When does the ERP system become too old?

An effect of the pandemic we experienced during 2020-2021 is a dramatic increase in initiatives among companies and organisations to accelerate their digitalisation and develop their ERP systems. From a shaky start in 2020, the year ended with an all-time high for many vendors and consultants focused on IT development. And 2021 has begun in the same way with a multitude of projects and initiatives.

Among the ERP systems affected by the investments is the classic ERP system. A system that over the years has both been praised as an enabler of development and also can become a hindrance that impedes the company's growth. Discussions about ERP systems often lead to emotional expressions from people with different experiences and views on the subject.

At HerbertNathan & Co, we daily meet businesses considering replacing their existing ERP system as part of their digitalisation journey. And what the customer often seeks can be summarised as “modern, flexible, future-proof and preferably cloud-based.” What this actually means is harder for customers to explain and often ends up with the explanation that the existing ERP system is experienced as having become “old.”

What customers miss in their current ERP systems

What do customers point to when the system is perceived as old? Among the criteria mentioned are the following:

• Cannot role-based tailor the system according to their user groups and users
• Cannot change the screen views and filter out irrelevant information for the user
• Cannot access the database from external systems to import/export data
• Cannot access the system from any web browser or any mobile device
• Cannot change the business logic beyond the traditional parameters in the system
• Cannot create new process flows and adapt as the business develops
• Cannot integrate with other systems or without consultant support
• Cannot receive new upgrades more often than every 1-2 years
• Cannot extract relevant information for analysis without connecting external reporting tools
• Cannot work with real-time analysis without having to run constant background jobs
• Lack of availability of external apps or ready-made interfaces to connect apps
• Lack of initiatives from the vendor regarding Machine Learning and AI
• Lack of initiatives from the vendor regarding predictive analyses and analysis support

Much of the above can be summarised under the keywords “Freedom and flexibility.” The majority of the traditional functions used daily are viewed by customers as bread and butter and are simply expected to be there. For the future, instead, systems are sought that are open to change. More and more organisations experience that we are moving from large and long one-off projects to constant change with many smaller and parallel initiatives. And it is in light of this that one should consider one's ERP system. Is it just a tool used daily for a specific task or should it also be an enabler of continuous development?

The phenomenon ERP system will remain for some time yet. But at the same time, the landscape around the ERP system will change and open up. The majority of the organisations we meet seek flexibility moving forward by combining multiple applications and avoiding dependency on a single vendor or a single system. An open platform and architecture create the flexibility that tomorrow's business needs.