5 Red Flags That Show When it's Time to Install a Modern ERP

ERP systems are now established in companies of all sizes and industries. They contribute to added value and to maintaining competitiveness. However, current developments such as increasing globalization, the trend towards the smart factory and the handling of big data significantly increase the demands on the functions and performance of your business software.

New operational processes require flexible adjustments as ever larger amounts of data have to be managed and evaluated. Increasingly, departments and partners are working in a common network - all the more important is a future-proof solution that serves as a central data platform and powerful control cockpit on the way to becoming a digital company.

But When is it Time for a Change?

Which warning signals you can use to recognize an outdated ERP solution.
Why “ERP relics” can become a risky drag on success.
What business software should be able to do in the age of digitization.

Warning Signal # 1: Your Business Software is Part of an IT Patchwork Quilt.

If your IT system consists of various components that exist side by side as "island solutions", errors, data redundancies and loss of time are inevitable. Even if the software tools are connected to one another via interfaces, experience has shown that synchronization problems arise again and again - and with increasing amounts of data these synchronizations will become even more error-prone in the future. Complex detours via Excel imports and exports from the various data sources, for example between the CRM tool, PPS data and the ERP system, are still typical.

Integrated ERP solutions, on the other hand, are designed to act as a central, cross-company switch point for users. Relevant information is available to all departments in real time, so that transparency and efficiency are optimized and friction losses are minimized.

Warning signal # 2: Your Employees are Dissatisfied with the Performance of the ERP System.

An aging ERP system is neither able to cope with the volume of data nor the ever more complex analysis requirements. Ranging from speed problems to regular system failures are an unmistakable alarm signal for an upcoming system change. What decision-makers often dismiss as an acceptable loss of time puts an enormous strain on the efficiency of day-to-day processes. In addition to the cost factor of total lost working time, a slow and fault-prone ERP system also reduces employee motivation: Trust in the software is lost, it is no longer used with pleasure and employees are increasingly turning to data exports, for example to Excel Tables.

Warning Signal # 3: Your ERP System is Technologically Not "Digital Business Ready".

Digitization is also changing the way we work and the workplace itself. Mobile access to relevant processes has long been an important selection criterion for modern ERP systems. The understanding of "mobile ERP" goes far beyond the retrieval of sales data during customer meetings: With ERP apps for the various business areas, almost all processes can be controlled independently of time and location via mobile devices - with great added value potential also in the warehouse, production, and services. Companies with ERP solutions without mobile apps lose an unnecessary amount of time through a mess of paper and manual work steps and struggle with a significantly higher error rate.

In addition to mobile applications, future-oriented ERP software also offers answers to the dynamic challenges of the smart factory, from managing large amounts of data to networking with external systems. Important considerations are well thought-out SaaS / cloud concepts, an open architecture, and stable connectors.

Warning signal # 4: Your ERP System No Longer Meets Legal Requirements.

An important argument for timely modernization of the ERP system is legal security. The regulation frenzy is growing and modern ERP software is already reducing the risk of compliance violations on the system side. Considerations include CCPA, GDPR, corruption, customs clearance, and terror. Although responsibility cannot be transferred to software, well thought-out processes support companies in complying with the various legal regulations. The capabilities of the ERP software are extensive, from encryption and role-based user rights, audit-proof archiving in the DMS, integrated group accounting, and automated workflows such as a sanction list checks.

Warning signal # 5: The Company Processes Can No longer Be Mapped in the ERP System.

As a result of digitization, business processes and business models are changing faster than ever. Even if an ERP solution perfectly covered the status quo when it was introduced, every company continues to change and grow, and with it its processes. Only if the software used adapts flexibly does the system not “age”. Regardless of whether the company wants to scale internationally, whether production is to be digitized or an innovative industry feature makes sense: As soon as important workflows can no longer be mapped by the system, a gap arises between business and ERP - with the consequence that either data in ERP systems are missing and have to be entered manually or that expensive individual adjustments are necessary. In both cases, a new ERP system is usually the better long-term solution.

Conclusion

Isolated solutions, performance weaknesses, legal loopholes, a lack of "digital readiness" or software that no longer fully maps your day-to-day business. If some of these warning signals apply to your ERP software, you should urgently think about modernizing it. Many decision-makers shy away from introducing a new ERP system, after all, the selection process is lengthy and the investment is high. But only with a modern IT structure can you remain competitive and fully exploit the potential of your company.