Moving To SaaS ERP: Why Legacy System Cripples Your Business

Managing company processes across multiple separate files can be tough and error-prone. To help you navigate this challenge, modern SaaS ERP systems offer a central place for syncing data, automating operations, and gaining insights in real time.

Let's talk about the advantages of using SaaS ERP systems and how to select and implement the best solution for your company.

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The Burden of Legacy ERP Systems

An old or outdated ERP system was once a game-changer in the automation industry. However, these systems are no longer compatible with today's developing digital world. Unlike SaaS ERP, they slow down businesses because they can't meet the need for quick data access and simple employee collaboration. When you stay with legacy ERP systems, there comes the risk of falling behind other companies leveraging the latest technology.

1. Are you using an outdated ERP system?

Let’s discuss your difficulties while using the current technology stack. Old systems can have limitations in several ways:

Read moreERP Companies' Ecosystem - A Guide Beyond the List of Software

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Signs showing an outdated ERP system

  • Limited integration: Is it hard to integrate your current system seamlessly with other applications or external systems? Is it even harder to integrate your system with new technologies like cloud computing, artificial intelligence (AI), and the Internet of Things (IoT)? The limited integration also results in manual data entry, abundant data and errors
  • Limited customisation: Does your team need manual workarounds or extra coding to customise workflows and other functionalities? You can consider an upgrade if these challenges seem to increase your business development cost over time
  • Limited scalability: Does your system lack the capability to support your business growth? Has your system shown signs that it could not handle your increasing data volume? Are procedures becoming more complicated? If yes, think of switching to a new system
  • Downtime & poor user experience: Does your current system make your teams more inefficient, struggling to perform daily tasks? Outdated systems are prone to crashes and experience downtime. They disrupt critical workflows and cost businesses a fortune.

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  • Obsolete technology: Outdated ERP systems might operate with outdated technologies that are no longer compatible with modern hardware or software models. They show frequent performance issues, potential security breaches, and compatibility errors with other systems.

2. The hidden costs of outdated ERP systems

Old systems suffer considerable inefficiencies, which can result in substantial financial losses for your company. Let's go further into the hidden costs that you may not be aware of:

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The hidden costs of outdated ERP systems

  • Reduced operational productivity: Old ERP systems commonly lack automation features that are found in modern ones, causing lower employee productivity. Manual workarounds and redundant processes can waste time and money, which reduces overall productivity. Genius ERP reported that businesses adopting modern ERP experienced a 23% reduction in operational costs, especially in manufacturing
  • High maintenance and support costs: Once ERP systems are outdated, the costs of maintenance and support increase. Vendors might charge higher fees for maintenance contracts. Your request for customisations or modifications may incur additional costs
  • Limited visibility & strategic decisions: Outdated data and siloed information within legacy systems create limited visibility across your business. These challenges make it difficult for you to get real-time insights, forecast trends, and make strategic decisions
  • Security risks: Old systems may likely encounter cyberattacks. This is a consequence of missing security patches and slow upgrades. These security issues can cause data breaches, legal fines, and reputational damage. Verizon reported that human errors contribute to up to 82% of data breaches. This indicates the significance of user training and system updates to maintain data security.
Read more: How to Turn Your ERP Application Into a Strategic Decision Engine

Why Moving to a SaaS ERP is a Smart Move

1. Explaining SaaS ERP

SaaS ERP (Software-as-a-Service ERP) is a type of cloud ERP system that streamlines business management. While cloud-based ERP is any ERP system hosted and accessed on the internet, SaaS ERP focuses on a software licencing and delivery model. Accordingly, the system is centrally hosted and accessed on a subscription-based model.

In a nutshell, SaaS ERP enables you to quickly access business data and apps from anywhere online. This modern strategy gives companies greater flexibility, adaptability, and cost-effectiveness than traditional or on-premises software.

2. Why businesses are moving to SaaS ERP

To remain competitive in a fast-paced business landscape, your company must be agile and efficient. Businesses are making an important transition from outdated systems to modern SaaS ERP. Here are a few reasons why this is a reasonable decision:

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Why businesses are moving to a SaaS ERP

  • Enhanced Flexibility and Scalability

Businesses that develop or confront fluctuations in demand can quickly adjust their subscription plans to satisfy evolving demands. Unlike old systems, which might need costly upgrades or customisation for expansion, SaaS ERP has the flexibility to scale resources up or down as required. This scalability allows businesses to adapt promptly to market dynamics and seize new possibilities without being limited by outdated technology.

  • Improved Accessibility & Collaboration:

Accessing key business data and apps on outdated systems frequently requires staying connected to a corporate network. However, with cloud access, you can use the SaaS ERP system at any time and from anywhere. This advantage allows your employees to work from anywhere with colleagues and make better decisions. 48% of respondents saw a significant increase in efficiency and 35% of them found a better employee experience with cloud systems (Statista).

For instance, a worldwide logistics business using a SaaS ERP such as SAP Business One allows its distributed workers to access shipment data, monitor inventory, and interact with customers. These tasks can be performed from any device with a web connection, eventually improving productivity and customer satisfaction.

  • Enhanced Security and Compliance:

Security problems are likely to happen if your business is using an outdated system. To avoid potential risks, SaaS ERP systems are built with robust security features such as encryption, multi-factor authentication, and frequent checkups. Moreover, their vendors strictly comply with legal requirements like GDPR and SOC 2 for data protection.

For instance, when a healthcare provider switches from a legacy to a SaaS ERP system, it can exploit built-in encryption, authentication, and frequent security checks. The system helps the business to avoid data breaches and maintain patient confidentiality and regulatory compliance.

  • Cost Reduction and Reasonable Expenses:

Updating and maintaining outdated technologies can be pricey and unpredictable, causing ongoing costs for hardware, software licences, maintenance, and IT support. SaaS ERP, nevertheless, runs on a subscription basis with predefined monthly or annual pricing. This reduces upfront capital costs and gives you more cost consistency. IT cost saving, according to 40% of businesses, was one of the biggest areas that produced ROI for businesses (Ultra Consultants).

By way of example, a manufacturer migrating from an old ERP system to SaaS Odoo saves money on hardware purchase and maintenance. It also receives frequent software updates and technical assistance as part of the subscription.

  • Continuous Innovation and Updates:

SaaS ERP providers offer ongoing software updates and developments, in contrast to legacy ERP systems. Performance advancements, new functions, and security updates are some examples of these updates. They ensure that you will never lose access to the latest technologies. Using a SaaS ERP system, businesses may stay ahead of the curve and profit from technology like AI and machine learning.

See Also: Selecting an E-commerce ERP: Everything You Need to Know First

Expert Notes Before Implementing a SaaS ERP

1. What to consider when choosing a SaaS ERP?

  • No. 1 Assess Your Needs: A thorough understanding of your business needs is essential for an efficient SaaS ERP implementation

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Evaluate business requirements for a SaaS ERP

  • No. 2 Assess Vendor Capabilities: Once you've specified your requirements, you're ready to review potential vendors:

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Assess SaaS ERP vendors

  • No. 3 Assess the Total Cost of Ownership (TCO): Even though the initial costs are considerable, TCO also contributes to a large portion of the overall price, which mainly consists of:

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Evaluate the Total Cost of Ownership (TCO) of an SaaS ERP

2. What are the basic stages throughout the entire implementation?

The following actions refer to a general overview of the key phases of your SaaS implementation:

  • Phase 1: Planning & Discovery: Determine your specific needs and business goals, followed by choosing the best SaaS ERP solution. Key activities are project team assembly; business process mapping; and data migration strategy
  • Phase 2: Setup & Migration: Tailor the SaaS ERP system to your unique business processes. This can involve migrating old data to the new platform, integrating with existing apps, and modifying workflows. Key activities are system configuration; integration with existing systems; user testing and training
  • Phase 3: User Training & Adoption: This includes training your personnel on the new system and making sure they are confident using it. Key activities are initial system launch; ongoing support and maintenance
  • Phase 4: Go-Live & Ongoing Support: Your new SaaS ERP system goes live, but the journey continues. Here, the vendor should provide consistent support to address issues and maintain a smooth workflow. Key activities are performance monitoring and user feedback; data analytics and reporting.

3. How long does an implementation usually take?

There isn't an all-inclusive solution for this matter. The implementation duration can vary greatly based on different variables:

  • The complexity of your business: Companies with intricate operations and procedures demand a longer implementation duration. Assume a major manufacturer that has multiple departments, product lines, and a global supply chain. Establishing a SaaS ERP system to handle these areas will be more complex than for a small retailer
  • Level of customisation: If you customise the SaaS ERP to meet your particular needs, the deployment process can take longer to complete. While basic settings can be performed quickly, major customisations can take even months
  • Data migration complexity: The complexity of your current data also affects the timeline. Moving large datasets or filtering conflicting data can be time-consuming.

4. Who can help with your ERP implementation?

Here's a breakdown of the key players who can help ensure your ERP implementation takes off smoothly:

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Key players in ERP implementation

It’s Time to Embrace Change and Invest in Growth

Making the switch to a SaaS ERP system is an investment in your company's future growth. The solution forms the foundation and offers a single source of truth for efficient corporate management. By opting for a SaaS ERP, you are not simply deploying software. Instead, you are making a well-developed decision to strengthen your employees, advance procedures, and construct a resilient business.

Understand that an effective SaaS ERP implementation involves a team effort. You can tap into its disruptive ability by thoroughly assessing your needs, selecting the best approach with certified experts, and supporting open communication among members.

References:

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