Knowing your hidden costs of legacy/outdated ERP

The main purpose of an Enterprise Resource Planning (ERP) Software is to create a centralized database, streamline the business process, make efficient utilization of resources and improve productivity with better quality.  But not only having ERP software is enough to achieve the business enhancements. There is more to maintaining the existing legacy ERP software. Upgrading to the latest version or choosing a new ERP system that will fulfill all your business requirements is a mandatory thing. 

Hidden cost of legacy ERP

Why are organizations delaying the upgrade ?

But there are still few companies sticking with the same old legacy systems and not taking initiative for a good change. The organizations are not fully aware that this could cause them more additional costs indirectly. With the evolution of technologies and various platforms, no one would want to use old Nokia model mobile phones at this time period. Then why is the software alone left unchanged ? The problem here with most companies is the fear of adapting a new software, feeling difficulty with convincing employees to learn more features, and being hesitant on investing more money. 

Another challenge is the time taken by the employees in researching for a new software is longer and finally deciding to live with the old software for further more years. But they should realize that doing nothing is also going to cost more to the business when compared to the cost of change. This is because due to the rising competition in the market and changing demands with the customer, one could not survive without being technically ahead of competitors. Let us discuss in detail the areas where the legacy systems cost you much.

1.Software Maintenance :

Legacy ERP systems are mostly on-site based software installed at the users premises. This involves an IT team and an infrastructure of hardware setups. The functions of this team would be regular maintenance, patching and upgrading software. 

If any problem arises that could not be solved by the team then you will have to approach a 3rd party consultant resulting in increased cost. But in case of cloud software the maintenance is off site and taken care by the vendors. Thus saving cost and time as well.

2.Customizing as per requirements :

As the trend keeps changing, the customers are always attracted to the changes and are up to date. Likewise to deal with those customers and sustain them with your business, one should look for more customization and personalization. To achieve such changes with time to time, the custom code has to be built. This adds up more cost. But in case of cloud based solutions, they are inbuilt to meet modern business needs thus eliminating extra codes and customization.

3.Security breaches :

Any company can fall victim to a cyber attack. When you have a weak configuration and are vulnerable to the attack you can be easily affected by a security breach. Imagine losing all the crucial data. You could go insane and lose your peace of mind. The time, effort and money required to restore them is tremendous. 

Legacy ERP does not withstand these kinds of cyber plays but in the case of cloud ERP the solution provider saves you with faster patching and greater security. The cost after a security breach adds up more as compared to not using an updated ERP system. The companies should think wisely considering which is more riskier. 

4.Remote access :

Since all the legacy systems are on premise based, the remote access is restricted. As we all know, the recent pandemic has brought major change in the working environment. All companies have adopted the idea of working from a home environment. But this seems impossible for legacy ERP systems. As a result it leads to disruptions in business processes affecting productivity. With changing economic situations, the businesses must leverage digital and cloud based solutions to be on a safer side.

5.Real-time reports :

Outdated systems might impact the quality of real time reporting. The data stored in the system often comes in the form of reports instead of real-time updates. This could negatively impact productivity and inventory, delaying the operation. This results in increased cost. But whereas a cloud software can provide you with accurate data and customized reports. This is greatly helpful for business analytics and improvements. 

6.Customer retention :

Customer relationship management is very crucial for the brand name. Without satisfying customer demands and queries it is difficult to sustain in the highly competitive business environment. The legacy system doesn’t have wide features in responding to the customers on time. The CRM should be capable of tracking up to date follow ups and give a reminder on a regular basis. The constant touch with customers in solving their issues earns a good reputation to the company. If none of this is happening with your legacy system then you may be at risk losing valuable customers. This again results in business downfall.

7.Time consuming : 

The most valuable resource is time. Efficiently utilizing the time spent is equal to an investment you put for your company. While using an outdated system, there may occur a number of issues, duplication of data like multiple entries, inaccurate reports etc. All these consume more time in finishing the task. More time is more money. But using a cloud ERP, each and every task is being automated and time saving. Process automation is one of the most important feature in recent trends that greatly helps with business optimization.

Conclusion :

The money you spend on upgrading your ERP system is not an expenditure but an investment for a better future. You can see visible ROI by migrating to cloud systems as it can prevent many unwanted issues and disruptions. The legacy system can only give you headaches by errors and inaccuracies in data. It is advisable to choose wisely so that you can compete in the market working more efficiently with all those time saved by cloud platforms.

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