This article was updated July 31, 2023.
The pace of business and innovation has accelerated dramatically since 2020 when the COVID-19 pandemic hit. This places stress on the processes that are tracked and managed through a company’s enterprise resource planning (ERP) system.
Times are different. Worker expectations have changed around how they want to engage with business systems in a work-from-home environment; and customers have changed the way they want to engage with a company. Businesses can go global nearly instantaneously, e-commerce has created new sales and customer service channels, and the past decade has seen the birth of several hyper-growth companies.
Keeping pace with phenomenal growth and business opportunity requires the latest technology. Systems that need to be upgraded every four or five years are no longer enough to stay competitive in the current business landscape. Here’s a look at how an aging ERP system might be detrimental to your business.
Below is a look at eight key ways your business could become stagnant if you remain status quo with a legacy ERP system.
Measuring how much of a company’s IT budget is devoted to innovation rather than day-to-day operations, such as patches, fixes, and support calls, can help determine how aligned a company’s ERP program is with overall imperatives.
Analysts from Forrester to Gartner measure this allocation closely and find that maintenance spend can range from 50% to more than 90% of a typical IT budget, leaving only a fraction of the budget for meeting emerging or changing business needs.
Accounting and regulatory environments are in flux as governments tighten fiscal policy through sales and corporate tax changes and accounting bodies implement more stringent requirements. Such requirements include Financial Accounting Standards Board Accounting Standards Codification® Subtopic 605-25, Multiple-Element Arrangements, which governs revenue recognition for multi-element products and services.
These changes could place enormous pressure on organizations that an out-of-date ERP wasn’t designed to accommodate.
This results in spreadsheets being emailed back and forth as well as headcount meant to fill the gap between a company’s ERP program and the current business operating environment. Revenue recognition schedules migrate to spreadsheets, local tax reports get massaged through comma separated value (CSV) exports and manual entry, and sales-tax calculations start becoming error-prone affairs.
The web enables businesses to go global instantly, reaching millions of customers in a year when it used to take a decade or more to make that type of progress. Some of today’s fast-growing companies grew so quickly because they weren’t bound to an on-premise ERP system.
A company’s ability to compete is diminished if it’s running aging software designed for when businesses grew incrementally and IT budget, resources, and time were the constraining factors for that growth.
With the Gen-Z generation entering the workforce, and a large amount of employees working remotely, everyone wants an easy-to-use systems that mirror social tools and online shopping, increasingly blurring the lines between work and home life.
At the end of the day, putting the right person in the right place with the right tools remains the best way for any company to stay competitive.
The number of mobile devices worldwide in 2023 stood at approximately 7.33 billion. But most legacy ERP programs were designed for when work was done in the office and consumer and business computing were clearly separated.
The result is employees who are less productive than they could be and decisions that are often made based on outdated information.
It’s not just workers that are becoming mobile—businesses are also becoming more distributed. To compete, companies 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 three factors:
Today’s businesses are running operations in multiple locations and increasing efficiency with offshore and remote workers. Last generation’s ERP programs weren’t designed with that in mind, however, requiring companies to maintain desktops at multiple locations, regularly upgrade local clients, and deal with information fragmentation across local desktops.
Businesses want to decentralize while maintaining visibility and control, but legacy ERP systems often hold them back from achieving those goals.
For companies running on an aging ERP system, it can take days to assemble bookings, billings, and backlogs reports—or to complete periodic budgeting and forecasting processes. These businesses may be struggling to unlock data that’s buried in the ERP software and other disconnected systems and spreadsheets.
While businesses can now measure ad performance, marketing campaign responses, and the number of unique visitors to their website in real-time, core financial-management reporting is often still measured in weeks and business days.
Everything has become connected through the cloud. For example:
A company’s website is increasingly its principal storefront, and customers judge a business by the level of service it provides. This means operations need be interconnected with customers, suppliers, and partners, enabling real-time information exchange on demand.
Legacy ERP software wasn’t designed as a service-oriented system meant for such an interconnected world. This means companies using this type of out-of-date software are often required to bridge this gap by deploying expensive adapters, third-party applications, and Excel exports.
To determine if a company is self-serve, begin by asking these questions:
If the answer to none of these questions was yes, it’s likely due to an outdated ERP system. Legacy ERP solutions were designed when businesses were top-heavy in general administration and it was standard practice to have someone assigned to rekeying purchase orders or time-and-expense entries.
The cloud frees businesses from the inflexible and change-resistant ERP programs of the past. NetSuite is an example of a true cloud-based ERP solution that provides the latest innovations automatically—from features to support-required reporting to SuiteCommerce engineered to deliver a modern e-commerce experience.
During times of disruption, flexibility could be key to an organization’s survival. NetSuite allows organizations to build a suite of solutions based on its current work that could be modified easily for future business goals.
The most common reasons businesses move to a cloud-based ERP like NetSuite:
These systems enable enterprises to experience ERP innovation as quickly as consumers do, allowing for better alignment with business operating environments. Companies can also customize their ERP program with confidence because the cloud allows customizations to migrate automatically with every new release.
ERP system selection is a complex process with many operational variables to consider—all of which may impact every level of your organization. However, the process of choosing a system and implementing it doesn’t have to feel overwhelming. For more information about implementing an ERP solution like NetSuite within your organization, contact your Moss Adams professional or email ERP@mossadams.com.
As a NetSuite solution provider, Moss Adams delivers industry-specific insight and technical resources to streamline your selection and implementation processes—while providing ongoing support as you need it.
From fast-growing startups to large global enterprises, NetSuite powers businesses across a variety of industries. NetSuite is the No. 1 cloud ERP and serves as one unified business management suite encompassing: financials, customer relationship management (CRM), ecommerce, human capital management (HCM), and more. Additionally, each component of NetSuite is modular; it’s able to be deployed and integrated with existing investments as required or needed.
With more than 36,000 customers running NetSuite worldwide, some of the most innovative organizations trust NetSuite and take their financial and operational processes to the cloud.