erp
Enterprise Resource Planning (ERP)

Legacy ERP Systems are Holding Your Business Back

Business processes are rapidly changing with advancements in social business, mobile, cloud and big data analytics. Yet, as companies have embraced innovative technologies that enhance front office (i.e., customer facing) processes, the back office has quickly fallen behind. In fact, a recent study found that only 14% of businesses are using ERP systems delivered as software as a service (SaaS). This means that most companies are using legacy systems that are technologically outdated and inefficient.

As innovative technologies have begun to pave the way for improved business models and revenue streams, business processes have grown more complex. Unfortunately, we are seeing a gap emerge between the fast-paced front end of businesses and back office ERP systems. The issue is that legacy ERP systems weren’t designed with social, mobile and big data in mind. They aren’t agile enough to keep pace with rapidly changing business models and evolving customer needs. Furthermore, most ERP systems can’t support integrations with other applications.

Consider the following examples. The proliferation of mobile has spurred the growth of big data through remote data capture and location-specific information. Additionally, it has created a need for product and service information, such as pricing, to be updated in real-time. With social media, updates about new products and deals spread far more quickly than before, leading to a much higher volume of customers in a shorter time span. As a result, companies in fast-growing consumer markets are forced to find ways to cope with business models that generate a higher volume and range of transactions that on-premise ERP systems simply can’t handle.

The alternative? Cloud-based ERP systems. In order to create a seamless experience for today’s digitally savvy customer and gain a competitive edge in the market, the back office must embrace cloud technologies that integrate with front office tools, such as cloud-based CRM applications. Research indicates that 29% of employees use at least three devices for work, several applications and work from multiple locations. If employees cannot access back end information, they cannot do their jobs effectively, which leads to inaccurate and inconsistent customer service. Ensuring a high level of front and back office integration increases communication and decreases the risk of discrepancies in pricing, billing, etc. between the sales and services teams.

Below are key elements to consider when evaluating your current ERP system to determine whether the time is right to move to the cloud:

  • Collaboration: Many cloud-based ERP systems integrate with CRM tools to create a seamless transition between front and back office processes. This helps businesses to better align finance, sales and service in a way that enables profitable growth.
  • Integration: In addition to CRM, cloud-based ERP integrates with mobile and social business apps such as Salesforce Chatter to increase communication between departments, whether in the office or on-the-go. Mobile is especially important, as nearly two-thirds of employees work from multiple locations. As mentioned above, legacy ERP systems were not designed with mobile and social functionality in mind.
  • Speed: For nimble companies adopting innovative and evolving business models, the speed and agility that a cloud-based service offers surpasses the abilities of most legacy ERP systems.
  • Customization: Legacy ERP systems are expensive, and customization takes months to complete. With the cloud-based ERP, organizations can easily and quickly customize and tweak applications to fit the needs of the current market.
  • Management: Difficulty in generating reports is among one of the leading frustrations businesses have with current ERP systems. In the cloud, reporting and functional changes do not require extensive input from the IT department or external consultants. These processes can be configured and managed by end-users.

As business processes become increasingly complex, companies will have no option but to move to the cloud. According to Gartner, 53% of CFOs estimate that half of their enterprise transactions will be delivered through the cloud over the next four years. As this transformation takes place, businesses must make sure that they are not leaving the back office behind with legacy systems that cannot keep pace.

 

Jeremy Roche is CEO of FinancialForce.com

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Jeremy Roche

Jeremy Roche is CEO of FinancialForce.com

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