ERP took root in the 60s and 70s, so legacy systems are not uncommon. Knowing when to re-evalaute an ERP system is not an easy task, but if your system was launched 15 years ago, it’s a good idea to consider all the new capabilities available in the current market.
Companies often debate adding another software layer onto the existing system vs. replacing what they have, which almost always requires a higher price tag. While it’s tempting to eschew upfront investments, it’s risky to downplay the risks of keeping an old system or downplay the benefits of ERP replacement.
Aberdeen Group did a research study which found, “Companies with ERP systems between 2-7 years old had 30% more reduction in costs than those companies with systems 15 years or older.”
So what makes older systems lose their benefit?
- Aging software infrastructure, which often becomes increasingly expensive to maintain.
- Aging Hardware, which becomes unreliable, unsupported and often discontinued.
- Lack of integration capabilities, flexibility and the new technology assets and features that competitors are using and your company is not.
- Lack of ongoing available support for all of the above -- as a legacy system ages out, so does the support that comes with it.
So how do you know when it’s time to replace your system?
One key question to ask is, “Can the existing system scale up to meet the growing needs of the company?” Sometimes, existing ERP can scale short term, but looks less effective long term. Since business changes fast, companies need to have systems that can respond quickly, and waiting to install a new ERP system, right as the need for the new system becomes apparent, is not an ideal option.
To test and measure old system capabilities vs. new, create a Business Process Model, which is also an essential tool in new system implementation. This involves reverse engineering requirements and ideal functionality by understanding where the current system falls down and how a new system might better meet those needs. If the difference in capability is dramatic, it’s a sign to get moving on an update.
Perhaps one of the biggest reasons to get serious about change is unhappy customers and poor ERP feedback from staff and vendors. If your partners and clients are consistently asking for better functionality, better access to information and more streamlining of processes, all which you cannot provide, take note. Businesses unable to meet the basic needs of their customers, suppliers and distributors are businesses that can not, in the long run, thrive.
Do you have an aging ERP system and are wondering about your options? Give Parallel Solutions a call at (440) 498-9920. We are a full service provider and our experienced staff can help assess all your needs from software to training and support.