Is Your ERP System Out of Date? Here’s How You Know


Finance Insights for ProfessionalsThe latest thought leadership for Finance pros

Thursday, July 6, 2023

Is your firm still using outdated legacy ERP technology? Here are five issues this could cause for finance departments.

Article 6 Minutes
Is Your ERP System Out of Date? Here’s How You Know

In the rapidly evolving world of business technology, staying up to date is not just an advantage, but a necessity. One of the key systems that organizations heavily rely on is Enterprise Resource Planning (ERP). While ERP systems have proven to be game-changers in streamlining business operations and enhancing decision-making, an outdated ERP system may become a hindrance rather than a help. The question therefore arises - is your ERP system keeping up with the times or is it falling behind?

Just as technology moves at a fast pace, so should your business. Any system installed 3-4 years ago may no longer suffice in today's business landscape. A system that once seemed "good enough" may now be holding you back, causing stagnation in innovation and an inability to respond dynamically to external pressures.

Legacy ERP can be a huge issue for organizations as finance teams rely on these tools for almost everything they do, and if they can't use them effectively, it costs the business time and money. Outdated, inflexible systems that lack essential functionality needed by today's firms mean employees have to rely on complex, manual processes to manage their activities, which not only takes longer, but can result in errors creeping in and valuable information being overlooked.

Are ERPs obsolete?

ERP systems are not obsolete, but organizations still running traditional ERP platforms may find themselves struggling to keep up with the competition.

With the shift towards cloud-based solutions, the right ERP can now provide a cost-effective, scalable solution that enables remote access to essential data and tools. Additionally, the incorporation of advanced technologies such as AI and IoT has allowed for automation and increased efficiency in various business processes, including procurement.

With 67% of companies claiming their ERP gives them better data visibility and over half benefitting from optimized processes, how do you know if your ERP system is out of date? Here are 5 features that could act as red flags, indicating that it's time for an upgrade:

You've only got a basic accounting overview

Today's ERP tools can offer a wide range of valuable information to the finance department - but if you're still dependent on older, legacy systems you'll be missing out on the huge insights this can offer.

A good ERP system should provide professionals with information including real-time receivables and payables data and forecasting models, presented in an easy-to-understand, visual format. If you're still having to rely on paper-based systems or separate spreadsheets that aren't integrated into the rest of the business, this isn't only slower, but much more wasteful.

Reporting and auditing are poor

Part of this data should be a comprehensive reporting and auditing process that enables a finance team to maintain full visibility of all operations and track what activities are taking place and who is responsible for them.

Teams without these capabilities will find themselves spending much more time chasing down records and dealing with manual and paper-based systems that harm productivity and don't give a clear picture. In the worst-case scenario, they may be completely unable to determine exactly what's going on inside their department, or get vital up-to-date info.

Learn more: The Finance Analyst's ERP Audit Checklist

You can't make or receive fast, easy payments

Being able to integrate payments management into an ERP system will also make it much easier to keep full control over your firm's finances, and the benefits can extend far beyond improving efficiency.

A survey from Flywire found that payment integration was crucial, particularly in the current economical climate with 86% saying they invioce international cutomers from their ERP system and 89% claiming their business could save more money if the cross-border receivables process was more tightly integrated with their ERP system, demonstrating the value this type of integration has.

It's inflexible and inaccessible

The ability to add new locations and lines of business to an ERP system will be essential if growing firms are to be productive, but if this isn't quick or easy to achieve with a legacy system, it can leave finance teams with incomplete or out-of-date information.

Having a system that employees can access anywhere has a range of benefits that are great for the finance team, even if they never have to use this directly. In addition to lower costs, it ensures every individual can enter and view accurate, real-time data wherever they are. With everything from new sales to travel expenses available instantly and in one place, this gives the finance team much better data to take into account in their planning.

You don't have in-built compliance features

Systems that can help you remain compliant with essential regulations such as the Sarbanes-Oxley (SOX) Act will be essential for any finance team. It's important to note the software itself won't automatically make you compliant, but it will greatly streamline your compliance activities, with features such as security, notifications and auditing tools.

Meanwhile, rules such as GDPR will also have to be considered. Finance teams deal with some of the most sensitive personal data a business possesses, and having secure solutions that can be centrally managed will be hugely useful in meeting these requirements.

Learn more: How Finance Leaders Can Get Maximum Value from Their ERP: 2023 Research

What does the future of ERP look like?

The future of ERP software looks promising and is set to revolutionize the way companies manage their operations. As technology continues to evolve, ERP systems are adapting to become more user-friendly and efficient, impacting all parts of a business from accounting to human resources.

One of the major trends in ERP is the shift towards cloud-based ERP solutions. This movement not only provides businesses with improved flexibility and scalability but also allows for better integration with other digital tools such as Slack, Teams, and Zoom. This seamless integration is expected to enhance collaboration and efficiency within organizations.

The incorporation of the Internet of Things (IoT), machine learning (ML) and Artificial Intelligence (AI) will enable ERP vendors to offer industry-specific solutions and enable smarter decision-making. However, it's important to note that while AI and machine learning holds great potential, it proves to be most beneficial when there's a clear use-case.

There's also a growing emphasis on improving human-ERP interaction through enterprise digital assistants. These digital assistants aim to provide a more conversational experience, making the systems more intuitive and easy to use.

Essentially, the future of ERP lies in its potential to provide greater visibility across an organization. As businesses continue to grow and evolve, the need for a unified data set that provides cross-departmental visibility becomes more critical. ERP systems are poised to meet this need by eliminating conflicting data sources and providing insights that lead to process improvements and efficiency gains.

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