9 Challenges Posed by Legacy ERP Systems 16

Legacy ERP systems – we cant live with them, and cant live without them! In the article Why you should feel revulsion for the term ‘omni-channel’ Chris Skinner nicely outlines why the banks need to replace their legacy bank systems. As I read through the article, I was thinking wow – these same arguments ring true for corporates too. Following are 9 reasons why corporates also need to seriously think about replacing their legacy ERP systems….

Legacy ERP Systems – Continuing Challenges…

1. From a bygone era:

Legacy systems were built at least a decade ago, when both the wider world and the corporate environment was very different. The historic system, functionality and technology requirements were without doubt quite different to todays requirements

2. Out of date:

The underlying technology that drives and operates legacy systems is outdated – today’s systems leverage open source software and API’s that promote and enable interconnectedness

3. Closed and unconnected:

Legacy systems are not suited to a corporate that is growing through mergers and acquisitions. As a result the legacy system is unable to easily connect and talk to other systems – this results in the development of one off custom interfaces to/from silo systems that aren’t actually talking to one another

4. Local, not global:

In the current climate of outsourcing to shared service centres (SSC), legacy systems cannot be easily deployed to staff located in various global SSC locations and often an interim solution is implemented. Unfortunately the interim solution due to system constraints actually ends up being the only long term solution

5. Inability to meet new requirements:

Legacy systems cannot cope with the various global regulatory requirements. This was clearly highlighted during the SEPA implementation where new standards could not be handled by the legacy systems. It was simple things like the legacy ERP systems not having an IBAN field in the supplier master screen which could be mapped into the outbound SEPA credit transfer file. Of course there was a field to capture the legacy bank details, but often this was not long enough to accommodate the IBAN value. Another area that required development was the creation of the SEPA XML file, in many legacy systems this had to be built from scratch which added significant development time and cost to the SEPA implementation

6. User unfriendly

Customers often want access to their data – for example to see in real time location/status/quality/cost of their product/ship/truck delivery. Providing this level of access to your customers via a green screen legacy system for example is often not easily possible, and when it is, is hardly a customer friendly and engaging portal

7. Batch processing

Legacy ERP systems were typically built upon batch processing, today real time information is key for both corporates and their customers – but unfortunately legacy systems are often not programmed, built to handle and process data in real time

8. Cyber security threats

Legacy ERP systems are not built to cope with todays network demands and withstand todays cyber threats – system access, database structure and the data itself is often open, accessible and unencrypted

9. Monster systems with add on’s here and there

Often all of the above challenges are managed and handled by a bolt on here and a system fix or enhancement there. This in turn creates multiple bolts-on and in turn a monster legacy ERP system which depends on resources with specific legacy system programming and system knowledge. These resources can be costly both in terms of time and money, because the legacy system wasn’t built to do the things that are now being demanded of it. But more importantly the approach fails to address the underlying issue and accentuates the dependence on the legacy system.

Legacy ERP Systems – Biting the Bullet

It is fair to say that we all understand legacy system limitations and acknowledge the rich functionality offered by current day ERP (Enterprise Resource Planning) systems. The challenge for corporates is at what point do you bite the bullet and make the strategic decision to replace the legacy system(s). After all the core business does not stop and it goes without you saying that you need a system to manage your day to day business processes. Couple that with the unprecedented visibility that customers have into your systems, and the need in a ultra-competitive marketplace to keep your customers happy, continue to challenge both corporates and banks alike.