According to one study, the typical corporation spends between 60% and 80% of its IT budget simply maintaining its existing mainframe systems and applications.
In their prime, these systems were innovative and cutting-edge. They helped companies improve productivity and perform critical day-to-day functions.
Now, however, they’ve become obsolete due to the advent of lightning-quick technology that’s evolving at a breakneck pace. In short, the ERP system you implemented ten years ago may no longer be capable of meeting your current and long-term business goals.
Today, we’re discussing legacy ERP challenges and why experiencing these challenges might mean it’s time to implement more modern technology.
The 2024 Top 10 ERP Systems Report
What vendors are considering for your ERP implementation? This list is a helpful starting point.
Modern ERP vs. Legacy ERP
ERP systems first arose from early material requirements planning (MRP) platforms. Though there were early models as far back as the 1940s, these systems dominated the market in the late 1980s and early 1990s.
In the MRP heyday, manufacturers found the systems incredibly helpful. This is because they included features and functions that simplified and organized their daily activities, such as:
- Inventory
- Finance and accounting
- Production management
- Operational planning
The only drawback? These systems were challenging to deploy, as they were built around proprietary or legacy programming.
Manufacturers also had to install them on-site. This meant that to achieve multi-site capabilities, a company had to install the same instance on each of its sites, then connect them using advanced networking tools.
Not only were these ERP and MRP systems slow, siloed and frustrating to use, but they lacked in-depth business intelligence.
Many businesses are still running these systems, and many others will soon be in the same boat. Several ERP vendors, such as Deltek, Thomson Reuters Elite and BST Global, have recently announced that one of their products will be sunsetting.
(Learn more about software end of life scenarios.)
So, that’s the lowdown on legacy ERP. What about modern ERP?
Well, a modern ERP system is still supported by its vendor and thus, receives regular updates.
In addition, modern systems are no longer isolated to the manufacturing realm. They’re designed to automate and centralize a wide variety of functional areas, and they closely align with today’s business needs.
4 Legacy ERP Challenges
Is the ERP system at your organization a legacy system? If you’re not sure, there are a few signs to look for.
1. Integration Challenges
Increasingly, companies that are standing out in the post-digital era are those that have made a firm commitment to digital transformation. They’re redesigning their business models and investing in tools and technologies that can keep them on the cutting edge.
However, many of these companies are keeping some of their legacy systems and hoping the new technology will seamlessly integrate with these older systems.
Unfortunately, new systems are often incapable of integrating with existing ones. Attempting to do so can result in processing issues, bottlenecks, data loss and more.
2. Outdated Operating Systems
One of the biggest issues with running a legacy ERP system? It requires an original operating system.
Unfortunately, this means you’re stuck using archaic platforms that reach as far back as Microsoft DOS. If you have an advanced workstation, this means there are many functions left unsupported.
When legacy systems first came out, features such as multi-core CPUs simply didn’t exist. As such, there’s a good chance you maximized your investment long ago, and now you’re just exhausting computing power.
3. Data Security Challenges
Any time you use older software, you’re assuming inherent ERP data security risks. Outdated systems aren’t designed with strongholds to continually cleanse and secure the data that flows through them. As such, continuing to trust a legacy ERP system to safeguard your intellectual property is a gamble.
Without regular updates, the system is unable to adapt to new and developing threats. This makes it incapable of keeping your data safe as it moves around your organization.
4. Inability to Support Innovation
Technologies such as advanced analytics and cloud computing are revolutionizing the way companies do business. With such capabilities at their disposal, executives are able to make quicker, more informed decisions.
They can also adjust their business models to be more in line with customer needs, and easily pivot any time the market changes or a new innovation emerges.
If you’re still relying on a legacy ERP system, you might not have the agility to support these new developments. In the short-term, this leaves you scrambling to solve problems and manage workflows. In the long-term, it ultimately renders you unable to keep pace with the competition.
Replacing Your Legacy ERP System
Do these legacy ERP challenges sound familiar? If so, it may be time to upgrade to a modern ERP solution.
While it might seem as though you’re saving money by sticking with your existing system, keep in mind that paying to maintain and upkeep these systems could be costing your business more than you think.
At the same time, their rigid design makes it difficult or impossible for your company to embrace digital business transformation and remain competitive.
If you’re ready to learn more about the benefits that new ERP software can provide, our team of ERP consultants is here to help. Contact us below for a free consultation and take a smart step forward.
