ERP systems form the backbone of many companies, however their performance decreases over time and this has a major impact on the way companies work. The “ERP in Practice 2022/2023” study by Trovarit shows that The average age of ERP software is around 13 years. This means that the majority of companies rely on systems from the early 2010s, which are often not designed to meet today’s challenges – whether due to technological, economic or regulatory changes.
Technological developments since 2010 have brought about fundamental changes in the corporate landscape. E-commerce, automation and artificial intelligence are playing an increasingly important role in corporate success. At the same time, the world has been shaped by various crisis situations over the past 13 years: The corona pandemic forced many companies to adapt their processes to enable home office and to strengthen hygiene measures in warehouse locations. In addition, the war in Ukraine has led to rising energy costs, which are still being felt today. Regulatory changes also pose major challenges for companies: New data protection and environmental laws have come into force, and these also have an impact on business processes.
Many medium-sized companies continue to be successful despite major challenges, which is often due to their strengths: family ownership over generations, a solid equity base, high adaptability and high-quality products.
However, these strengths only remain viable if they are backed up by a modern IT infrastructure. The ERP system plays a central role here. If it reaches its limits, a change should be seriously considered. If you wait too long, you risk decreasing efficiency and a considerable competitive disadvantage in the long term.
When is an ERP change due? Here are nine signs that your company needs a new ERP solution:
1. Declining company performance
Outdated ERP systems often cause unnecessarily high administrative costs. This can lead to materials being ordered too late, resources being scheduled incorrectly or customer inquiries being processed slowly. Such efficiency losses have a direct impact on a company’s performance. These problems can be solved by switching to a modern ERP system.
2. The ERP system is too inflexible
Markets and business models are changing rapidly. Old ERP systems are often not agile enough to keep pace with these changes. If adjustments require too much time or cost, or are even impossible, this often results in inefficient workarounds or isolated solutions. A lack of scalability, for example as a company grows, is also a clear indication that an ERP change is necessary.
3. The range of functions is not adequate.
One of the most important warning signs is that not all of the required functions can be covered by the existing ERP system. As a result, employees often have to be creative and resort to short-term solutions, such as manual data transfers using Excel. In the long term, these quick fixes lead to confusion, a lack of transparency and an increased susceptibility to errors. A modern ERP solution should seamlessly cover all business processes.
4. The performance leaves a lot to be desired
Digitalization brings with it growing volumes of data. Outdated ERP systems often cannot cope with this volume of data. Long loading times, system crashes or inefficient reports are the result. If the ERP system slows down your business processes, an upgrade is unavoidable.
5. Compliance gaps arise
New regulations, such as the EU GDPR, the GPSR or the e-invoicing obligation, place high demands on IT systems. If your ERP software cannot meet these requirements, legal and financial risks arise. Such gaps are a clear signal to modernize the ERP system.
6. Poor transparency of information
Informed decisions require up-to-date, standardized data. Older ERP systems often fail to connect all business areas and processes centrally and the resulting lack of transparency can prove to be an obstacle to effective management. A modern ERP system should offer comprehensive analysis and reporting functions, as well as connections to powerful BI tools.
7. Limited mobility
Hybrid working and mobile access options are now standard. If your ERP software causes problems in the home office, does not offer apps for field service or does not support a mobile solution for scanning barcodes, this hampers productivity. Modern ERP solutions should enable easy access to data and functions – anytime, anywhere.
8. Lack of interfaces and connection options
Digital transformation thrives on networked systems. If your ERP cannot exchange data with suppliers, customers, shopping platforms, accounting programs or other internal systems, it will become a brake on digitalization. A lack of IoT integration or manual data exchange are also clear indications that the software needs to be upgraded.
9. High maintenance costs
Older ERP systems often entail high costs – whether due to expensive hardware upgrades, a lack of support or costly customizations. A modern system can reduce operating costs in the long term and increase efficiency at the same time.
The bottom line: introducing a modern, well equipped ERP brings many advantages that help businesses compete successfully and overcome crisis situations.
If one or more of the signs mentioned above apply to your company, you should consider an ERP change. Switching to a modern system not only increases efficiency and flexibility, but also secures you a leading position in a dynamic market environment.
On-premise or cloud: which solution is the right one?
An important question when implementing a new ERP system is the choice of operating model – local (on-premise) or cloud-based. Both approaches offer advantages and disadvantages that should be evaluated individually. Find out more in our article on this topic.