Companies using an outdated enterprise resource planning (ERP) system are wasting time and money on the technology, according to a recent report by TechTarget. While experts say there are "unmistakable signs" that a legacy ERP system is due for an upgrade, many companies are ignoring these signs out of fear of the perceived, time, costs and frustrations that will come with updating a system.
"The truth is, companies may miss out on a host of business benefits by burying their heads in the sand," the report stated. "If they are running a legacy - or less than up-to-date - ERP system, they might be paying too much for maintenance. In this case, upgrading to a[n] ERP modern system can bring welcome new capabilities and lower total cost of ownership."
The report said companies actually put themselves at a disadvantage when they put off the inevitable process of updating ERP. One expert said in the report that many executives don't even realize what they could gain from updated technology and additional features, which could create smoother operations that drive business growth and revenue.
The smart companies are those that don't spend too much time trying to prove a business case for ERP, but see the clear benefits of the system that makes managing warehouses, manufacturing plants, supply chains and other operations so much easier. According to an Aberdeen Group survey in 2011, 63 percent of the 465 IT and business executives that participated said they upgraded their legacy ERP system to replace their outdated technology.
"Companies in that camp generally do not bother with building a business case, since the stakes are clear: Fail to invest, and your company is in jeopardy," the TechTarget report stated.
Steve Phillips, a contributor to SearchManufacturingERP.com, said for many business executives, there is no choice but to adopt an ERP system and keep it updated. Phillips said these executives know they have to make such moves in order to stay in business and remain competitive - this is the 'ultimate driver" for many businesses with regard to ERP.
A recent study based on economic models from the Centre for Economics and Business Research also described how important it is to keep ERP technologies updated. The study showed retail companies stand to lose money this holiday season if they do not have a clear understanding of their available products. For instance, retailers in the United Kingdom could lose more than $192 million this season because of missed sales opportunities related to out-of-stock products. When consumers can't find what they need at one store, they turn to a competitor that does have that product in stock. However, with smart technologies like barcode scanners and other tracking software, as well as a reliable ERP system that compiles information about available products, companies will be able to effectively operate to meet shoppers' demands.