How do you think your CEO and key decision makers would like to be remembered? As leaders who helped create an agile, adaptive company or as the ‘old guard’, clinging to outdated systems which hurried its demise? Assumed cost savings and familiarity with a brand name are not good enough reasons for holding on to your current ERP. In fact, there is a lot at stake if you don’t demonstrate the real risks of maintaining the status quo, to those who need to listen.

The Real Risks of Relying on a Legacy ERP System

Legacy ERP systems, like SAP ECC, have been running in businesses for years. Perceived as a ‘known quantity’, they come with predictable costs and few surprises. However, the ‘comfort’ of customizations, built for past needs now feels like a straitjacket. Your business, unable to adapt to a changing and often hostile market landscape, is now vulnerable to increased security risks and data discrepancies, leading to poor decision-making, thwarted progress and an inevitable downfall.

Generally, every modern business story follows one of two narratives: the first tells of a company clinging on to past triumphs and the legacy systems that got them there, only to be rendered obsolete by a changing business environment; the second depicts a growing company that adapts to the slings and arrows of seismic change and destroys their own models before customers and competitors force them to react. In this ‘up or out’ atmosphere, it has never been more imperative to transform into an adaptive enterprise and modernizing central business systems like ERP are key.

Building a Business Case for a Modern ERP System: Start by Identifying the ‘WHY’

Identifying the ‘why’ behind the importance of modernization is crucial for bringing decision-makers on board. By clearly linking the upgrade to the company’s strategic goals, you can demonstrate how modernization is needed to drive future success.

To build a compelling business case, let’s anticipate stakeholder questions and address them proactively. You could begin by setting the stage: “Modernizing our ERP system is about more than just software. It is a critical step to ensuring our company remains competitive and thrives in the years to come. I understand that change can be uncomfortable, so I welcome any questions you may have.”

5 Questions Key Stakeholders Will Ask (And How to Answer Them)

Our current ERP system seems to be working fine. Why should we invest in a new one and risk disrupting our operations?

While our current system may be functional, it’s like an old reliable car – it gets us from A to B, but lacks modern features and doesn’t demonstrate the efficiency and safety standards of a newer model. Modern ERP systems offer advantages that a legacy system cannot deliver; for example:

• Improved decision-making: With better data, analytics and outcome-oriented AI we can make faster and more intelligent decisions.  
• Strengthened security: Manufacturing is the most targeted industry for cyber attacks, so we need round-the-clock protection from cyber threats and data breaches.  
• Growth enablement: Fit-for-purpose and extendable ERP helps us scale operations so we can expand without technical burdens.
• Increased efficiency: Streamlining processes to prevent errors rather than fixing them and enabling people means we can add value.  
• Enhanced agility: The ability to respond quickly to changing customer demands and market conditions.

Our current ERP system is not just outdated, it poses a significant risk to our company. And it’s not just about security vulnerabilities, it’s about our ability to survive in this rapidly changing and often nefarious business landscape. For example:

• Technology limitations: Our current ERP has a nonexistent roadmap and is already behind in user enablement technologies like mobile access, exception-based notifications and interactive analytics.
• Compatibility issues: It doesn’t integrate well with other business systems, leading to data silos and manual workarounds.
• Security risks: It’s vulnerable to security breaches due to outdated technology and a lack of support.  
• Maintenance headaches: It’s becoming increasingly difficult and expensive to maintain, with no direct vendor support and limited options for managed services.  

Our business is outgrowing the current system and poses problems such as:

• Lack of scalability: It is a dead-end for M&A – we can’t bring any acquisitions onto this software and is on the “con” list if we seek new investment.
• Limited functionality: It doesn’t support our evolving business processes or new product lines.
• Inefficient reporting: It can’t provide the real-time insights we need to make informed decisions.
• Manual processes: Employees are relying on spreadsheets and workarounds due to limitations in the system, leading to errors and wasted time.  

We will never meet evolving customer expectations due to limitations in order management, inventory tracking and in customer service functionalities. For example:

• Competition? We’re falling behind competitors that execute new product launches faster than we can.  
• Compliance? We’re struggling to meet regulatory requirements and industry standards with our current system.  
• Costs? We’re suffering with the total cost of ownership (including maintenance, upgrades and support) which is becoming excessively high, not to mention a drop off in vendor support.

Staying with this legacy system limits our potential and exposes us to risks that could outweigh the perceived disruption of an upgrade.

How can we be sure that a new ERP system will be worth the investment?

We owe it to ourselves to conduct a cost analysis to discover if there is financial evidence in favor of an upgrade. By considering factors like the total cost of ownership (TCO) of the legacy system (including maintenance, support and hidden costs like inefficiency and security breaches) and comparing them against the TCO of a modern ERP, we can demonstrate ROI by:

• Cost savings: Reduced operational costs, improved inventory management and increased productivity.  
• Revenue growth: Enhanced sales, improved customer satisfaction and new market opportunities.  
• Risk mitigation: Improved security, compliance and business continuity.

Won’t implementing a new ERP system be complex and time-consuming?

While ERP implementation requires careful planning and execution, our current ERP is not only inherently complex, it’s time-consuming as well. Maintaining the status quo will only lead to more complexity and protracted workarounds whereas a new ERP has the potential for better everyday operations, once it is live. We can even minimize implementation disruption by:

• Engaging manufacturing experts to ensure a smooth transition.  
• Adopting a phased approach to allow for gradual adjustment and minimized disruption.
• Empowering people to make decisions that promote results rather than protect habits and assumptions.

By taking a structured and well-managed approach, we can minimize the challenges and ensure a successful implementation.

We’ve invested time and resources into customizing our current ERP to fit our unique business processes and don’t want to lose that functionality. What about our existing customizations? Will we lose those with a new system?

While every company has unique business practices, it’s likely that a majority of your customizations are focused on transforming a generic, finance-focused ERP (ie. SAP) to work in a manufacturing environment. By using an ERP that is purpose-built for manufacturing, your industry best practices are in standard product. This allows your last-mile fit to be focused on what truly makes your organization stand out among fellow manufacturers. QAD ERP not only includes manufacturing best practices, it comes with a low-code/no-code platform that enables your unique practices to be built with supported, forward-compatible technology. In other words, no more need for expensive application management services (AMS) to support customizations.

Remember, they will work closely with us to ensure a smooth transition and preserve the functionality that is critical to our operations and your legacy.

How will a new ERP system impact our employees? Will they be resistant to change?

Change management is always hard, but we are at an impasse: it’s not a question of “do we change?”, it is “when and how do we change?”. QAD ERP comes with an adaptive user experience that supports smooth onboarding and intuitive everyday use. It can help with: 

• Simplifying tasks: Automating routine processes and providing easy access to information.
• Improving collaboration: Facilitating communication and information sharing across departments.  
• Empowering employees: Giving workers the tools and insights to make better decisions and contribute more effectively.

In addition, QAD will engage with staff throughout the process, providing ample training and support to ensure a smooth transition and a positive attitude towards the new system.

But before beginning the process with a cost analysis, remember this: ‘wherever there is fear you will get the wrong figures’. You need to start by seeing modernization as an investment and not solely a cost; challenge the status quo, stop romanticizing the past and always remember our ‘WHY?’”

Create a Legacy of Transformation with QAD ERP

Why choose QAD? We only provide specialized ERP solutions for manufacturers, devising industry-specific solutions that are more user-friendly, adaptable and intelligent to enable businesses like yours, achieve faster time-to-value, lower costs and increased agility. We are much more than software; we are a life partner invested in your long-term success. Modernize your systems using QAD ERP and help build a legacy of efficiency, innovation and growth – quite a nice way to be remembered!

So, don’t let the status quo, including outdated systems, define your legacy. Contact us today about modernizing your ERP, protecting your business and your reputation.