When to modernize your legacy ERP? 5 signs you shouldn't ignore

If you're like most growing businesses, your legacy ERP system has been a cornerstone of your organization's evolution. Sticking with what has worked so far may feel like the smart option, but modernizing an outdated legacy system can lead to cost savings, enhanced security, and better overall visibility. 

A more modern system makes implementing ERP integration throughout your organization easier, which is key to simplifying complex operations. According to the Intuit QuickBooks Business Solutions Survey, 95% of respondents agreed that integrated business solutions can help their companies continue to scale. 

Read on to learn five key signs that it is time to upgrade your legacy ERP system, the benefits a state-of-the-art ERP system can provide your company, and what to look for in an ERP replacement.

What is a legacy ERP system?

5 signs you need to modernize your legacy ERP software

The 7 benefits of a modern ERP system

What to look for when replacing your legacy ERP system

Best practices for legacy ERP modernization

Boost productivity and enhance profitability

What is a legacy ERP system?

A legacy ERP is an older software platform that companies use to integrate and manage business processes. This includes older technology that no longer receives support and homegrown technology that has become outpaced by current technology. 

As the creators of these systems retire and maintenance becomes harder and more expensive, the costs of maintaining these outdated systems often offset the benefits of ERP legacy systems. However, there are some clear signs to help you determine when it's time for a change. 

5 signs you need to modernize your legacy ERP software

When reviewing your current legacy software, consider the following five signs to help you determine whether it is time to overhaul your legacy ERP. 

Sign 1: Outdated technologies cause major security risks

Cybersecurity threats are constantly evolving, but frequent updates to ERP software are an impactful measure to help combat these risks. Many legacy ERP systems lack ongoing support and use obsolete programming languages that software developers no longer use. This lack of support leaves your business more vulnerable to cyber threats and data breaches. 

Sign 2: Scalability, flexibility, and remote access are limited

Legacy ERP software often struggles to adapt to new business processes or increased data volumes. It may fail to connect to the cloud easily, limiting remote work capabilities. These shortcomings make scaling operations difficult and costly.

Sign 3: System isn't compatible with innovations and regulations

Older software did not envision the efficiencies that AI and advanced business analytics tools would have on businesses. Using legacy software means companies will find it hard, if not impossible, to integrate their ERM with these essential features. 

As technologies improve, the regulations companies must adhere to are also changing. Companies using older software face challenges complying with evolving data security regulations, leading to costly fines and legal issues. 

Sign 4: Inefficiencies lead to high costs

Legacy ERP demands companies spend significantly on hardware upkeep, software updates, and specialized IT personnel to maintain an aging system. The inability to integrate with new programs and leverage the latest innovations stunts your overall performance and productivity. These upkeep expenses often end up costing you more than an upgrade would.

Sign 5: Data fragmentation limits visibility 

Older systems pose a two-pronged challenge when it comes to data visibility and multi-dimensional accounting. Information is trapped within specific modules, making it difficult to get a unified view of your business operations. 

Second, businesses must rely on manual data transfers and fragmented reports, leading to inaccuracies, wasted time, and poor decision-making.

Accounting solutions like Intuit Enterprise Suite can harness the power of AI to automate and centralize your organization's data management process. Quicker, more accurate data means you can make smarter, data-driven decisions.

The 7 benefits of a modern ERP system 

The previous section outlined the costs of a legacy ERP system, but that’s only half of the equation. In addition to offsetting some of these costs, a modern ERP system offers key benefits to businesses. 

1. Cloud deployment

As workforces become more geographically diverse, cloud computing is an important way to keep your team connected and working on the same page. Cloud deployment ensures your company’s data is available to your team anywhere and on any device. Greater use of cloud storage facilitates more informed decision-making and simplifies backup and recovery of data. 

2. Powerful reporting

Manual reporting is an arduous process that consumes time and resources. Modern ERP systems can leverage AI and machine learning for deep data analysis. These developments eliminate the need for manual reporting and create more useful and more accurate business intelligence reports. 

3. Enhanced scalability

A modern ERP system makes onboarding more devices and employees easy as your business grows. Modern systems can also fully support remote and hybrid work models, allowing you to adapt effortlessly as your team expands. 

4. Seamless integrations

Modern tools are designed to be compatible with the latest technologies. Investing in a modern ERP system means you can start to integrate a diverse range of modern software and AI-assisted tools into your business. These solutions streamline workflows across your organization, thereby increasing overall efficiencies significantly. 

5. Improved collaboration

Modern ERPs contain unified databases that centralize all of your information and offer real-time data access to all contributors. These improvements enhance communication and collaboration among your teams. 

6. Cost efficiency

Modern systems use cloud-based subscription models, which reduce upfront capital expenditures. As data moves to a cloud-based ERP system, the maintenance burdens also move to the cloud providers. This shift frees up valuable internal IT resources to focus on other, more critical duties.

7. Mobile accessibility

Many legacy systems were developed before employees used mobile devices en masse. Today’s workforce is accustomed to working on smartphones, tablets, and other mobile devices. Modern ERPs offer full functionality to all devices, improving productivity and responsiveness for your workforce. 

What to look for when replacing your legacy ERP system

The decision of which ERP platform to use is important for businesses. Below are four key elements of ERP to look for when modernizing your legacy system.

Tailored for SMB and mid-market businesses

Your ERP software should be geared specifically to small and mid-sized businesses. ERPs geared toward large corporations or those more generalized may fail to provide the relevant features needed to scale operations. 

Modern technology with rich functionality

The right ERP system should combine the latest technology with continuous business functionality enhancements. This combination enables advanced strategies, including digital transformation, industrial internet of things (IIoT), and AI-based planning. 

Deployment flexibility

Your business structure today may be different from how your business operates tomorrow. Ensure your ERP is built on an industry-standard technical platform that offers flexibility in deploying it on-premises or in the cloud. Having the choice to deploy the ERP means that companies can select the option that best suits their infrastructure and business needs. 

User-friendly interface and accessibility

Regardless of the platform you choose, moving to a new ERP will require training for your team. Look for a system that has an intuitive design to help smooth the transition from a legacy system. Modern ERPs that are easy to use and highly accessible will provide an easier adoption process for your entire team.

Best practices for legacy ERP modernization  

When making the shift from a postmodern ERP system, businesses should incorporate the following best practices into their modernization process:

Take the hybrid approach

To truly bring your current ERP system into the future, integrate modern cloud solutions alongside your existing on-premises software. For example, you can prioritize using cloud solutions for geographically dispersed projects and departments while preserving on-site tools for small teams that collaborate in person. 

Depending on your organization's structure, maintaining on-premises systems may not even be necessary. Moving your entire ERP system to a cloud-based architecture will significantly enhance flexibility, scalability, and cost-efficiency in these situations.

Custom development

Existing technology may perfectly address the needs of your company’s ERP migration. However, for businesses with more complex or unique circumstances, there may not be a perfect set of tools on the market that fits their needs. 

In these situations, companies may create a tailored solution uniquely adapted for their needs. Customized tools will cost more up front, but they allow businesses to achieve objectives that off-the-shelf solutions can't meet.

Implement a full modernization in phases

Modernizing a legacy ERP system is a complex project that touches many departments and areas of a business. Rather than replacing everything simultaneously, consider adopting a phased approach, replacing legacy components with modern modules over time. 

This approach requires a greater time investment, but a slower approach can pay off in the long run. Working in phases will reduce disruption across the organization during migration and better ensure a smooth transition to the new systems. 

For many organizations, the end goal of ERP modernization is to replace their old system with comprehensive benefits and fully up-to-date functionality. With careful planning and execution to mitigate downside risk, this strategy allows businesses to reduce complexity when scaling operations.

Boost productivity and enhance profitability

Business executives understand the importance of a strong ERP system to their organization. Modernizing your company’s legacy ERP platform can improve productivity and profitability, saving your business time and money. 

Schedule a call today to learn how Intuit Enterprise Suite can help you streamline operations, automate workflows, and improve decision-making as you scale your business.