How Do You Know It's Time to Break up with Your Legacy ERP?
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When was the last time you felt like chucking your laptop out the window? Was it when you had to dig for critical information because your ERP couldn’t run the report you needed? Was it when critical feature updates blew your technology budget out of the water? How about that time you lost a loyal customer because your user experience was a total flop?
You’re not alone. We hear countless stories of business leaders who feel paralyzed by the inflexibility of their legacy ERP platforms, while not knowing any other way.
We have good news for them—change is possible. But, of course, shifting away from your legacy system isn’t easy. It’s like being stuck in a bad relationship. You feel trapped, because you depending on that system to help you meet your obligations, but you know that you could be operating more efficiently and with fewer headaches if you could find a better solution.
So how do you know when you’re ready to break up and move on?
Know Your Options
If you’re using one of the ERP software giants, you have a lot of history, research, and innovation at your disposal. That can be a great thing—but it can also stifle efficiency and growth. Before we talk about the stifling part, let’s take a snapshot look at five of the top ERP software providers in the industry:
As one of the leading IT companies in the world, IBM stands out with a diversified portfolio of ERP solutions, end-to-end capabilities, a unified user experience, and front-edge investments in cloud, big data, analytics, and security. Its century-long presence on the IT market has weathered technological innovation and business process evolution admirably, making it a top contender for operational software products.
Another of the top IT performers, Accenture offers global service delivery, a strong client-driven approach, broad capabilities and support, and a continually evolving technology platform. With a focus on mobile applications and a better user interface than many ERPs, Accenture has earned a reputation as an efficient solution for large companies. They invest heavily in research and development, focusing their efforts on scalable industry solutions across a variety of platforms and applications.
Deloitte has ridden the front edge of the technology wave ever since the 1950s when data processing machines revolutionized the accounting industry. It is a leader in SAP collaboration and improved customer operations. Their services include ERP strategy development, enterprise cost reduction, governance, risk and compliance, and ERP project and change management.
Microsoft’s broad capabilities and deep market penetration have made the company a household name. Their cloud-based operations product offers integration with legacy systems and global scalability combined with Microsoft’s well-known productivity and intelligence tools. Offering end-to-end business applications, Microsoft Dynamics serves over 23,000 organizations with finance, project, and business process operations.
Oracle offers an array of business software under the name E-Business Suite. This software offers an array of functional modules for ERP, CRM, supply-chain management, warehouse management, human resource management, product lifecycle, financial applications, and more.
So What’s the Problem?
The impressive credentials of these four ERP solutions serve many companies well. As five of the top providers, they’re clearly meeting the needs of many businesses with innovative apps and cloud-based tools.
So what’s not to love? Why have some companies stopped drinking the Kool-Aid?
Ultimately, it’s because their greatest strengths—their single-system solutions that include broadly diversified product offerings with consistent user experience—may also be their biggest drawback. Companies with specific, unique needs and limited budgets run into problems because these goliath ERPs can’t pivot quickly or make cost-effective changes.
Let’s take a look at four reasons companies might rethink their partnership with these seemingly omnipresent solutions:
Steep operational costs
It’s difficult to calculate the total cost of ownership for your ERP, because hidden costs, maintenance fees, and product upgrades can send your budget careening out of control. With large enterprise systems, expect to pay not just the original ticket price, but also customization costs, consultancy fees, maintenance charges, change implementation costs, and modification costs after implementation. Any change will be charged at high hourly fees, and these companies often force multiple developers to work on your system at once—which means your costs skyrocket incredibly quickly.
Once implementation is complete, how easy is it to make changes to your legacy ERP system? When you’re ready to scale your business to accommodate growth, can your software keep up? If you’re using a large, change resistant solution, you’ll see a rise in total cost of ownership as you make modifications or upgrades. These systems are also aging, because making even the slightest change in user experience is incredibly complex. This means that your business is basically locked in to whatever these companies provide—and what they’ve provided for the last decade or more. If you do get to the point where it’s even possible to make a change, you may experience disruption to your workflow as changes require process alterations or product add-ons in order to keep the system functioning.
Complicated change processes
If you want to make changes, you’ll have to navigate a lengthy, cumbersome process that includes consultation about your problem, suggested solutions, development, implementation with probable cross-selling of additional products or services, and maintenance. While some of these elements will be necessary for any change request, big software companies involve move levels of complexity and longer wait times for each step. Your existing system may not allow you to make the changes you need quickly enough to keep pace with the growth and evolving needs of your company.
Out of touch with business needs
Small, mid-size, and large companies all have different needs and goals for their software. Companies in different industries may need specialized solutions to keep their workforce running smoothly. Software giants usually can’t provide the level of customization you need and may not make the effort to truly understand your organization before suggesting a predetermined solution. They may also require you to work with an external consultant or inflate your ownership costs with add-ons that deliver little value.
The Bottom Line
The big ERP software giants constantly pursue market expansion and product diversity, which has propelled them to the top of the industry. But they also come with a high price tag that includes not only huge financial investments, but also lost productivity when they can no longer meet the customized needs of your organization. In the end, to get the power of one of these giants, you will end up either buying a lot of functionality you’ll never use, or changing your established business processes to fit the way the software works.
How Do You Know When It’s Time to Move On?
If you can relate to these pain points—or if you’re just fed up with giant companies like IBM and Microsoft because they don’t understand your business—it may be time for a change. New software isn’t always a magic wand to whisk away your troubles, but sometimes it’s a necessity.
In some cases, it may be enough to add a new product to your current technology stack—for example, by building a portal to access information or generate reports. At other times you need to break off the relationship and build a custom ERP to meet your full potential. Here are 5 questions to ask as you decide whether to make the leap:
What will we gain?
When small inefficiencies add up to big losses in productivity, it might make sense to replace your ERP so you can focus your energies on solving real problems instead of maintaining your software. Will the increased functionality gained by new software make it worth the investment?
What will it cost?
Costs can take many forms, including down time during development, workflow disruptions, lost productivity during implementation and training, and of course, dollars. Will the benefits of the new system or add-on offset the cost of development and implementation? Think of costs over a three-year timeline to get an accurate comparison.
How long will it take?
Your projected timeline should include not only the development and implementation phases, but also training to get your team up to speed. Consider the time spent both by employees who are being trained, and by stakeholders who have to focus on training duties for an extended time.
Can we serve our customers well?
Older systems aren’t always designed for the needs of the customer. If your ERP leaves customers waiting for information or causes poor customer service interactions, your best customers could jump ship for a competitor. This is a real cost of keeping your legacy ERP as is.
Can we meet the needs of our workforce?
Your workforce may operate in several different locations, across time zones, or with independent contractors. And that means you need flexible software that can manage your business efficiently and remotely if necessary. At Worthwhile, we build software using Django and Python, ensuring plenty of support for future improvements. We understand that you need dependable technology that can evolve along with your workforce, and we’re committed to making sure you love the end result.
A brand-new ERP isn’t always the best solution for inefficient business practices—but sometimes it is. When your employees experience constant frustration due to poor user experience, inefficiency, or lack or functionality, it’s time to break up with your legacy software and consider making the leap to a custom solution.