How can an outdated ERP damage your business?

Hope the followinf info help to answer your question

Over the past decade technology has transformed the broader world of business and consumer applications. Workers interact through mobile devices and social media, with applications increasingly connected over the web. 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.” It’s hard to believe that an outdated,5-year-old ERP system can be relevant to a business in the modern world in which last year’s smartphone is passé and a business like Group on can grow from a start-up to $700+ million in revenue in just a few years.

Today’s speed of change places stresses on business process. Worker expectations have changed on how they want to engage with business systems, and customers have changed how they want to engage with businesses.

Running an ERP system that is only upgraded every four or five years (at best) is simply not sufficient to take advantage of change and maintain competitiveness with your peers, especially in an uncertain and volatile market.

Business and technology are now moving so quickly that even if you do invest six months and £500k in an ERP upgrade, the end result will likely be out of date by the time it’s completed. Worse still, old ERP systems are fundamentally incompatible with the way companies need to be structured for success today.

Here are8 ways that aging ERP systems are holding back businesses and what can be done to overcome these issues:

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. Analysts from Forrester to Gartner measure this closely, and have found maintenance spend ranges from50% to more than90% of a typical IT budget.

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.

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 Out-of-date ERP systems struggle to cope with these changes, typically requiring time-consuming patches or additional manual processes.

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. Group on stands as an example of the kind of disruption that the internet enables. Labelled the “fastest-growing company in history”, it grew to revenues of $700+ million in2010 from $30 million in2009—a stunning growth rate of2,241%.

This would have been unthinkable just five years ago. Furthermore, with 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.

According to Forrester, up to50% of businesses will increase the number of mobile applications available to employees, customers or partners as part of their upcoming IT priorities. Our computing time is spread across any number of devices and platforms—an iPhone or Android device in the morning, a PC and tablet in the daytime and maybe a MacBook in the evening. We’ve transitioned to what Steve Jobs called the “post-PC era,” with powerful mobile devices offering anywhere, anytime web access

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.

Businesses as a whole are becoming more distributed. A June2011 survey by McKinsey illustrates the trend: More than50% of companies anticipate a rise in part-time and temporary workers,25% a rise in telecommuting and more than20% expect growth in offshoring and outsourcing.

Old ERP forces you into an expensive centralized 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.

Old ERP systems generally make reporting an onerous and error-prone exercise – leaving organizations to manually generate reports and create budget or forecast spreadsheets. To compete, businesses need modern ERP designed for today’s needs. This includes combining real-time business intelligence and analytics to enable workers across the organization to collaborate more easily and have visibility on key performance indicators, no matter where their location and without days of delay.

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.

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.

These eight factors should provide some compelling evidence as to how persevering with outdated ERP may be damaging your business. So what’s the solution? Modern demands for real-time information and boundless flexibility point to one answer: the cloud.

The first benefits of cloud-based ERP are the automated upgrades managed and delivered by the vendor at any time, helping to reduce spend on maintenance, freeing up resource for value-added activities including creating new cross-functional workflows and reporting processes, adding sales channels, entering new markets and improving collaboration between internal and external systems.

It aligns continuously with your operating environment so you’re always up to date and adhering to the latest accounting rules, tax regulations and compliance standards. The result is less risk, reduced headcount and more time spent on strategic rather than operational tasks.

Cloud applications also provide the engine to drive growth, enabling businesses to lay down an applications footprint for each country and subsidiary in weeks – not months or years. Cloud ERP spares businesses from having to worry about scaling up expensive IT resources and large capital expenditures on IT infrastructure. The result is speed that creates true competitive advantage.

In addition, web-based ERP applications are optimized for the distributed “elastic” business, meaning the workforce can access applications, monitor and manage the business from anywhere on any device and scale up and down when needed. They can operate on a true “follow-the-sun” model and not be limited by the constraints of centralized ERP or be dependent on local IT resources. A similar principle extends to connectivity with other platforms and web applications within your enterprise or beyond, to partners or suppliers.

Lastly, cloud ERP is designed for lean businesses and uses the power of the web to drive employee self-service, just as the web has securely transformed online banking and customer self-service systems. Web-based systems can allow employees to submit reports or purchase orders directly into the ERP from anywhere, requiring just online approval. As banks have known for years, empowering customers with self-service through the web increases profitability and reduces waste that goes straight to the bottom line.

Cloud ERP frees businesses from the brittle, inflexible and change-resistant ERP of the past. With the cloud, businesses can run on ERP that is “version-less.” It means that businesses get the latest innovations automatically, from new features to support for the latest regulations. No more waiting, no more costly upgrades, no more upgrade risk. No more outdated ERP.

The following are eight ways that an aging ERP system is holding back your business.

Legacy ERP Drains the Innovation from Your IT Budget

How much of IT’s time can you devote to addressing new business requirements, rather than day-to-day operations such as patches, fixes, support calls and otherwise managing your infrastructure? Take a hard look at the aging, version-locked ERP system you are running right now, and do the math.

Analysts from Forrester to Gartner measure this allocation closely, and find that maintenance spend can range from50% to more than90% of a typical IT budget. Only a fraction is left over for meeting business needs.

Business Regulations Demand Fluidity; Brittle and Outdated ERP Fails to Keep Pace

The accounting and regulatory environment is in constant flux as governments tighten fiscal policy through sales and corporate tax changes, or accounting bodies implement more stringent requirements. These kinds of changes place enormous pressure on finance organizations. An out-of-date ERP is simply not designed with change in mind.

The gulf between your ERP and your current business operating environment is filled with spreadsheets and headcount. This is the “putty’ that fills the gap that your ERP was meant to automate.

Aging ERP Is a Drag on Business Velocity

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.

Your ability to compete is diminished if you’re running an aging install of an ERP that was designed for when businesses grew incrementally—country by country, market by market, over years and decades. The old way of doing business meant deploying multiple ERP instances and databases for each market. It meant hiring IT in each location, setting up offices, procuring software and hardware, and enduring onerous setup processes. IT budget, resources and time were the constraining factors for business growth.

Mobile Workforce Battles Immobile and Outdated ERP

According to Forrester, up to50% of businesses will increase the number of mobile applications available to employees, customers or partners as part of their upcoming IT software priorities. Our computing time is spread across any number of devices and platforms. With computing fragmentation, we’ve moved from the PC/notebook-centric world of just five years to what Apple late CEO Steve Jobs has called the “post-PC era,” with powerful mobile devices offering anywhere, anytime web access.

Aging ERP systems were designed for when work was done in the office cube, and consumer computing and business computing were clearly separated. Using outdated ERP means either completely giving up on accessing your information from anywhere outside of your office, struggling for access over sloth-like Citrix connections or enduring painfully slow client-server experiences over virtual private networks (VPNs)—not to mention the associated IT and maintenance costs. 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 your employees are simply less productive than they could be and you make decisions more slowly based on outdated information.

Centralized Old ERP Hampers the Increasingly Decentralized Business

It’s not just workers that are becoming mobile. Businesses as a whole are becoming more distributed. A June2011 survey by McKinsey illustrates the trend: More than50% of companies anticipate a rise in part-time and temporary workers,25% a rise in telecommuting and more than20% expect growth in offshoring and outsourcing. To compete, businesses are looking to achieve agility and fluidity in their business structure. In a globalized world, businesses need to be able to choose where work takes place based on cost, timeliness and the ability to maintain and adapt an elastic workforce.

Today’s businesses are running operations in multiple locations and maximizing efficiency with offshoring and remote workers. But last generation’s ERP was never designed with this in mind, requiring hefty Windows clients and heavyweight software in each location. Old ERP forces you into an expensive centralized 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 desktops. Businesses want to decentralize while maintaining visibility and control, but old ERP holds them back from achieving those goals.

Legacy ERP Fails to Satisfy the Appetite for Real-Time Information

If you’re running legacy ERP you know the drill. Your business is running on spreadsheets, and management reporting is an onerous and error-prone exercise. You’ve got employees dedicated to the job of simply reporting, or reporting consumes the lion’s share of their day.

More often than not, it takes days to assemble bookings, billings and backlogs reports, or complete the periodic budgeting and forecasting process. You’re constantly struggling to unlock data that’s buried in the ERP (or other disconnected systems and spreadsheets). Amazingly, while businesses can today measure ad performance, marketing campaign responses, and the number of unique visitors to their website in real time, core financial management reporting remains measured in weeks and business days.

The simple fact is that the ERP you’re running was designed before businesses needed to move in real time, and before analytics and measurement was considered mandatory, not just a “nice to have.”

According to a recent Gartner/FEI study, business intelligence (BI) is now on top of finance’s agenda. And for good reason—there’s a gulf between what financial managers need and what their ERP is delivering. Your ERP is starving your business of information, forcing you to make strategic and tactical decisions based on out-of-date, incomplete or simply erroneous data.

To compete, businesses need modern ERP designed for today’s needs, not the needs of yesteryear. BI and analytics should be part and parcel of the ERP experience. BI has to empower every employee with personalized key performance indicators (KPIs) in real time, enable them to get down to the invoice behind that days sales outstanding (DSO) threshold metric, gain visibility across the complete business and create and share their own reports with self-service tools.

Stone Age ERP Walls Your Business Off from Suppliers, Channels and Customers

Your 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. Channels like Amazon are ripe to drive additional sales. 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.

But your out-of-date ERP deployment was never designed for such an interconnected world—forcing you to deploy expensive adapters, third-party applications and CSV exports. In short, Stone Age ERP was never designed to be connected across so many touch-points and with so many external stakeholders—they’re simply not service-oriented systems.

The impact is multi-faceted. Your customers are frustrated if they can’t easily view pricing and inventory information on your website, or check the status of orders or returns. You’re frustrated if you can’t switch suppliers on demand, because the effort requires yet more expensive integrations.

Old ERP Is a Barrier between Your Employees and Self-Service

Are you part of a self-service business? Can your employees enter time and expenses themselves into the ERP, or does someone need to rekey it for them? Can an accounting manager quickly implement a new purchase order process, or do you need to wait weeks for IT to do it? Can your finance team easily change the invoice template, or add another field to a customer record themselves? If none of this rings true, don’t blame your co-workers— blame your ERP.

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. Back then, a manager could offload his reporting to the finance staff, and you could hire another IT guy to make an ERP process change.