replacing legacy erp
05 Dec 2018

Why Replacing Your ERP Makes Sense

Today’s leading manufacturers and service providers are diving into technologies to help stay competitive, profitable and primed for growth — advanced robotics, 3D printing, Manufacturing 4.0, the cloud, Big Data, the Internet of Things, and mobile technologies, just to name a few. Incorporating new methods for doing business is always challenging — it’s absolutely grueling without advanced Enterprise Resource Planning (ERP) software. The benefits of implementing an ERP sooner rather than later includes graduating from a slow, clunky system that is burgeoning with redundant and/or inaccurate data offering no clear picture of day-to-day inventory or tracking of business processes. Delaying an ERP implementation only supports prolonging the use of outdated IT tools and platforms, leading to departments within an organization acting as silos where sharing of data is difficult and and at times discouraged, instead of working as teams that share, communicate, and collaborate.

Do you need to upgrade – or change – your ERP system? That question plagues most CEOs, CIOs, and CFOs as their legacy ERP systems continue to chug along. It’s no light matter to replace your ERP system. By definition, the ERP system is your financial and operational backbone and reaches into all areas of your business and value chain. Replacing it would appear to be a difficult and intensive process, but done right, it can open unlimited business opportunities. Companies decide to replace their ERP systems for a variety of reasons. At the most fundamental level, the question is whether your current system supports or constrains your ability to execute business strategies that will make your company successful and establish it as an industry leader. These systems typically automate only a single business function and not an entire, cross-functional business process; they demand manual, labor-intensive processes, such as rekeying data into separate systems.

Many legacy systems are inflexible – not permitting organizations to change business processes to adapt to changing business requirements. In today’s connected world, many legacy systems struggle to provide the deployment and device flexibility demanded by business users. So, should you consider a new ERP system? Review the following statements and see if you can answer ‘yes’ to any of these questions.

  • Is your organization growing exponentially and in need of a system to keep up with your future growth expectations?
  • Are you planning on adding new businesses by growth or acquisition?
  • Are you subject to generally accepted accounting principles (GAAP), international financial reporting standards (IFRS), Sarbanes-Oxley, or any other national or international financial oversight?
  • Do you need financial transparency across all of your business units or is your organization still using spreadsheets to manage its financial health?
  • Are you using a highly customized system that does not allow the ability to upgrade to new, more efficient technology platforms?
  • Are all your users, however infrequent, able to interact with the ERP regardless of device and without requiring weeks of up-front training?
  • Are you worried about data security? Consider all valuable data produced and shared between customer service, human resources, finance, IT, warehouses, and manufacturing.

If you have answered ‘yes’ to any one of the above questions, your organization may need to consider the replacement of the existing solution and integration of a next-generation enterprise financial system. The remainder of this paper outlines the fundamental considerations that you should use when evaluating vendors to determine which ERP application should be right for your current and future organizational goals and growth expectations. An enterprise needs to have a finger on the financial pulse of the company, and as the pace of business continues to accelerate, the organization must move rapidly with precision and agility, reducing reaction time and optimizing financial performance. You can’t afford to miss an opportunity or delay a necessary course adjustment. That means that everyone in your enterprise who impacts the financial results must know how the business is performing on a daily basis.

Trending Now: Cloud ERP: The Right Model for Job Shops and Manufacturers

Don’t forget the cloud! Keep in mind, cloud computing has given rise to subscription licensing schemes (software as a service—SaaS), which in many circumstances are a preferable way to pay for software versus traditional perpetual licenses. Most subscription offerings look remarkably like a mobile telephone agreement—a monthly fee for usage, a minimum contract term of one to three years, and a nominal fee for initial provisioning. It is easy to conclude that cloud computing somehow mandates multi-tenancy (the use of shared hardware) and subscription licensing. The fact is that cloud, tenancy, and licensing are completely independent factors. Cloud-deployed systems can be licensed perpetually and on-premise systems can be licensed through subscriptions. Single-tenant deployments, which provide dedicated computer resources, can offer more control of the system evolution. That means the system changes when the customer is ready, rather than as the vendor sees fit.

Regardless of how the cloud is employed in an ERP strategy, it is critically important to remember that all ERP strategies and plans change over time. Look for ERP systems that are equally at home on premise or in the cloud, perhaps both at once for multi-site deployments. Look for ERP vendors that offer systems fairly across any hosting model, with options to license perpetually or with a subscription plan. Like any other technology investment, purchasing the software and licensing is just one element of the overall cost. An extended financial ERP solution manages processes across your value chain. Some of the results of this coordinated effort that can help you achieve the maximum return on investment within the shortest payback period include improving cash flow performance, increasing the accuracy of your costing, achieving higher organic revenue growth, protecting profit margins, reducing your inventories, shortening product life-cycles and more.

Ready to move forward from your legacy ERP? Contact CompuData today!