One out of four companies will lose their competitive advantage in 2017 due to lack of digital business competence. These companies will lose out on new business as their rivals will have a faster time-to-market, streamlined operations, better business intelligence and cost savings that digital businesses generate. These companies essentially lose out because of their reluctance to upgrade from their legacy systems.
The problem with legacy systems is not only the loss of business opportunity. It is also one of cost. As most of these systems were created specifically to address a unique requirement, their maintenance and operation eats up between 80 to 90 percent of the IT budget. This leaves very little room for upgrading systems to keep pace with new developments like mobile technologies. Below are some of the other ways a legacy system could be hurting your business:
- Business Silos: Legacy systems are generally built as standalone applications. They don't work together and require substantial resources to integrate or communicate with other systems. They can also create business silos, separating useful information for no particular reason. Business silos do not give you the real-time business intelligence that is essential for the survival of any modern enterprise today.
- Compliance Standards: With the government also going digital in a big way the need for businesses to file digital returns has increased manifold. Just complying with the GST requirements alone can be tedious and time consuming. Upgrading your legacy systems to keep track of changing compliance standards can become a huge liability. Modern cloud-based ERP solutions, on the other hand are completely compliant with all government regulations. Any changes to regulations are automatically updated on the back-end, keeping you always up-to-date.
- Increasing IT Costs: If your IT costs are rising it is time to move on from your legacy systems. Studies have shown companies that adopt cloud based services save a minimum of 15 percent on their IT budget. Since legacy systems were often created decades ago, they require a specific skill set within your IT resources. More troubleshooting and more creative ways to make them work with your current business model become necessary each year. If you're not able to find employees who already know how to work within your legacy systems, additional training will be required.
- Customer On-boarding: Thanks to the increased emphasis on digital, most customers require you to be EDI (Electronic Data Interchange) -enabled to supply them. You must be compatible with their EDI systems, which can contain many different specifications. It means exporting data from your ERP system into a format that the customer’s system expects and understands. The difficulty is that each buyer has a different order format that requires you to integrate individually with each one. You may have to support multiple interface file formats for each trading partner. This means tedious updation of your legacy systems. Modern ERP systems are already compliant with most standard and several non-standard EDI formats.
- Security Threats: In-house systems run the risk of hardware or security threats. Viruses can cause major disruption. Without robust anti-malware security procedures in place you risk having to reinstall, backup and reassert all trading relationships. The onus of security in a cloud-based ERP system is on the vendor. Since this system supports multiple businesses, security is given the highest priority.
- System Expert Leaves: Legacy systems often run on a dedicated PC. That means key functions are not automated. If the operator or person who set up the system leaves, manual processes aren’t easily understood. Managing the IT infrastructure, the system runs on becomes virtually impossible.
So if you are legacy system is holding you back, click here to give your business the boost that comes from a cloud-based ERP solution.