7 Indicators It's Time for a New ERP System at Your Industrial Business

Welcome to Thomas Insights — every day, we publish the latest news and analysis to keep our readers up to date on what’s happening in industry. Sign up here to get the day’s top stories delivered straight to your inbox.

If employees in your organization regularly have to spend mind-numbing hours manually entering information into an outdated enterprise resource planning (ERP) system, it’s possible you’ve forgotten the reasons, such as efficiency, why the business invested in the ERP in the first place. 

Often described as the backbone of a business, ERP systems capture and connect the data that powers your industrial operation. 

An ERP is a significant investment. Not only are there perpetual licensing or subscription costs, but businesses must pay for implementation costs, including customizations and training, and ongoing costs such as customer support, IT staff, and maintenance. It’s little wonder, then, that the decision to replace an industrial business’ ERP system is not taken lightly. Like all technology, ERPs can become outdated and can end up hindering rather than helping your organization reach its goals.

Here are seven ways to tell that your ERP system is outdated.  

1. It Isn’t Cloud-based

A 2019 report by Aberdeen found that “on-premise licenses are giving way to cloud-based ERP platforms that can offer a more easily integrated solution across all entities and provide ready access to new technologies.” Aberdeen found that the top four reasons companies choose a cloud-based ERP are:

• Standardization onto a single system for multiple entities
• Collaboration needs across multiple locations
• Difficulty recruiting IT staff
• Dated technology infrastructure limiting the organization

Aberdeen also noted that ERP users expect that moving to the cloud will give them access to the “always up-to-date-economy” with ongoing updates and technical support.  

2.  It Isn’t Mobile

If you’ve ever had the experience of someone saying to you, “Sure, I can get that information for you, but you’ll have to wait until I’m back at my desk,” your ERP was likely built before the rise of smartphones, or you use an ERP with a mobile version that isn’t as comprehensive as the desktop experience. 

Outdated ERP systems can be the key factor holding organizations back from achieving full mobility, hampering flexibility and efficiency. While just about every modern ERP will have mobile functionality, some are simplified versions of the full offering. It’s therefore important to find out if there are any key features that can’t be accessed via mobile. 

3.  It Lacks Features That Are Now Industry Standard

Tech companies come out with countless new ERP-based solutions every year. In reality, most of them will never catch on, but the precious few become industry standard. If your outdated ERP system doesn’t support a now-standard tech, such as integrated analytics, your competitors may have the advantage.   

4. Vendor Support Has Been Discontinued

In the case of very outdated ERPs, the technology vendor will eventually decide that it’s too expensive for them to continue offering technical support for a dwindling number of users. This is a clear red flag and can spur organizations to upgrade their ERP because they’ll no longer be able to fix problems with their old one. 

Another scenario could be that technology vendors continue to offer support for an outdated ERP, but increase the cost of that support because they’ll need a dedicated team to look after that small pool of users.

5. It Can’t Integrate New Technologies

Integration — or the ability to integrate future tech — is a key consideration in choosing an ERP. Integration means different systems should be able to talk to each other, and data should be easily transferrable between systems. Without this, data may have to be manually prepped before transferring it to your ERP, leading to an ineffective workflow. 

6. It’s Creating Manual Work

Outdated ERPs tend to require more manual input as they grow older. If you find that your ERP is consuming valuable time for users or your internal IT team, it’s worth considering what this is costing your business. Manual work is also frustrating and demotivating for employees who would rather spend their time on value-adding projects. 

Your outdated ERP may also frustrate organizations external to your business, such as suppliers who dislike working with you because of the clunky online experience. Business customers will notice that your ERP is outdated because your responsiveness will be slower than industry standard.

 7. It Can’t Keep up with Regulatory Changes

ERP systems are an enabler of regulatory compliance, providing the data visibility required for reporting and auditing. Outdated systems, however, may be unable to provide the support necessary to comply when new regulations come into effect. General Data Protection Regulation (GDPR), for example, created a massive compliance burden in 2018 for companies with ERP systems that were too old to integrate GDPR patches or software updates.     

In the end, the costs and missed opportunities resulting from an outdated ERP — manual work, regulatory fines, loss of competitive advantage, lack of mobility, and more — add up to become more expensive than the cost of bringing in a new ERP system. 

Image Credit: Image courtesy of NicoElNino / Shutterstock