In April, Microsoft CEO Satya Nadella made news when he told Wall Street analysts that Covid-19 had forced companies to perform “two years’ worth of digital transformation in two months.” In addition to the sudden and widespread shift to remote working models, organisations also hurried to move more applications and systems to the cloud. Companies that already operated in the cloud prior to the pandemic worked diligently to optimise those cloud environments.
Of the many difficult lessons learned during this mobilisation, one realisation pertaining to enterprise resource planning (ERP) systems stands out: the value of modern ERP resides not in an individual system but in a continually expanding – and typically cloud-based – platform that links finance and accounting automation with supply chain, human resources, sales and marketing, and tax technology, among dozens of other applications.
Companies with that cloud ecosystem in place have tended to make strategic adjustments quicker, respond to marketplace and supply chain disruptions more effectively, and manage tax compliance challenges better compared to their less digitally advanced counterparts.
Despite the rapid digital transformation activities organisations have engaged in so far this year, many companies remain reliant on legacy ERP systems. This can be problematic, although the negative effects of outdated ERP systems are not always readily apparent. The following deficiencies often signal that it’s time to evaluate whether a legacy ERP system should be replaced:
Growth obstacles: ERP limitations may hinder the achievement of market expansion objectives, especially when that expansion involves the accounting, financial reporting and tax compliance complexities that arise when entering new countries.
Systems integration friction: Data-sharing problems, which can impede collaborations among different areas of the business, mark another sign that an ERP system requires updating. Integrations between new applications and legacy ERP can be cumbersome and time-consuming to establish, maintain and update. The time that extra integration and maintenance work requires can amount to an internal tax on innovation and business agility.
Customer-experience deficiencies: Limits within legacy ERP environments also can hinder an organisation’s ability to meet rapidly changing customer expectations, especially regarding self-service portals, mobile communications and customisations that have pricing, accounting and tax compliance implications.
Ann D’Emilio is a channel sales manager at Vertex
This article was originally published in the Autumn 2020 issue of The Record. To get future issues delivered directly to your inbox, sign up for a free subscription.
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