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The High Cost of Obsolescence: When it's Time to Move On

The business world has changed in everything from statutory and regulatory policies to how people work, placing new demands on the ERP system. But the more process and technology change, the harder it is for legacy systems to keep up.

According to industry estimates, the expected life span of an ERP system varies, from seven to 10 years at the low end, to 10 to 20 years at the high end. Whether it is seven years or 20, there is a good chance your organization is missing out on new functionality as well as technology improvements, including the ability to easily access to data and business intelligence, and mobility when running an older ERP.

Few people like the thought of going through an upgrade or replacement, but having an outdated ERP system is almost as bad, if not worse, than not having one at all. How can you expect to achieve high performance and a competitive edge without state-of-the-art tools? Even if you think things are fine for now, it’s hard to catch up once you’re lagging behind.

How do you know when your ERP has run its course?

The best time to change an ERP system is when you need more functionality and integration than your system can offer.  For example, consider retailers trying to combine ecommerce with brick and mortar experiences. Or customers (or suppliers) who want to be able to track an order or request support from an online portal, but your ERP system is not able to provide that service. Self-service portals are a differentiator that helps customers meet their own needs and improves the overall customer experience. If you’re unable to access these functionalities, it’s time to upgrade your system.

A modern company using a legacy system is like running iOS 10 on the Motorola Razr where the limitations outweigh the benefits. The faster the needs of a company change, the shorter the ERP solution can effectively meet their needs.

What happens if you let the ERP run old?

It can be easy to put off upgrading because your current option is working “just fine.” Failure to open your eyes to what’s possible is the impediment to progress. Companies may not realize how their inefficient business processes are eroding business performance or that they’re spending more in damage control than if they invested in modernizing. Thus, failing to optimize and meet business requirements and falling behind their competition, effectively losing business in this process.

Inability to capture important information quickly enough will take a toll on customer satisfaction, efficiency and profitability. Modern ERP systems aid companies in keeping up with customer demands. Those who can’t keep up, will get left behind.

Time to Take Action

Sure, you can program in new capabilities to prolong the life of your legacy system. While this option might add missing functionality to your original system, you can’t postpone a system refresh forever. Additionally, supporting the reconfigured application may pose a challenge down the road.

The more beneficial option is to replace your legacy system with the most modern technology available. Companies that are currently running on premise may find the cloud a more suitable, cost-effective solution. Modern systems are more industry-focused, with capabilities suited to business needs and without extras your organization will never need.

ERP is one of the most significant IT expenditures, so it is important to make sure you get the most out of ERP investments. As more applications to benefit your business become available, update, or move to the cloud, it is essential to know when to let go of a legacy system and embrace the ROI possible from a new ERP.