One thing is certain when it comes to technology: it is going to evolve. This is particularly true with software and the infrastructure it runs on. With cloud versions of most ERPs replacing on-premise predecessors, many ERPs now find themselves facing the “legacy software” graveyard of obsolescence. But what risks does obsolete ERP really pose to a business? To understand that, it’s important to know what legacy ERP really is.

How Legacy ERP Could Harm Your Business

One thing is certain when it comes to technology: it is going to evolve. This is particularly true with software and the infrastructure it runs on. With cloud versions of most ERPs replacing on-premise predecessors, many ERPs now find themselves facing the “legacy software” graveyard of obsolescence. But what risks does obsolete ERP really pose to a business? To understand that, it’s important to know what legacy ERP really is.

Defining Legacy ERP

“Legacy ERP” is just another phrase meaning “outdated software.” At ERP Advisors Group, we consider legacy ERP to be any platform a business has been running on for 10 or more years. Typically, legacy ERP is built around on-premise solutions and older technology. As a result, many face issues and constraints that have been resolved by modern advancements in technology.

However, legacy ERP is not necessarily restricted to just on-premise deployments. The earliest iterations of cloud ERP are still far behind the modern cloud-based systems of today. In the 10+ years that a business has been on its system, there have been key evolutions in technology. On top of those missed developments, many legacy systems are unrecognizable after years of customizations, many of which have forgotten purposes or overly complicated workflows. As a result, the systems have become obsolete.

Common Pain Points Caused By Legacy ERP

Legacy ERP can cause problems for your business, and those pain points vary from company to company, especially when it comes to industry-specific needs. However, there are some common pain points we often encounter.

Resource Departure

Possibly the most common pain point of running on outdated enterprise software is losing the resources who understand your system. In many cases, the developer who coded and customized the software ends up leaving the company or retiring, stranding your business without any way to really maintain your software in the future.

Without those key individuals in place, your business will also lose the ability to develop hotfixes for any system glitches or bugs. If your legacy ERP goes down and you do not have a resource who can configure the system, you will be stuck without any support. And in many of these cases, it is not as simple as bringing someone in to learn and fix it. New talent is not learning how to code in outdated languages which were used 20 or more years ago. Ultimately, knowledgeable resources disappearing from the market puts businesses at risk of being left “high and dry” with no one to support their system.

Business is Being Run Outside of the ERP

Legacy ERP can still fulfill the requirements of some companies. However, in many cases, expanding businesses may find themselves running new processes outside their current system. As more business is conducted outside of the ERP, processes become too complex to effectively track. Manual processes can take valuable time away from your resources who could be performing higher-value tasks. Manual data in Google sheets, Excel and Smartsheet can get corrupted, deleted or lost. Also it is not part of the ERP transaction data which makes business intelligence reporting more difficult.

Inability to Leverage New Technology or Upgrades

The inability to utilize newly released technology is the most common pain point we have seen in recent years. Artificial intelligence’s massive boom has made it a priority in ERP advancement, driving a wave of desire for the latest automation and real time information gathering tools. Most legacy ERP platforms do not have the capacity to leverage new tools, like AI agents, simply because the technology is too outdated to integrate.

Businesses which have evolved and become more sophisticated since implementing their legacy ERP may have customers or vendors demanding EDI, but this does not integrate to 25 year-old ERPs. Additionally, customers and dealers may demand websites and portals for customer self-service and ordering, but eCommerce sites cannot integrate to the legacy systems. We’ve seen businesses with sophisticated warehouse management systems on legacy outdated ERP which cannot easily integrate with each other. This can impede their competitiveness and speed to do business.

While software vendors have announced continued support for some legacy products, support cycles won’t continue forever, and the support offered often doesn’t include hotfixes or regulatory updates. You might be able to get some new tools, but in all likelihood, you are not going to get the same functionality new platforms receive because the vendor is focused on enhancing its go-forward products, not the legacy systems.

Regulatory Changes

For many, it is crucial your ERP can comply with industry regulations. Unfortunately, with legacy ERP, there is no guarantee the developer of your product will continue to provide regulatory updates as new policies or laws are introduced. If you are stuck on a product that is not receiving regular investments, you may be left stranded on a system that can no longer support your needs.

How Your Business Can Be Harmed

While these obstacles are frustrating and difficult to manage, it is important to consider how those pain points are truly harming your business. We can categorize the ways legacy ERP harms businesses into two categories: direct and indirect.

Many of the direct harms are mentioned above, but others may include:

• Instability/Crashing: If your business has expanded extensively over the course of the 10+ years, your ERP could be unstable when processing lots of transactions. Every ERP is written with a maximum level of processing power, and the older your system, the more likely it is struggles to keep up with your growing business.
• Natural Disasters: While it may seem unlikely a natural disaster could impact your ERP, occurrences like floods, wildfires, and hurricanes do happen. If a natural disaster strikes unexpectedly, the last item on your list of priorities is going to be your ERP. In modern systems, data is backed up in multiple places and shared across multiple servers, protecting your business if a natural disaster impacts your business. This is, unfortunately, not the case for legacy ERP. Even if your company maintains regular data backups, it may not have a “snapshot” of your ERPs instance with its updates and customizations. Without a carbon copy of your instance to install on new hardware, you will need to implement from scratch before your data will be useful. This could easily take months to rebuild your ERP after a disaster strikes.

Now let’s discuss how legacy ERP can indirectly harm your business. An inability to integrate with new technologies is a major concern covered above, but many other businesses have noticed another concerning effect:

• Lack of Appeal to Younger Talent: We have seen many businesses concerned about their succession plan and how their legacy platform shapes it. Technology has developed rapidly, even in the last 10 years alone. Younger talent expects to work with modern technology. As a result, you will have trouble competing with businesses who have more advanced software to attract and retain younger talent.

What To Do About It

Now that we’ve discussed how legacy ERP can harm your business, let’s consider the approach for resolving these issues.

Ultimately, the longer you remain on a harmful legacy solution, the more painful it will be to migrate off. However, it is important to avoid rushing into a risky ERP migration and we recommend carefully considering all your options first.

Speak to your current vendor first

The first step should always be to speak to your current vendor. Let them know what product and version you are on and explain your desire to modernize the system. Your vendor can help ensure you are on the latest version available and help you with any updates you are eligible for.

Evaluate your vendor’s recommended roadmaps for upgrading

If your product is already up-to-date, the next step could be to look at your current vendor’s available cloud-based products. Most vendors developed roadmaps off their legacy products to the cloud. While this is labeled an “upgrade” the process is typically an entirely new implementation, which is a major financial and time investment. So, be sure to discuss existing customer discounts with them!

Explore what else is available on the ERP market

Another viable approach is to skip out on your current vendor’s offerings and move directly into evaluating other solutions available on the market. Speak with other industry connections, colleagues, and peers to see what systems they are familiar with or using, and make sure to do your research. Selecting a new ERP is a complicated (and important) process, so make sure you know your options.

Engage an independent advisory firm for unbiased guidance

Finally, know you can always discuss your situation with an independent advisory firm like ERP Advisors Group. An independent consultant can provide you with an objective look at your business and current landscape.

With no ulterior motive to sell a certain product, we can provide insight into why certain products suit your business better, or if it even is the right time to migrate off your legacy system. Regardless of the outcome, an independent advisor, like us, wants what’s best for your business!

Conclusion

Many businesses today remain on their legacy ERP systems without knowing the real risks that doing so poses to their company. While there is nothing inherently wrong with utilizing legacy software, there are major threats to your business that can arise when using outdated technology.

Whether it is time to upgrade, migrate, or remain on your legacy software, the experts at ERP Advisors Group are here to help! Schedule your free consultation with our team today.