Success in today’s business landscape looks so easy. But as someone who runs one, you know it’s not. Threats pop up out of nowhere, and everything from compliance to closing the books seems to be more challenging than it was in the past. When so much could pop up to derail your business, often, it’s not the external threats that are the most dangerous.
Too often, it’s within your own four walls. Legacy ERP systems often leave businesses with high costs and low value. Simply put, yesterday’s ERP solutions just can’t keep up with today’s business and technological demands. It’s a real challenge that’s driving many companies to replace their legacy ERP systems with cloud-based solutions—and ignite the digital transformation of their business.
Today, in anticipation of an upcoming webinar on this topic, we would today like to discuss six dangers of pushing ERP past its expiration date.
Risk 1 & 2: The Two-in-One Risk of Software and Hardware
Is elevated cost a risk? Of course. If you’re paying for legacy software, you’re probably not getting the value you need, cutting into your margins and making it tougher to free up capital for other business decisions.
Software: What Are Those Maintenance Fees Again?
Yes, you paid for a perpetual license. That’s no lie. But there’s something ironic about that perpetual license—it only works if you’re paying every year for maintenance. These maintenance fees are for ‘updates’ and the boatload of maintenance that comes along with legacy updates.
Well, the problem, of course is that most legacy software is beyond its biannual update schedule—maybe a new version came out or maybe it’s past its support life. Either way, you’re paying maintenance fees. Knowing this, the choice to continue using legacy/on-premises software—software that requires you to pay 20-30% of the initial license fee annually for maintenance and support—is not one that benefits you or creates opportunities. But neither is the hardware…
Hardware: Upgrades, Maintenance, and Electricity
Keeping a system in-house has built-in costs that are hard to escape. Legacy software requires hardware to run it, data centers to house it, electricity to power it.
First, let’s look at the hardware itself. For those companies using a legacy product, you already know that during the eight-plus years you’ve worked with it, you’ve probably replaced a server or two. The average life of a server is three to five years, meaning that throughout the life of your software, you’ve had to upgrade server hardware, software, and the like, transferring data from server to server each time.
For those companies who have remained on the same infrastructure for the life of the software, it’s even worse. You’ve done a backup recently, right? Guess you’d only lose what, a week of work? If you haven’t, you may be housing a data timebomb—all of your information could be gone one day.
Pair this with compute costs, networking costs, disk storage costs, electricity costs, and the salaries of your IT people (whose time is best spent on other tasks), and the outputs add up.
Risk 3: Putting Yourself at Odds with Your Staff
Good talent is hard to find. Good talent in two of the most competitive fields for talent is nearly impossible to find. Well, somewhere between the finance talent gap and the pervasive IT shortage, it’s a good idea to put in the work to keep people in each of these departments around.
Top talent—the people with the in-demand skills your company needs to grow—expect access to tech-fueled tools and resources. They have little patience for the issues that often go along with outdated ERP systems, like manual processes and lack of 24/7 mobile apps. To retain your most valued employees and attract tomorrow’s talent, your business software needs to answer the call for convenient, flexible, collaborative, and user-friendly access.
It’s not just retention, it’s recruitment as well. Finding an employee who knows a software that hasn’t been sold in the last decade is going to require you to hire someone who was in the workforce when that software was being used.
Risk 4: You’re Getting Outgrown
Every business is a global business. Whether it’s your customers or your suppliers, it’s likely that your business model requires you to do something globally.
Unfortunately, legacy ERP wasn’t built with the global business in mind, it was likely built when each country had a division, and each division had their own business management products whose numbers were rolled up at the end of the year.
Cloud applications provide the engine to drive growth, enabling businesses to lay down an applications footprint for each country and subsidiary in weeks—not months or years. Cloud ERP spares businesses from having to worry about scaling up expensive IT resources and large capital expenditures on IT infrastructure. The result is velocity that creates true competitive advantage.
Risk 5: Compliance? Spreadsheet and Likelihood Inaccuracy.
When’s the last time you received a comprehensive update to your software? Two years? Five years? More? How’s it holding up to the new lease standard? The new tax code or the Wayfair decision? What about revenue recognition?
A lot has changed in the last few years, and legacy systems simply weren’t developed to keep pace with today’s lightening-speed regulatory changes.
If your software hasn’t, we can only assume that your compliance initiatives requires you to break out the spreadsheets, pour yourself some coffee, and possibly buy your team dinner, because it’s going to be a long night. Only time will tell if everything was entered correctly (probably not—four in every five spreadsheets has an error). But this probably isn’t the only place where your staff is turning to spreadsheets.
Risk 6: Integration? Emails, Spreadsheets, and the Potential to Lose Customers
Companies like Amazon have set a new standard for customer service across all industries. Consumers and businesses alike are used to instant, easy access to their account and order status online, and “Let me find out and call you back” just doesn’t work anymore.
Often, for companies whose legacy processes hold them back, integration is a pipedream and rapid customer service is a myth. If the process of generating a quote requires the input of 3 or more departments via email to get the information, there’s a huge risk the customer has already found someone who can tell then, “I have this many of this item and can do it for this price.”
Unfortunately, when decision-makers can’t quickly access all of your business data—or they can’t crunch it in just the right way, they miss out on important insights, even revenue. And that means your vendors and customers are probably missing some functionality, too
Get to the Cloud: Modern ERP Makes Life Less Risky
Whether it’s risk from regulators, competitors, or your own company, legacy software holds your business back. Implementing a modern ERP system with well-supported, open architecture will grow with your business and support:
- Company-wide data integration that delivers the insight you need to optimize operations and respond to market forces.
- Business processes and automation that capitalizes on new channels, self-service and mobility to build tighter relationships with your customers and business partners.
- Increased coordination and more efficient processes from order entry through delivery.
If you are in the decision making process of implementing an ERP system the MIBAR team can help you. Contact us today to learn how we can ignite the digital transformation for your business.