. It also has a nasty habit of losing its utility over time, especially in the fast paced, ever-modernizing industry of technology. Investing in the latest and greatest ERP software update or platform can become a vicious cycle that you throw too much of your valuable investment into, but businesses that rely on truly outdated legacy ERP software systems that they can ‘get by’ on often risk losing more than just their money. In general terms, legacy software is a system that a vendor is no longer updating or maintaining, usually in favor of more modern or new offerings. This means that as the software degrades over time, it cannot be helped; slowing down every single one of your business processes and potentially causing disastrous errors in your data entry or manufacturing processes. Is that really worth the risk?
As fierce proponent of the benefits of modern enterprise software, we know that when implemented smartly and utilized properly, ERP systems have the power to generate a generous ROI for businesses with a clear plan and proper execution. Over the past 18 years we’ve seen hundreds of businesses go from outdated legacy ERP software to new systems that support and drive dynamic process changes, revitalizing their operations. Some companies still running aging systems don’t even know how damaging legacy ERP software can be for their processes until they have done some serious harm, or have emerged successful on the other side of a system upgrade, amazed at what they have been missing all along. So, how do you know it’s time to ditch that old piece of legacy ERP?
The Common Tipping Point
There is a common tipping point for all of the businesses running legacy ERP. This is usually the stage at which a business reaches a critical level of handcuffing and roadblocks that prevent the company from effectively growing, generating new sales, filling orders, etc. They find that they are spending more money patching up the software and putting out fires—when ERP is supposed to save them money. Because the ERP systems of years past were traditionally structured through heavy customizations for each business, the large number of customizations begin to become burdens on your IT team, and they simply cannot keep up with the rapidly evolving needs of your modern enterprise. These problems usually lead to serious executive discussion around what new capabilities are needed for the business to restart growth. The most common answer is, unsurprisingly, a new software system.
Unfortunately, this often-repeated tale is a lot like going to the doctor long after an illness has already caused pretty significant damage to the body. Imagine you have a pain in your foot that spreads to your knee. You can still limp along, so you choose to ignore it in favor of saving on medical bills. After several years that pain spreads to your whole leg, and walking becomes even more difficult. Finally, the illness prevents you from walking all together, so you make a doctors appointment to fix the problem. Now your medical bills have far outstripped what it would’ve cost you to just go for an initial checkup—and your life has been severely hampered by immobility in the run-up to the appointment. It’s obvious that the best time to investigate the issue was in the beginning when the problem was just beginning. You can see where we are going with this parable—now imagine that the illness is your aging ERP software. Too many businesses wait until their outdated legacy ERP software systems have already crippled their operations until they seek help. They find that not only are they paying upgrade and implementation fees for the new system, they are also burdening the costs of broken processes, lost customers and inefficient operations left over from the old ways.
Legacy software is a common growth barricade for many businesses, yet it’s typically only operations-killing endeavors that cause businesses to evaluate changes to such an integral and involved system. What almost all businesses find when they carefully plan and implement a new system is that there are a lot of inefficiencies and processes that had been costing them hundreds of thousands of dollars each year. These are typically small costs, but add up extremely quickly. By treating the symptoms before they develop into a full-blown sickness, you are saving you (and your business) a whole lot of pain down the road. In short; the best time to ditch that legacy ERP software is now.
The costs vs. the ROI
Where do these hidden costs of legacy software really come from? Legacy ERP software supports outdated processes that were conceived whenever that software was implemented, is often painfully slow, can be full of bad data and bugs, and can obviously hinder future opportunities. When replaced with a newer ERP system that has been planned and implemented around strategic business objectives, organizations can save hours of time from numerous employees each week, simply by getting rid of the bugs, old systems and lagging software. This produces exponential cost savings depending on how inefficient a process was or slow a system is, and just how many employees the inefficiencies were affecting. This doesn’t even take in to account the opportunities that could be taken advantage of if the speed of the system was faster—cutting down further on your costs. Although it may seem like a huge, overwhelming process, the move to modern ERP is intuitive. It’s a trade-off of the time spent implementing the new system over the time wasted trying to get the old one to work.
Ditching an old legacy ERP software system can lead to improved sales and could drive increased drive revenue. Through using data and reports generated inside of newer, properly modeled systems can provide businesses with valuable buying and customer information that sales can then leverage to create targeted, smart and effective marketing campaigns—every member of your team will benefit from the upgrade. These kinds of opportunities are the types of things businesses often discover when trashing their legacy ERP software for a much newer system. If the effort for these projects is detailed and thoughtful, the ROI that can be achieved (and even regained) will be significant.
Single Source of Truth
One of the single biggest obstacles business running legacy ERP software will come across is the total lack of system visibility. A traditionally customized and aging ERP system will contain a lot of disparate functions with very little communication between each arm. The mess of customization will eventually obstruct one of the main functions of your software; data reporting. Without transparency throughout your enterprise software and a seamless structure connecting all of the reporting functions and departments of your software, you cannot collect all of the mission-critical information your business needs about your key processes. For example: without inventory data, you cannot plan for upcoming demand, and your sales team cannot accurately communicate with clients about expected delivery dates and manufacturing times. Newer ERP systems have been built with the value of interconnectivity in mind—they foster an environment of valuable collaboration within your business, rather than obstructing.
What’s more—if you decide to move to the cloud, at least in some aspects of your enterprise system, you will immeadietly encourage greater accessibility between your employees and your software. Cloud software can be utilized from any device that has an internet connection. Legacy ERP software is dated and almost always unable to integrate successfully with the cloud or other web-based technologies. By ditching that old system you can immediately boost your business onto the web, and start reaping the inherent benefits of scalability, flexibility and cost efficiency that come along with cloud-based ERP. Even if you stick with on-premise software for your upgrade, a newer ERP system will be naturally much more amenable to integration with cloud-based applications or solutions, like your CRM or Marketing Automation software. Because vendors are becoming more cognizant of the importance of the cloud to enterprise systems and business processes, you will find that any upgrade you make will allow your business to make the jump into this incredibly exciting sphere of technology.
The major area that business should be concerned about when it comes to leaving legacy ERP software behind is investing in a new system that supports the old processes you were running on the old legacy ERP software. In the same way that businesses can achieve significant ROI using business process modeling, they can just as easily create sunk costs by failing to properly implement or align a new software investment to their business, and using the opportunity of an ERP overhaul to re-examine and streamline their own business processed and operations. By making your company as efficient as possible before your implementation, you will ensure that the new ERP system can run smoothly, and manage your operations and collect data exactly how you need it to.
Thousands of businesses each year implement software systems and fail to conduct proper business process modeling prior to implementation. This causes the new system to support old processes; thus supporting the same inefficiencies. Ultimately, this means businesses could be doing all the work and spending all of that investment on a costly new ERP system while achieving none of the benefits that the software promises. The difference is business process modeling; a thorough look at the way your company operates so that you can clear away all the unnecessary sources of waste.
The bottom line…
The bottom line is this; businesses of all shapes and sizes that are operating legacy ERP software systems will most likely benefit and indeed save quite a bit of money by conducting business process modeling and implementing or upgrading their current ERP system. Most businesses don’t see this opportunity until it has already cost them a significant amount of money and system dead weight, and many fail to ever benefit from an eventual upgrade due to poor implementation and configuration practices. Businesses that invest time into educating themselves about solutions and system evaluations could reap a generous ROI by ditching their outdated legacy systems and implementing powerful new systems and processes.
Interested in proper business process modeling? Our experts specialize in ERP implementation, selection, and process modeling. Contact them today for more information about your upcoming project.