The term “legacy ERP” came into widespread use around the same time that ERP in the cloud was poised to take off. Cloud architectures had gained the resilience and elasticity to accommodate demanding ERP functions with high numbers of transactions and support growing, digital businesses more efficiently and affordably than traditional ERP. Many other technology changes and innovations have happened since then. Legacy ERP now encompasses not just systems created by companies for their unique requirements, but also some fast-aging, standardized ERP products marketed by vendors. This has many organizations discussing the possibility of a move to cloud ERP, but when is the right time to get serious?
Challenges of Homemade ERP
It can be hard to imagine the need for a custom-built ERP system. However, there was a time when creating your own ERP was a reliable way for some of the most innovative and largest companies to obtain all the functionality they needed without incurring the functional restrictions and expenses of customizing and extending off-the-shelf systems. In-house ERP in many organizations started with a great match between business requirements and functionality. But as operating conditions, customer preferences, competitive challenges, supply chain fluctuations, and other parts of the business climate changed, ERP had to be updated.
That task, however, became steadily more complex and expensive. When the original developers moved on, it became more difficult to find specialized IT professionals who could maintain the software. The usability of in-house systems was often poor and did not improve during years of updates. Integrations and data migrations had to be re-built with each major change. An ever larger portion of IT budgeting was consumed by maintenance and support, making it difficult for IT leaders to enable their organization’s strategy and growth.
ERP Became Standardized and Complex
When technology vendors offered comprehensive, standardized ERP systems, many in-house ERP systems were retired. For many organizations, productized ERP was more usable, efficient, scalable, and robust than custom-built systems. Productized ERP had its own challenges. Deployments required specialized skills and could be lengthy and expensive. When companies did a poor job of aligning their processes and requirements with ERP capabilities, implementations could fail or only generated a portion of the hoped-for benefits. Users resisted ERP adoption when a product was too hard to work with. Unexpected costs could lead to large budget overruns, for example, when new servers, storage, and networking equipment had to be purchased to accommodate the software. Vendor-provided upgrades were often as complex and challenging as original implementations. Industry and technological changes, and the fluctuating demands of customers and new markets often made it necessary to customize ERP systems or add specialized solutions for certain requirements.
Over time, many once standardized ERP environments became as complex to support and operate as the in-house systems they might have replaced. What’s more, not every company needed all the vast functionality in the ERP solution. In some businesses, years after the deployment more than half of the software capabilities went unused. When you combined poor strategic alignment, flagging adoption, extensive customization, and limited use of ERP, the return on investment didn’t pencil out, or it was generated much later than stakeholders hoped
Enter Cloud-Based Business Management Solutions
When companies and technology providers saw the potential of cloud ERP, the sun set for many vendor-provided instances of onsite ERP. Very quickly, the large ERP products that could be so difficult to deploy also became legacy ERP. A major step forward happened when cloud ERP no longer simply replicated onsite ERP, but took advantage of the cloud environment to become modular. Your implementation could then be even more streamlined and provide just the functionality you wanted, nothing else. Cloud providers went beyond the industry functionality and standard integrations and migrations that were already available for on-premise ERP. On the same cloud platform, they surrounded ERP with analytics, data storage, artificial intelligence (AI), machine learning, mobility, social collaboration, and other tools that greatly extended what technology could help businesses accomplish.
Why Make the Move to Cloud ERP?
There are a number of items to consider when making a move to a new ERP solution, from organizational growth, to additional functionality requirements, to streamlined operations and innovation. Here are three key reasons to make the move:
- Your company is growing and your systems cannot keep pace
- You require additional functionality to meet current and future business needs
- You’re looking to streamline operations and reduce costs
Is Now the Right Time to Consider a Move to Cloud ERP?
No business is ever truly ready to make a move to a new ERP. Instead, you should look at the cost of not making the move and how it could impact the short and long-term aspects of your company. We suggest considering a move to the cloud if you fit in one or more of the following scenarios:
- When you’re looking to expand into new markets and geographies.
- Recent company acquisition
- Expansion of goods and offerings
- Growth in foreign countries
- When your current rate of growth is exceeding the capacity, functionality and scope of your existing solution.
- Increase of end users/Projected company growth
- Projected growth rate in number of employees and company transactional volume
- When your legacy ERP “End of Support” agreement is drawing near, or additional infrastructure investments are required.
- End of support of current ERP version
- On premises servers are not operating efficiently or near end of life
- Technology roadmap is to push systems to the Cloud
- When your existing solution is no longer meeting your current or future business needs.
- Reporting is not meeting expectations
- Additional functionality required
- Desire for expanded mobile capabilities to include use of tablets
- Current business processes are inefficient and implementing Dynamics 365 becomes a change agent for business process reengineering
What Cloud ERP Solution is Best?
Choosing the best software to fit your organization can be an overwhelming, and confusing, process. It’s precisely why Microsoft has developed the Dynamics family of Enterprise Resource Planning (ERP) systems – to accommodate the needs of companies, and support them, as they bloom and grow. Over the years, Microsoft has invested well over one billion dollars in research and development to its ERP software systems, including SL, GP, NAV, AX and now Dynamics 365 Finance and Operations and Dynamics Business Central. Microsoft has established itself as a leader in the ERP system marketplace, providing cloud based applications with intuitive interfaces, strong connections to other Microsoft products, and specialized functionality and utility that can serve clients in most industries. It also leads in the number of world-wide customers with Dynamics products.
Want to see more benefits and start building your cloud business case? Read our eBook: 14 Point Blueprint to D365 Implementations to find out today.