WHITE PAPER 5 SIGNS IT S TIME TO REPLACE YOUR LEGACY ERP

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1 WHITE PAPER 5 SIGNS IT S TIME TO REPLACE YOUR LEGACY ERP TM

2 Early ERP adopters are paying the penalty of a decade or more of excessive customization. THE RISE OF POSTMODERN ERP IT decision-makers within growing businesses are no doubt aware of the challenges facing their companies, such as increasing operating costs, changing business demands, aging technology and hardware, knowledge transfer and the struggle associated with maintaining standardized operating procedures and processes. However, growth presents business leaders with a golden opportunity to reevaluate current technology systems, often none more important than the enterprise resource planning (ERP) system that is approaching legacy status. Legacy ERP systems are a key area of focus for companies seeking to lower IT costs and increase flexibility. In the early days of ERP, companies implemented heavily customized ERP solutions in the pursuit of increased agility and responsiveness. However, as a 2014 report by Gartner notes 1, Early ERP adopters, particularly large enterprises in energy, manufacturing and distribution industries, are paying the penalty of a decade or more of excessive customization. The good news for businesses is that they can now take advantage of all the benefits of a postmodern ERP system, such as native functionality that is better suited to fully address many specific business requirements for a lower total cost to ownership and without massive customization. Whatever challenges organizations face due to growth and technology obsolescence, real-time visibility to information and key performance indicators are critical for informed decision-making and maintaining a competitive advantage. Plus, efficiencies and cost savings are associated with leveraging a scalable ERP system that has enough flexibility to meet changing business demands. If your organization identifies with any of the following signs, it is likely time to explore how a new ERP system will provide a long-term, strategic advantage. THE FIVE SIGNS IT S TIME TO REPLACE YOUR LEGACY ERP: 1. Increasing expense associated with maintaining current ERP software updates and customizations Over the last few decades, ERP implementations were usually largescale and highly customized, involving burdensome implementations that carry a hefty price tag. The ramification today is that anything outside of the ERP s basic financial management and manufacturing functionality requires additional customizations, which costs more money. Businesses with highly customized systems are shelling out more money to support and carry these customizations forward during software upgrades. The unintended effect is that IT roles have become more complicated and inefficient as technology leaders manage a tangled web of disparate systems, coinciding applications and business processes. The solution to a highly customized, monolithic ERP system involves a shift to a hybrid approach. This approach is 1 Gartner Says By 2016, the Impact of Cloud and Emergence of Postmodern ERP Will Relegate Highly Customized ERP Systems to Legacy Status

3 characterized by blending cloud-based applications with on-premise applications, which Gartner refers to as postmodern ERP. In addition to a hybrid concept, ERP systems today have evolved to include features such as integrated warehouse management, streamlined navigation, and user-interfaces, and native integrations with existing third party systems. All of this translates into an ERP system that requires less customization and hardware costs, which in turn, makes implementing and maintaining a new ERP system a worthwhile endeavor for technology executives to consider. 2. Lack of visibility and access to all data from a single source The challenges posed by a legacy ERP system include how to organize, analyze and extract critical data. Legacy ERP systems function as a repository for limited types of data (e.g., financials), but not as a data warehouse from which leaders can easily analyze and extract information. As a result, finding and leveraging full data requires a considerable amount of internal time and energy. Furthermore, system limitations mean that sales, inventory and customer data are likely maintained elsewhere, whether in third party systems or spreadsheets. Fortunately, modern ERP systems are designed to enable businesses to consolidate data across various functions into the same application. For example, data associated with a specific sales order, such as the customer, inventory and financial information, can now be captured in a single system. A single source of By 2018, thirty percent of service-centric companies will move the majority of their ERP applications to the cloud. information means that everyone within an organization can leverage and work from the same set of data, which improves informational consistency and accuracy. As mentioned, access to real-time information and key performance indicators is vital toward giving businesses the ability to track trends, identify problem areas, improve processes and provide accurate financial information for more precise forecasting and decision-making. 3. Inability to integrate with other business systems or technology platforms Arguably, one of the most impactful developments within ERP has been the advancement of the cloud deployment model. As mentioned, the hybrid ERP approach is transforming the way companies think about ERP implementation. Gartner predicts that by 2018, Thirty percent of service-centric companies will move the majority of their ERP applications to the cloud. A hybrid approach solves a couple of major problems for businesses running legacy ERP systems. First, it allows them to take advantage of cloud-based point solutions that are either unable to integrate with legacy ERP software and hardware or not natively available in a new ERP system (e.g. EDI, Business Intelligence,

4 Modern ERP systems have expanded to include a full range of integrated solutions that once existed as stand-alone systems, such as warehouse management, business intelligence, and e-commerce. WMS). Secondly, businesses that have been burdened by outdated, rigid ERP systems now gain the flexibility offered by deploying an ERP system in the cloud. This immediately removes the need for time and cost-intensive upgrades or customizations and the reliance on a patchwork of on-premise, legacy business systems. 4. Dependent on a veteran IT professional for knowledge transfer and maintenance related to the legacy system Oftentimes, one of the most difficult roadblocks associated with operating a legacy ERP system is not the software and hardware but the people responsible for its maintenance and support. Through no fault of their own, these IT professionals have been tasked with the unenviable task of acting as the life support for a dying, legacy ERP system (and they ve been doing it for 20 years!). While these individuals may be the undisputed experts about the legacy system, what happens when they leave the company or need to be replaced? It would be nearly impossible to impart a career s worth of knowledge about an outdated technology to a successor. The move to a postmodern ERP system in the cloud benefits both employees and the business. IT professionals responsible for system maintenance and training appreciate the ease of addressing system updates, hardware failures and support tickets. Business leaders also rest easy knowing that information related to the operation of an advanced ERP system is readily accessible to all users through online documentation and elearning. The availability of online training resources and the general improvements in user-friendly interfaces within new ERP systems makes the transition away from a legacy system more desirable. 5. Current system lacks the out-of-thebox functionality to support changing business requirements As businesses grow and evolve, changing demands and market conditions can wreak havoc with business processes that are governed by limited legacy ERP functionality. Companies also simply outgrow the ability to manage increasing volumes of information within existing systems. Whatever the challenge, advanced ERP systems can support new initiatives and adapt to new business processes. Modern ERP systems have expanded to include a full range of integrated solutions that once existed as standalone systems. For example, ERP systems now include robust out-of-the-box The move to a postmodern ERP system in the cloud benefits both employees and the business.

5 features such as an integrated warehouse management systems, business intelligence, mobile functionality and e-commerce platforms. For mid-market companies, this is an exciting development because it gives them access to features that would have previously required expensive customization or needed to be purchased independent of an ERP system at a much higher overall price point. The result is that mid-sized companies are better positioned to compete globally against their larger peers. THE FUTURE IS BRIGHT FOR ERP There are many reasons that companies continue to operate legacy business systems, but given the encouraging trends in the ERP market, the barriers of moving to a new ERP system have rapidly dwindled. When considering a move from a legacy system, it is essential that IT decision-makers link business objectives to their ERP strategy. The selection of an experienced implementation partner can be instrumental to implementation success, time to value and overall return on investment. If any of the five challenges mentioned above resonate with you, an objective technology assessment and development of a strategic IT roadmap are ideal starting points. These will help determine if a new ERP would address your business challenges and identify associated risks and rewards. For more information, please contact or info@envistacorp.com. envista N. Meridian St, Suite 415 Carmel, IN W250 Copyright envista, LLC TM

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