Why You Should Modernize Your ERP System
Enterprise resource planning (ERP) systems are critical to running a business today. Whether you’re churning out disposable widgets or building cutting-edge satellites, having a system in place to capture and connect the data driving your operations is a foundational element of modern manufacturing.
“Modern” is the operative word here, however. With the extreme pace of technological advancements over the past decade, relying on an outdated ERP system isn’t just slowing you down, it’s holding you back. There’s the cost and resource requirements of support and maintenance. There’s the lack of data integration with other modern systems, as well as limited insights to the data you do have. There’s the inability to adequately work with customers, suppliers, partners, and others. And so much more.
But while your ERP might seem like it’s good enough to wring a few more years out of it, it’s important to consider what you’re missing out on now as you cling to an older system. Here are 5 signs that you’ve outgrown your current ERP system and should start looking into modernization options.
1) Customers are starting to notice
No matter how great your products might be, customers are becoming more and more sensitive to the services and support around those products. Look at a simple customer inquiry. At a minimum, customers expect a support rep to have instant access to accurate data on every aspect of their accounts, orders, shipping, invoicing, and other information. More likely, customers want to access this information themselves through a web portal or, better yet, have the data sent in near real-time to their own systems.
As your customers go through digital transformations and modernize their own businesses, they expect their suppliers to keep up. Even more, they’ll need to be confident you can meet security, compliance, regulatory, and other requirements. Trying to meet their needs with a legacy ERP system will either be impossible or cost prohibitive, and they’ll likely move to another supplier. If you’re already under pressure from customers due to your inability to meet their technology or data needs, or if you’re losing deals because of it, it’s time to consider ERP modernization.
2) Internal teams are feeling the pain
Let’s face it: it’s always the internal teams who have to bear the weight of older ERP systems. Accenture found that 92% of ERP systems require manual effort to access data and 33% require custom development to extract data. That means teams are using manual, time-consuming workarounds to overcome limitations. They cobble data together in massive spreadsheets to make up for weak analytics or non-existent integrations. They spend time aggregating and consolidating data to build reports and dashboards. They rely on old, incomplete, or partial data to make strategic decisions. Or they simply go without the insights they need because it’s too hard, too slow, or too expensive to find and gather the right data.
This doesn’t even consider the complexity of older software, the need to rely on IT or a dedicated resource to generate reports, and the time consumed by manual tasks that could easily be automated.
There’s also the mobile aspect of data and systems access to consider. Sales, support, technicians, and other mobile teams have relied on smartphones for years to access almost everything they need. But if they’re at a customer site and don’t have instant access to customer, product, or delivery data, they already look as if they’re behind the times.
3) Inability to fully leverage newer technologies
A quick web search shows that the average life of an ERP system is 5-10 years, while the average age of an ERP system is closer to 20 years. That means most companies are limping by with outdated technology. The challenge comes from either not being able to integrate (or even consider) newer technologies or having to pay for expensive customizations and third-party software to cobble together a solution.
Just think of the popular technologies that have entered the mainstream in the past decade. There’s mobile connectivity, Internet of Things, augmented reality, cloud infrastructure, Artificial Intelligence (AI), advances in robotics, social media, 3D printing, location-based sensors, and so much more. For AI alone, PwC found that 72% of executives believe that AI will be a key to future business advantage.
An older ERP system doesn’t prevent you from using these new technologies, but it does limit how you can integrate their deployment and their mountains of data into your overall operations. Upgrading to a modern ERP can help you maximize the investments you’ve made in the newer technologies you’ve already deployed.
4) Regulatory, audit, or compliance challenges
Regulatory compliance is a fact of life. The reporting, auditing, and other visibility necessary for compliance frequently relies on operational or other data housed within your ERP system. Creating those reports and facilitating audits can be a monumental burden if your ERP system requires specialized or custom report creation.
Modern ERP systems are built with reporting and analytics at the core. Sure, so were yesterday’s ERP systems, but a decade or two of customizations, integrations, and technical band-aids has surely created reporting hurdles. What’s more, the massive amounts of data being collected today also bog down data access and reporting on older systems. If audits create a ripple effect of pain and resource drains for your business, it’s time to consider an ERP upgrade.
5) Consumes too many IT resources
All of the above issues come back to IT’s plate. They’re usually responsible for maintaining an ERP system and they’re on the hook when the business wants new features, new integrations, or even just simple reports. Customizations also turn older ERP systems into a one-of-a-kind puzzle that only those who’ve worked on it for years have the ability to accomplish even the simple tasks.
IT, like every other team, is transforming into a more strategic force within an organization. They’re moving from a support function to a differentiating function, where technology helps companies gain an advantage. But when an older ERP system drains much of their resources and budget, it’s time to make it easier with a modern upgrade.
It’s time to upgrade
Have you ever considered the cost to your business of your ERP system? Even saving a few hours per week across a few dozen workers starts to add up, and that’s just the labor costs. Data entry errors and copy-and-paste mistakes can lead to bad decisions with massive costs. Lack of insights can cause delays of days or weeks that disrupt operations, annoy customers, or give competitors an advantage. If your teams are wasting time and making mistakes that could be solved with a more modern ERP system, it’s time to upgrade.
Your ERP system is foundational to your entire business. Paying to maintain a slow, inadequate system can prevent your business from reaching its full growth potential. While the excess burden on teams to do their jobs may seem like just a cost of doing business, when you add it up, it’s a drag on growth. Adding in the impact on customers and critical suppliers and partners, the fallout from slow, inefficient, and cumbersome systems can cost you even more growth.
But the answer is simple: upgrade to a modern ERP solution. It’s easier than you imagine and requires less resources than you think.
Now that you know why you should upgrade to a modern ERP solution, join our webinar on August 8th to learn “The 5 Categories of Digital Transformation” to help transform your business processes to supporting new business models. Register Today.