Replacing an ERP system, it’s a task that almost no one would call fun. There is a lot of time-consuming research and planning involved. But, like many things in life, it’s necessary occasionally. One factor in the decision to buy a new ERP system people often overlook is cost. Not the cost to replace an ERP system, but the cost of keeping your existing one going.
It’s understandable that many people assume sticking with the status quo will be the easiest and often least expensive choice. However, that is not always the case. Without considering the costs from both sides, you are doing your business a disservice and may wind up hanging onto an ERP system for much longer than is financially wise.
Cost to replace an ERP system, three key factors to consider
- Data silos–As your business has grown and become more complex, the amount of data you collect has surely increased exponentially. To handle that new data, many companies find they have to rubber band solutions together. The ERP system they bought many years ago can't easily handle all this data. And, when you store data sets in different systems that cannot easily talk to one another, it becomes much more difficult to get a holistic view of your company and make data-driven decisions.
Not only does your decision-making suffer, so too does your productivity. If your team must spend hours compiling information from various sources to give decision-makers the information they need, data silos are hurting your business.
A modern, connected system stores all your important data in one place. So, users can generate reports with ease, many times in a matter of minutes, rather than hours or days.
- Limited functionality–Your ERP system probably had all the features you needed and more when you originally bought it. But as times have changed and your business has grown, they’re probably have been times when your ERP couldn’t do something you wished it could. Here, you have 2 choices. You can either use a clumsy workaround or, you can purchase a standalone system that has the features you are lacking. The problems with this approach are again a negative effect on your productivity and incomplete data.
With a modern ERP, adding new features that feed key information into the main system is a breeze, thanks to cloud technology. You can finally collect information in real time and make it available for on-demand decision-making, meaning that your entire business, from front-line workers to the C suite can move faster than ever.
- IT costs–Maintaining an outdated, or dare we say even obsolete ERP system puts a lot of extra work on your IT team. No matter whether they are internal or external, all the additional work your IT team must put into making the system usable and handling users' issues is doing nothing but raising your overhead costs and putting a Band-Aid over the real problem.
By contrast, a cloud ERP system needs much less maintenance. It’s easy to get up and running. All you need are Internet connected computers and devices. There is no other hardware to buy. Plus, IT related implementation, support and maintenance costs are cut dramatically since cloud ERP vendors take care of much of that for you with no input on your end.
When looked at in this light, the cost to replace an ERP system seems a lot less like an unnecessary expense and more like a smart financial decision.
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By: Laura Schomaker, Intelligent Technologies, Inc., a SC Microsoft partner
Very well explained. And the most important is that if you don't pace up your business with the new technology, the losses you will incur is much higher than what you require for implementing ERP solution.
Thank you, glad you enjoyed the post! You make a very valid point. We appreciate the input.