Are traditional ERP systems becoming ‘legacy?’
One of the major problems for technological systems is the fact that after time it will become "legacy." This does not mean that it loses any of its effectiveness, but the cost of repair and maintenance increases, as well as adds a new layer of complexity when it comes to finding parts, because the new systems are cheaper and more readily available.
For example, after several years, it becomes more cost effective for Apple to offer a new MacBook or iPhone, instead of trying to repair an old model. That is why the Genius Bar has specific cut-off dates for all of its products.
All technology solutions have this problem. A recent article from PCWorld recapped a study by Gartner about enterprise resource planning (ERP) solutions. While basic systems are still evergreen and are easy to upgrade, highly customized ERP software will be considered "legacy" software by 2016.
The report makes the case that many organizations have been improving operations and data sharing because of these solutions, they have also spent vast amounts of money to create these "perfect" systems. This has helped create a strong software vendor market.
"However, the main beneficiaries were the major consultancies who managed the business process re-engineering and implemented the ERP solutions," the analysts wrote. "These implementation service providers secured themselves a prosperous future by utilizing lucrative continuous service contracts that went beyond implementation into extensive customizations."
All of this led to a situation where it is easy to find a single business that has spent up to 10 times as much on customizing these systems. The problem is that the net result of 15 years of this process is that ERP systems are not "extremely arthritic, increasingly slow and expensive to change."
What do businesses do now?
With ERP solutions becoming legacy, what is the next step for businesses to take? The report also attempted to answer this. According to the research, the next step will be moving toward the cloud.
"The notion of a single, integrated ERP system to handle a company's every need is being replaced by the emergence of cloud point solutions that deliver functionality business users want that the IT-controlled and centrally-mandated ERP megasuite previously struggled to deliver," the report reads.
It goes on to say that it could take a decade or longer before a majority of companies have adopted cloud-based ERP systems. However, there will be hangups because traditional systems have offered such strong support and benefits.
With the help of an IT solution provider that specializes in manufacturing ERP software, any company can easily take the steps to deploying the latest innovations.