Diminishing Returns from Legacy Technology?

Jeff Carr is the Founder of Ultra Consultants.

Manufacturers and distributors face an ever-increasing realization: Their legacy systems deliver diminishing benefits and lack go-forward capabilities. The ERP software may be a victim of end-of-life “sunsetting” where support is discontinued. Another possible scenario involves the vendor putting the product in “maintenance mode” with limited updates. These legacy ERP software packages may no longer address the critical needs of today’s organization in areas of reporting, planning or overall efficiency.

Organizations depending on legacy products are also limited due to a lack of mobile functionality, analytics, CRM, and other applications that that are needed in today’s competitive environment. With manufacturers and distributors saddled with ERP solutions that were state-of-the-art a decade or so ago, many organizations find that the time is now for an ERP selection project that considers modern technology and systems that best fit their unique needs.

Upgrading or transitioning to a new ERP system – or any enterprise software solution – is a potentially disruptive process which can impact business continuity. Keeping the ERP project on time and on budget is certainly a challenge. Choosing the right technology solution is never easy, but informed businesses start with an analysis of the current state and a clear definition of the desired future state. Fortunately for the companies on the cusp of making that plunge into choosing a new ERP solution, there is a proven methodology that helps companies successfully execute these projects and help reduce risk.

Companies in this position should start by asking themselves the following questions:

Ongoing support: Is there uncertainty in obtaining adequate support, upgrades or maintenance?

A common scenario is that the legacy enterprise software system the organization has used for years is going out of business or has been acquired by a competitor and is no longer maintained or upgraded. If that is the case, then an ERP project to evaluate an appropriate solution should be a priority.

User interface: Are there onboarding challenges and the risk of attrition with millennial employees who are handicapped from a “green screen” ERP interface?

Legacy enterprise systems are often distinguished by an antiquated “look and feel” that can frustrate today’s generation of employees. An interface that is difficult to change, customize by user or role can make everyone’s job more difficult.

Modern feature-set: Does the current ERP system support the company’s plans for growth in new distribution channels and e-commerce?

Decades old legacy systems often don’t include the functionality that is available with modern enterprise systems. Nor do they offer features that drive business process improvement such as e-commerce or custom reporting. Modern ERP solutions go beyond first-generation systems by enabling modern initiatives such as e-commerce, supply chain management, customer relationship management and business intelligence. For example, companies anticipating expansion into new markets may require systems that support multi-language, multi-currency functionality. Insight into business intelligence (BI) trends helps inform strategic decision-making and is often the difference between success and failure in a competitive market. The ability to leverage mobile applications is increasingly critical, too. Most legacy systems are lacking in these areas.

Scalability: Will the technology support future growth and competitiveness?

Enterprise systems must accommodate growth. Legacy ERP systems are ill equipped to handle changes as a company grows. Does the current system limit number of data entries or crash when multiple end users access it concurrently? Does the system update in real-time or correlate across applications? If these features are not in place, a company will find it difficult to scale and accommodate business expansion and growth.

Standalone systems: Are current processes supported by discrete, non-integrated applications, spreadsheets and work-arounds?

It’s common for organizations to rely on standalone systems to offset the limits of a legacy ERP solution. A stand-alone purchasing system, for example, might have been implemented to help address the limits of an outdated ERP solution. Manual work-arounds are common within organizations saddled with a legacy system. Many companies find it necessary to manually enter data because the current system is unable to share data or is based on an incompatible data structure. This can lead to wasted labor costs and incorrect data entries, often leading to expensive downtime. If employees need to enter data on spreadsheets or cut and paste data into reports, chances are good you should plan on evaluating and choosing a new system to maximize efficiency and free up staff to work on other higher value tasks.

What’s the Next Step?

After answering these questions, you are likely in one of two places: You have accepted the realization it’s necessary to begin the process of evaluating and choosing a new technology solution, or you are confident in your current system.

Choosing a new enterprise software solution is an important challenge and requires careful planning and research into potential solutions. Today’s modern technology supports business process improvements and best practices that lead directly to business performance improvement.

By approaching the evaluation process and ERP selection criteria in an informed manner, companies can ensure they make the right decisions to maintain or establish a competitive edge over other companies in the marketplace.

Opinions expressed in the article above do not necessarily reflect the opinions of Data Center Knowledge and Informa.

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