3 Reasons Why Sticking with Your Legacy ERP Could Kill Your Business off in 5 Years

1) Security Vulnerabilities

The Growing Threat of Cyberattacks

In the current digital age, one of the most underreported yet critical issues facing businesses is security vulnerabilities. Legacy ERP systems, often hosted on-premises, are particularly susceptible to cyberattacks such as ransomware. Unlike modern cloud-based systems, which benefit from regular security updates and enterprise-grade protection, on-premises systems are often neglected in terms of security upgrades. This neglect can lead to significant vulnerabilities that cybercriminals are eager to exploit. 

The Cost of a Data Breach

According to a report by IBM, the average cost of a data breach in 2021 was $4.24 million, an increase from previous years. This cost includes legal fees, regulatory fines, lost business, and the expenses associated with restoring data and systems. For many small to mid-sized businesses, a financial hit of this magnitude can be crippling, if not fatal. 

The Cloud Advantage

Modern cloud-based ERP systems, such as Microsoft Dynamics 365, offer robust security features. Microsoft’s data centers provide enterprise-grade data protection, ensuring that your business data is secure. Regular updates and advanced security measures such as multi-factor authentication, encryption, and continuous monitoring protect your data against the latest threats. By transitioning to a cloud-based ERP system, you can significantly reduce the risk of security breaches and protect your business from potentially catastrophic cyberattacks.

Compliance and Data Protection

In addition to enhanced security, modern ERP systems help businesses stay compliant with data protection regulations such as GDPR, CCPA, and others. Compliance with these regulations is critical to avoiding hefty fines and maintaining customer trust. Cloud-based ERP systems offer built-in compliance features, regular updates, and audit trails that simplify regulatory adherence and reduce the risk of non-compliance.

Proactive Threat Detection

Modern ERP systems also leverage advanced technologies like artificial intelligence (AI) and machine learning to proactively detect and mitigate potential security threats. These systems can analyze patterns and behaviors to identify anomalies that could indicate a security breach, allowing businesses to respond quickly and prevent significant damage.

2) Inability to Pivot to New Features

The Need for Agility

The business world is constantly changing, and companies must be agile to stay competitive. Legacy ERP systems often lack the flexibility needed to adapt to new business requirements or technological advancements. This inability to pivot can leave your business at a significant disadvantage.

Case in Point: The COVID-19 Pandemic

A prime example of the necessity for agility was the COVID-19 pandemic. The pandemic forced a dramatic shift in consumer behavior, with a significant increase in online shopping and a decline in physical retail. Businesses with modern, flexible ERP systems were able to quickly adapt to these changes by implementing new features such as online e-commerce capabilities and buy-online-pickup-in-store (BOPIS) options. However, companies relying on outdated legacy systems struggled to keep up. They lacked the necessary infrastructure to support these new business models, leading to lost sales and a decline in market share.

Embracing Innovation with Modern ERP

Modern ERP systems are designed to be adaptable. They support the rapid integration of new features and technologies, enabling businesses to stay ahead of industry trends. For instance, with a cloud-based ERP, businesses can easily implement advanced analytics, AI-driven insights, and other innovative tools that enhance operational efficiency and customer satisfaction. This adaptability not only helps businesses respond to current market demands but also prepares them for future challenges and opportunities.

Integration with Emerging Technologies

Emerging technologies such as artificial intelligence (AI), machine learning, and the Internet of Things (IoT) are transforming the way businesses operate. Modern ERP systems seamlessly integrate with these technologies, providing businesses with powerful tools to automate processes, gain deeper insights, and make data-driven decisions. For example, AI can be used to forecast demand, optimize inventory, and personalize customer experiences. IoT can provide real-time monitoring of assets and streamline supply chain management. Businesses that fail to adopt these technologies risk falling behind their competitors.

Enhanced Customer Experience

Customer expectations are higher than ever, and businesses must leverage technology to meet these expectations. Modern ERP systems enable businesses to offer personalized experiences, faster response times, and more efficient service. For instance, integrated CRM capabilities allow businesses to manage customer interactions more effectively, track customer preferences, and provide tailored solutions. By enhancing the customer experience, businesses can improve customer loyalty and drive growth.

Real-Time Data and Analytics

One of the significant advantages of modern ERP systems is their ability to provide real-time data and analytics. This capability allows businesses to make informed decisions quickly and accurately. Legacy systems often struggle with data silos and outdated information, leading to decisions based on incomplete or incorrect data. With modern ERP solutions, businesses can access up-to-the-minute data across all departments, leading to more effective and timely decision-making.

Scalability and Flexibility

Modern ERP systems offer scalability and flexibility that legacy systems cannot match. As your business grows or market conditions change, you need an ERP system that can scale with you. Cloud-based ERP solutions provide the flexibility to add new users, functionalities, and modules as needed, without the significant capital investment required for on-premise systems. This scalability ensures that your ERP system supports your business’s growth and adapts to changing needs.

3) Poor Employee Experience Leading to High Turnover

The Importance of Employee Experience

In today’s competitive job market, employee experience is crucial for retaining top talent. A poor employee experience can lead to high turnover rates, which are costly and disruptive for any business. Legacy ERP systems, with their outdated interfaces and cumbersome processes, contribute significantly to a negative employee experience.

The Modern Workforce’s Expectations

Modern employees expect user-friendly, efficient, and technologically advanced tools to perform their jobs. Working with outdated systems can be frustrating and demotivating. Employees who are forced to use inefficient systems may experience reduced productivity and job satisfaction, leading them to seek employment elsewhere. This turnover not only leads to the loss of valuable talent but also incurs additional costs associated with recruiting and training new employees.

Enhancing Employee Satisfaction with Modern ERP

Transitioning to a modern ERP system can significantly improve the employee experience. Modern ERPs offer intuitive interfaces, automation of repetitive tasks, and seamless integration with other business tools. These features enhance productivity, reduce frustration, and increase job satisfaction. By investing in a modern ERP system, you demonstrate a commitment to providing your employees with the best tools to succeed, which in turn helps retain top talent and reduces turnover costs.

The Cost of High Turnover

High employee turnover can have a significant financial impact on a business. According to the Society for Human Resource Management (SHRM), the cost of replacing an employee can range from six to nine months of the employee’s salary. This cost includes recruiting, training, and lost productivity during the transition period. By improving employee satisfaction and reducing turnover, businesses can save substantial amounts of money and maintain a more stable workforce.

Supporting Remote Work and Collaboration

The COVID-19 pandemic accelerated the shift towards remote work, and many employees now expect the flexibility to work from anywhere. Modern ERP systems support remote work by providing cloud-based access to essential business tools and data. This flexibility not only enhances employee satisfaction but also enables businesses to attract talent from a broader geographic area. Additionally, modern ERPs offer collaboration tools that facilitate communication and foster teamwork, further improving the employee experience.

Training and Development

Modern ERP systems often come with extensive training and development resources. These resources ensure that employees can quickly learn how to use the system and stay updated with new features and functionalities. Providing continuous learning opportunities not only improves the efficiency and effectiveness of your workforce but also shows employees that you are invested in their professional growth, which can boost morale and job satisfaction.

Reduced Administrative Burden

Legacy ERP systems often require significant manual intervention, which can be time-consuming and error-prone. Modern ERP solutions automate many routine tasks, reducing the administrative burden on employees. This automation allows employees to focus on more strategic and value-added activities, increasing job satisfaction and productivity.

Enhanced Collaboration and Communication

Modern ERP systems facilitate better collaboration and communication within the organization. Features such as integrated messaging, shared dashboards, and collaborative workspaces allow employees to work together more effectively, regardless of their physical location. Improved collaboration can lead to better problem-solving, innovation, and overall job satisfaction.

Key Takeaways

Sticking with a legacy ERP system can severely hamper your business’s ability to thrive in today’s fast-paced and technology-driven environment. The security vulnerabilities associated with on-premise systems expose your business to significant risks, including costly ransomware attacks. The inability to quickly pivot and adopt new features leaves you struggling to keep up with market demands, as seen during the COVID-19 pandemic. Moreover, poor employee experiences caused by outdated systems lead to high turnover rates, further destabilizing your business.

To ensure your business remains competitive and resilient, it is imperative to modernize your ERP system. Transitioning to a cloud-based ERP like Microsoft Dynamics 365 offers numerous benefits, including enhanced security, operational flexibility, and a better employee experience. By making this critical investment, you can protect your business from potential threats, adapt to changing market conditions, and retain top talent, ultimately positioning your company for long-term success.

How to Transition to a Modern ERP System

Navigating ERP Implementation Process: Essential Stages for Success

Assess Your Current System

The first step in transitioning to a modern ERP system is to assess your current system’s limitations and identify areas that need improvement. This assessment should involve key stakeholders from various departments to ensure that all perspectives are considered. By understanding the shortcomings of your legacy system, you can better define your requirements for a new ERP solution.

Define Your Requirements

Once you have assessed your current system, the next step is to define your requirements for the new ERP system. This includes identifying the features and functionalities that are essential for your business operations. Consider factors such as scalability, integration capabilities, user-friendliness, and cost. Defining your requirements will help you narrow down your options and choose a solution that best meets your needs.

Evaluate ERP Vendors

With your requirements in hand, you can begin evaluating ERP vendors. Look for vendors that specialize in your industry and have a proven track record of successful implementations. Consider factors such as the vendor’s reputation, customer support, and the flexibility of their solution. Request demos and case studies to get a better understanding of how their ERP system works and how it can benefit your business.

Plan Your Implementation

A successful ERP implementation requires careful planning. Develop a detailed implementation plan that includes timelines, milestones, and responsibilities. Ensure that all stakeholders are aligned with the plan and understand their roles. Consider working with an experienced implementation partner who can provide guidance and support throughout the process.

Train Your Team

Training is a critical component of a successful ERP implementation. Ensure that your team receives comprehensive training on the new system and understands how to use it effectively. Provide ongoing training and support to help employees adapt to the new system and stay updated with new features and functionalities.

Monitor and Optimize

After the ERP system is implemented, it is important to continuously monitor its performance and make necessary optimizations. Gather feedback from users and identify any areas that need improvement. Regularly review the system’s performance against your business goals and make adjustments as needed to ensure that the ERP system continues to deliver value.

Conclusion

Transitioning from a legacy ERP system to a modern ERP solution is a significant undertaking, but it is essential for ensuring the long-term success and resilience of your business. By addressing security vulnerabilities, enhancing operational flexibility, and improving the employee experience, a modern ERP system can provide a solid foundation for growth and innovation.

At Volt Technologies, we specialize in helping businesses transition to modern ERP solutions like Microsoft Dynamics 365 Business Central. Our team of experts can guide you through every step of the process, from assessing your current system to implementing and optimizing your new ERP solution. Contact us today to learn more about how we can help you modernize your ERP system and secure your business’s future.

Why Volt Technologies?

Here at Volt, we recognize that a dynamic and proactive approach is essential for growing your business in today’s competitive market, especially in the apparel, retail, and furniture manufacturing industries. So, here’s why Volt stands out as your ideal partner for upgrading to Microsoft Dynamics 365 Business Central:

Expertise and Experience: Since 1994, Volt has been dedicated to helping consumer brands, manufacturers, and retailers streamline their operations and achieve their business goals. Our deep understanding of the SMB market allows us to implement groundbreaking ideas tailored specifically to the needs of businesses like yours.

Specialization in Microsoft Cloud Solutions: As a trusted Microsoft Cloud Solution Provider (CSP), we specialize in deploying and managing Microsoft cloud solutions. This ensures you benefit from cutting-edge technology that enhances productivity and efficiency. We simplify your experience with a single monthly bill covering all the Microsoft Cloud solutions we implement, making your transition to Business Central seamless and straightforward.

Tailored Industry Solutions: Volt focuses on delivering value-added industry solutions that address the unique challenges faced by businesses in the apparel, retail, and furniture manufacturing sectors. Our consultants have expertise in these industries, ensuring that your ERP system is not only robust and reliable but also finely tuned to your specific operational needs.

Comprehensive Support: We serve as your primary point of contact for customer support, providing you with continuous assistance and ensuring that your systems run smoothly. Our commitment to excellent service means that we are always available to help you navigate any challenges and optimize your use of Business Central.

Proactive and Innovative Approach: At Volt, we pride ourselves on being proactive and innovative. We understand the essential requirements for success in the SMB market, including streamlined commerce, adaptable technology, global insights, and an efficient supply chain. By partnering with us, you gain a forward-thinking ally who is dedicated to helping you stay ahead of the curve.

Whether you are a small business or a mid-sized business, Volt is excited to be a part of your journey. We are committed to helping you harness the full potential of Dynamics 365 Business Central, ensuring that your business remains competitive, scalable, and ready for the future.

Contact one of our experts today!