Over the past decade technology has transformed the broader world of business and consumer applications. But many ERP deployments remain static in spite of these changes.
According to Forrester, approximately half of ERP customers are currently on releases that are two versions behind the current release, which may be four years old or more.
Here are eight ways that aging ERP systems are holding back businesses:
1 Old ERP systems drain the innovation from your IT budget
The key to knowing how aligned your ERP systems are with your business imperatives, is measuring how much of the IT budget is devoted to innovation rather than maintenance.
Simply changing the equation and reallocating the IT budget from maintenance to innovation is almost impossible with old, on-premise ERP because every costly upgrade, patch and fix equals money and time that isn't spent on tailoring ERP to meet the needs of the business.
2 Business regulations demand fluidity; brittle and outdated ERP fails to keep pace
New regulatory changes are increasingly common today, whether for data protection, financial regulation or information security.
Out-of-date ERP systems struggle to cope with these changes, typically requiring time-consuming patches or additional manual processes.
3 Aging ERP is a drag on business agility
The web enables business to go global instantly reaching many millions of customers in a year or two, whereas it used to take a decade or more to make that type of progress.
The dramatic growth in emerging markets, businesses are looking to quickly tap opportunities in the space of months, not years, before their competitors get there.
Outdated ERP, unable to react to and take advantage of change, restricts the agility that is crucial in our increasingly online world.
4 The mobile workforce can't perform efficiently with outdated ERP
Using outdated ERP means either completely giving up on accessing your information from anywhere outside of your office or enduring sluggish client-server experiences over virtual private networks (VPNs).
It also means having no visibility into business operations when on the road, or having to drive into the office to approve a sales order.
The result is that employees are simply less productive than they could be, and important business decisions cannot be made as efficiently.
5 Centralised ERP hampers the increasingly decentralised business
Old ERP forces you into an expensive centralised structure unless you can afford to dispatch IT teams to every corner of the globe.
It means maintaining desktops at multiple locations, upgrading clients and dealing with information fragmentation across local clients.
6 Old ERP doesn't satisfy the appetite for real-time information
Old ERP systems generally make reporting an onerous and error-prone exercise, leaving organistions to manually generate reports and create budget or forecast spreadsheets.
To compete, businesses need to combine real-time business intelligence and analytics to enable workers across the organisation to collaborate more easily and have visibility on key performance indicators, no matter where their location and without days of delay.
7 Stone-Age ERP walls your business off from suppliers, channels and customers
Customers are no longer content to wait on the phone to check an order; they want to browse your website to get their order status right now.
Your suppliers stand ready to drop-ship your orders in real-time rather than forcing you to tie up capital in inventory.
Your website is increasingly your principal storefront, and customers judge your business by the level of service it provides.
Your operations have to be interconnected with customers, suppliers and partners, enabling real-time information exchange on demand.
As the web increasingly becomes the medium for information exchange, your on-premise ERP is increasingly a disconnected silo, out of sync with the rest of the world.
8 Old ERP is a barrier between your employees and self-service
Stone-Age ERP was designed when businesses were top-heavy in general administration, when it was standard practice to have someone assigned to rekeying purchase orders or time and expense entries.
Today, any unnecessary bureaucracy just wastes time that could be better spent elsewhere.
Paul Turner is a senior director at NetSuite