4 Signs That It's Time to Switch to a Cloud-Based ERP
Guest Post by NetSuite
Tasked with managing, streamlining, and improving business processes, enterprise resource planning (ERP) systems play a crucial role in the smooth running of most organizations. But like anything else, these systems have shelf lives.
Organizations that rely on older ERP solutions typically “tune” their systems to their own needs and are comfortable with their existing configurations. This comfort zone can be dangerous in today’s fast-paced business environment. For example, when it’s time to make changes and adjust to market conditions—such as adding a new line of business or sales channel—older systems can’t keep up or scale.
Here are four clear signs that your system may have expired, and that it’s time to replace the solution with a new, cloud-based ERP platform that’s designed to meet the challenges of today’s business world.
1. Your business visibility is limited.
Technology is evolving rapidly, which means that the ERP system you installed 20 years ago might lack most of the improvements, enhancements and capabilities of its more modern counterparts. Not only were there no commercially-available cloud-based ERP systems in 1999, but important functions like data analytics and reporting were still in their early infancy. Twenty years ago, most ERP systems were terrible at reporting and dashboards, for example. Today, most of them incorporate fantastic dashboards, reporting, and business intelligence. Older systems can also lack marketing automation, CRM, web storefronts/ecommerce, carrier integration, and revenue recognition.
2. The value of your ERP no longer justifies its maintenance fees.
Even if the ERP that your company implemented 15-20 years ago is still doing its job, the associated maintenance fees may be mounting. It may be a really good system that a lot of people love, but many organizations have changed over the last 15-20 years. Yet, they’re still paying high maintenance fees for a system that just doesn’t make sense for them anymore. For example, a company that was manufacturing products in 1999, but is now focused on distribution, doesn’t need a manufacturing-based ERP. Maybe your company was acquired by another entity, yet all of its systems are still set up to run on an older ERP that’s no longer relevant. Or, your company may be outsourcing most of its IT now, which means it lacks the resources needed to support a large, on-premise system. Companies in this situation should review their current requirements to determine whether their ERP truly aligns with their business.
3. You have more software functionality than you'll ever need.
Sales reps used to “oversell” the same software modules to smaller companies as they did to huge conglomerates. The problem was that those smaller entities didn’t need all of those modules (i.e. bulk inventory, advanced costing, etc.). In other situations, companies that scaled back during the most recent recession no longer needed some of the modules they’d been using during healthier economic times. This gets people thinking that, if we’re already paying out annually for support, why not allocate that money to a new cloud-based ERP? For example, one Terillium client recently implemented NetSuite for half as much as it was paying annually to support its 20-year-old ERP.
4. Software maintenance is your problem.
If you stopped paying your annual maintenance bill to your software vendor, then you no longer receive help desk support. Now, if a problem crops up with your software, you’re on your own. In this situation, your options include re-purchasing the software licenses; upgrading your ERP and upgrading any hardware, operating systems, and databases. Not paying support dollars is a really risky way to run a business; if the system goes down, there’s nothing you can do about it. Business will come to a halt. When working with companies that are in this situation, Terillium advises them to consider all options. As long as you’re going to have to re-purchase all of your licenses, for instance, you may as well evaluate new systems that offer expanded functionalities.
Making the Best Choice
To companies that are trying to determine if it’s time to switch to a new ERP, the best first step is to work with a partner that can take an objective look at the situation and help determine the best path forward. As part of that exercise, be sure to assess current system processes, outline your pain points, and analyze the value and cost of maintaining/upgrading/replacing various different systems.
Get recommendations and then make sure you understand the costs and benefits of each opportunity that’s being presented. Then, build a strategic roadmap and start to develop a new business technology plan for maximum ROI and internal buy-in.