Legacy software has paved the way for the ERP systems that run our world today. The term “legacy software” refers to any technology, application, or computer system that is considered outdated or possibly even obsolete. "Legacy technology" implies one of many different situations:
Regardless of the reason, legacy technology eventually limits a business' operations. ERPs have solved these limitations and competitors may outpace companies who fail to keep their technology current.
There are general boundaries that can identify if a system is considered “legacy”. Incompatibility with newer systems on the market or lack of upgrades with new feature functionality is generally a sign that a product is considered "legacy software." This coincides with software that does not comply with modern user interfaces or user experiences, or cannot even receive the next upgrade due to extensive customizations. Unfortunately, the systems that are no longer being upgraded or generally supported by the vendor will not have the option of taking upgrades, stunting the business' value they can get from their ERP.
Even if legacy software is still supported by the vendor, it can still be risky to a growing business' future. Some key factors we've seen with our clients include:
There is an abundance of legacy ERP examples on the market, with that number continuing to grow year after year. In a world of ever-evolving technology, it is important to keep up to date regarding changes being made.
Some of these legacy software applications are very late in their lifespan, with little to no support coming from the vendor, while other vendors continue supporting their products through various policies or updates. It is important to understand the specific system you are on and the policies surrounding its support in order to determine what stage the system is in and how much support you can expect to continue to receive.
Every business deploys its ERP system to automate its business in its own unique way. But if there are some indicators that legacy software is holding the business back, it is time to make an assessment of all the factors that would make a case for either upgrading or not. We've highlighted the most compelling reasons to switch. When faced with changing legacy technology, executives must focus on the right reasons to decide if it is time for an ERP upgrade. How do you really know if there is enough business benefit or not?
People, Process, Strategy, and Technology
At ERP Advisors Group, we look at our client's problems through the four lenses of People, Process, Strategy, and Technology. If there are enough benefits that outweigh the costs of buying a new system, then we say there is a business case for upgrading legacy software to a new ERP.
There are usually two divergent camps of staff at our clients who are assessing legacy software - the mature staff who are used to the way it has always been and newer staff who are frustrated at how many clicks, screens, or spreadsheets they must navigate to do their work. A study from Workfront in 2020 found that around 49% of the United States workforce would leave their job due to frustrations with technology. This jarring statistic forces leaders to take a hard look at the nature of their system to determine if it is driving away top talent. The youngest generation entering the workforce grew up with iPads and smartphones and expect their technology to be intuitive and easy to learn and navigate. DOS-based "green screens" or "blue screens" that do not use a mouse and can't be navigated like a website are a turnoff to many workers, not just the newest members of the workforce. At the other end of the spectrum are mature staff who may "retire" to avoid the discomfort of an ERP implementation. And that may be the turning point--the company adapts new technology and processes that launch a new phase of growth otherwise prevented by older systems and resistant staff.
A scarcity of technical resources that can maintain and support the legacy software is another source of People issues to consider in the business case to upgrade. Without the resources to support the product, either in-house or through the vendor, the software can become a large risk to the company's future viability. A healthy ERP has a strong supply of development resources available in the market, including strong development and support partner channels, and access to a healthy pool of recruits who can provide day-to-day internal support.
When too many tasks must be done outside the system with manual processes that are typically found in most ERPs, there is likely a business case to upgrade. The number of manual processes and the tendency towards crashing spreadsheets and errors can drive out the new benefits which can be realized by automating more processes in the new software. (Visit our Industries page to find the most common reasons for industry ERP upgrades and the typical benefits achieved with a new ERP.)
For a company that isn't growing and doesn't have a strategy that entails organic or acquisition plans, and the owners and workforce are pretty constant, there may not be a good business case for an ERP upgrade. Conversely, an acquisition-hungry company, especially one with private equity funding, may find it cannot keep up with the business' transaction volume and reporting demands with legacy software. The business case for an ERP upgrade is more likely. Additionally, a company should take into account factors like expanding internationally, causing constraints on multi-company consolidations, currencies, and reporting as a strategic reason to consider an upgrade.
The underlying infrastructure should be considered for the Technology lens. The cost to maintain on-premise servers, disaster recovery mitigation plans, and cybersecurity risk mitigations may reveal vulnerabilities that could be resolved with modern Cloud ERP. An extremely outdated or heavily customized product may not be upgradable to the most recent version. This can prevent integration with new technology, including EDI, eCommerce, WMS, CPQ, and more. These systems will remain stagnant and can ultimately harm a company’s ability to grow and operate.
A common problem arises when a vendor ends system support for a business’s ERP. The end of system support comes at the very end of the product lifecycle and is typically a result of new products being released by the vendor, including newer versions of older products. As a result of the product being sunsetted, customers will eventually lose updates for common things like security issues, bug fixes, and 1099 updates.
At ERP Advisors Group, our Needs Analysis flushes out all the reasons why legacy software may no longer be a viable option for the company's future. Conversely, our Needs Analysis may also provide the proof that an internal software champion needs to show their ERP is still relevant and should NOT be replaced. It is not usually an obvious answer and even when it is, it is essential to understand all the implications to stay or to upgrade.
The process of determining your need for an ERP upgrade and then executing the transformation from a legacy ERP system is complicated, defined by obstacles and cautionary tales to avoid in order to reach success. Below are some of the most prominent issues faced by organizations tackling software upgrades.
Project managers must work diligently to garner buy-in and support from all parties before attempting a digital transformation of legacy applications. Failure to obtain buy-in can mean significant pushback from your users and leadership, ultimately tanking the project before it is able to get off the ground. From the viewpoint of leadership, a lack of support could mean that there is no need to supply resources to an ERP upgrade.
Once you begin your implementations, executive leadership must carefully craft a plan to address change management issues. Change management refers specifically to the oversight of employee response and adjustments to a new ERP system. An effective change management plan will allay fears from employees who may view new software as a threat to their job security. Other employees may need encouragement to overcome their unwillingness to learn new processes. The umbrella of change management can also encompass efforts associated with training users on the system once it is implemented. Human capital is one of the greatest resources a business has, so the risks to those resources should be heavily considered when planning for an ERP upgrade. And the window for training time may become compressed if the configuration and testing took longer than expected. However, don’t underestimate the importance of sufficient training time, and shorten it for time-saving efforts or to preserve a go-live date. Sufficient training ensures your team feels confident heading into cut-over and is a core piece of your change management strategy.
Another commonly overlooked aspect of leaving behind a legacy system is the headache of data migration. Without data, your new ERP is useless! Make data migration an important part of your project plan when replacing your legacy ERP. Cleaning your data and testing it in plenty of time before go-live ensures your ERP migration won’t be derailed. Extracting data from legacy systems can sometimes take even longer due to clunky extraction methods, so start data prep as early as possible.
When a business finally takes the steps to upgrade its legacy system, the lure of customization can also prove to be too much to resist. Businesses that are accustomed to the functionality of a custom legacy system are more likely to demand too many customizations because their users are accustomed to very personalized software functionality. It is essential that leaders familiarize themselves with ERP implementation best practices to avoid derailing their projects with over-customization.
At the heart of any potential software upgrade is the need for a more efficient system that will contribute to the success and growth of an enterprise. For any business contemplating an ERP upgrade, ensure that it is absolutely necessary and do not change unless you have to.