The top five risks of an outdated ERP system

The signals are loud and clear: your company's ERP system is outdated and needs to be replaced. But when do you take action? Replacing an ERP system always involves cost and effort, so you may prefer to put it off. But the risks of an outdated system can be greater than you think. Below, we outline the five biggest risks.

Reading tip: Five signs your ERP-system is outdated

1. Security risks

When your ERP vendor stops supporting the system, the risk of data breaches and successful cyber-attacks increases. This is because the vendor no longer implements regular security updates and patches.

The importance of these updates became painfully obvious during the May 2017 WannaCry ransomware attacks on outdated Microsoft operating systems. As early as March 2017, Microsoft offered an emergency patch to protect against the ransomware. Despite this, the ransomware made its way into hundreds of organizations, including the United Kingdom’s National Health Service (NHS). Parts of the agency had not installed the security update and were hit hard by WannaCry. The attack cost the NHS nearly £100 million and exposed poor IT policies within the organization. This incident highlights the importance of keeping systems up to date and creating awareness within an organization of the security risks of outdated software (versions).

2. Increasing support and maintenance costs

Outdated ERP systems often come with poor support and maintenance. The vendor focuses its energy on developing and maintaining the newer systems and discontinues support for older versions. When your outdated ERP system breaks down or needs to be modified, it can be difficult to get technical support from the vendor.In addition, hiring help outside of the vendor is becoming increasingly expensive as it becomes harder to find experienced professionals who understand outdated programming languages and system architectures.

3. Loss of competitive edge

Companies that cling to outdated ERP systems risk falling behind competitors that invest in more modern systems. Outdated systems may lack modern functionality that streamlines business processes and makes them more efficient. In addition, outdated systems may have difficulty integrating with new technologies, applications, or business processes. This can hinder business growth and innovation because the system is not flexible enough to grow with the changing needs of the business and the environment. All of this can lead to a loss of competitive advantage and market share, as well as the accumulation of technical debt – the money an organization incurs due to overdue IT-maintenance. Because the ERP system no longer meets the needs, quick workarounds are sought, within or outside the system. However, these quick wins and shortcuts do not solve the root cause of the problem and, in the long run, increase the complexity and cost of the overall solution.

4. Broken integrations and links

Outdated ERP systems can be difficult to integrate with new or external systems, requiring manual data entry and export. This takes time, compromises data integrity, and leads to fragmented data. Information is stored in different places and is not properly synchronized (in real time) between systems. When integrations don’t work well, it can also affect the customer experience, such as delayed delivery of products or services, inaccurate billing, or lack of communication with customers.

5. Gefrustreerde medewerkers

Outdated ERP systems can lead to employee frustration and reduced productivity. These systems often lack the user-friendly interfaces, intuitive designs and mobile access of more modern systems. They are also often slower, more error-prone, and not designed to work from multiple locations. These barriers can cause employees to feel unheard in their frustrations and seek their work happiness elsewhere.

Software developer Lakeside (2022) surveyed six hundred people about their digital experiences at the workplace. The survey found that 36% of respondents have considered resigning because of poor or missing ICT solutions. In fact, 14% have actually resigned as a result. These figures show that good IT-systems can make a real difference in retaining talented employees.

Do you recognize this?

Do you recognize the above risks within your organization or want to get ahead of them? Feel free to contact us to discuss a plan of action. Schedule a meeting with us here or leave your contact information below.

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