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Seven signs that your ERP system is due for a transformation

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6 minute read 09 Jun 2023

It's essential for organizations to reassess the health of their ERP architecture to keep pace with changing business needs.

In brief:

  • An outdated ERP system is suboptimal for modern challenges. To keep up with the rapidly evolving business landscape, updating your ERP system is crucial.
  • Overhauling an ERP system, whether by transforming a legacy model, consolidating the current landscape or implementing a new one, requires meticulous planning and serious consideration.

Enterprise Resource Planning (ERP) has been the backbone of modern businesses, streamlining operations, and providing valuable insights to drive growth. But despite its critical importance, many companies struggle to fully harness the potential of ERP. In a rapidly evolving business landscape, the importance of keeping your ERP system up-to-date cannot be overstated.

An outdated ERP system is like a rusty engine in a high-performance race car — it may still run, but it's not optimized for today's challenges. Whether it's adapting to new regulations, capitalizing on market opportunities, or simply streamlining your day-to-day operations, an ERP system that’s tuned for change gives you the agility and efficiency you need to succeed.

For large forest product companies, value chains are long and often complex networks of suppliers and partnerships, extending all the way to the final consumers. Aside from industry-specific challenges — such as sustainability tracking and reporting and the sheer complexity of the supply chain — there are also emerging trends that companies needs to keep track of, to continue deriving value from ERP.

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EY Global

    This article explores the need for ERP transformation along four major levers:

    • Seven signs that your ERP system is due for a transformation
    • Choosing the right partner for your ERP transformation journey
    • How can EY teams help?

    As a layer that touches every aspect of the organization, transforming a legacy ERP model, consolidating your current ERP landscape or implementing a new one takes careful planning and serious consideration.

     

    But first, is your ERP landscape due for a transformation? Let’s find out.

     

    Seven signs that your ERP system is due for a transformation

    As businesses evolve, their ERP systems must evolve with them to remain effective and relevant. But how do you know when it's time for a change? From outdated technology to missed opportunities for growth and efficiency, many warning signs could indicate that it's time to re-evaluate your ERP strategy and embrace the benefits of an updated system:

    1. Outdated technology: As technology evolves, outdated ERP systems can no longer meet the needs of a company. This year and beyond, we expect to see technologies such as AI make a marked appearance within ERP. Automation, predictive analytics, improved user experience, personalization and enhanced decision-making are few of the benefits that new technology can bring. If your current ERP system does not leverage technology or take advantage of these opportunities, it’s time to rethink your strategy.
    2. Inefficiencies have crept into your current ERP implementation. As ERP extends across the value chain, it is important to align any cracks that have crept into the existing implementation. Inefficiencies can result in manual workarounds, missed opportunities for automation, and ultimately, a decrease in productivity.
    3. The cloud is not being used as a transformation imperative. If you are leaning on a legacy ERP system, the chance is that it is run on-premises, in your own data center. Today, ERP solutions are increasingly provided by agile, cloud-based apps that achieve customization using application programming interfaces. If you’re not leveraging cloud services, you’re missing out on better scalability, increased accessibility, cost savings, performance improvements and automatic updates.
    4. Changing business needs: Business needs are dynamic. Companies may face changes in their business operations, while expanding into new markets or introducing new products. From user adoption to performance, several parameters take a hit if the ERP solution does not align with or support business needs as they evolve.
    5. Inadequate reporting and data analysis: The requirement for ERP systems to integrate with AI and data visualization tools is starting to change the way ERP systems are built and used. Many innovative organizations have already had a head-start in extracting real-time data insights and having systems that process big data. Organizations could miss out on these beneficial features if their ERP systems do not keep up.
    The latest technologies make it possible for you to not just mine your ERP data, but also derive real-time insights from them.

    Roope Hyöky

    Partner, Consulting, Business Transformation, EY Finland
    Picture of Roope Hyoky
    1. Integration challenges: If you are struggling to integrate your ERP system with other business systems or applications, it may be time to consider a new system. A modern ERP system should provide seamless integration with other systems and processes — including cloud-based applications — to help streamline your operations.
    2. Lack of mobile support: If your ERP system does not support mobile devices, you may be missing out on opportunities to increase efficiency and productivity. A modern ERP system should provide mobile compatibility, enabling you to access information and perform key tasks from anywhere, at any time.

    Choosing the right partner for your ERP transformation journey

    How do you manage your company through a multi-year, multi-million investment in a manner that does not compromise your business during the project, but improves the business afterwards? A good ERP implementation is the combination of business thinking with an understanding of technology and the latest industry trends.

    EY Survey
    of ERP programs in the public sector fail in delivering the enhanced business capabilities outlined in the ERP business cases.

    The rise of cloud-based systems has disrupted the ERP industry. Long-established vendors are being challenged by other players who are revising their products in response to market trends. At this time when new trends are rising and disrupting the existing ERP landscape, organizations must look at strengthening their ERP ecosystem with support from an experienced partner.

    Experience, industry knowledge, support for customization, technology roadmap and support are some of the key parameters to assess potential ERP partners. Getting support from a partner who has the business understanding and the technological backing — potentially in the same industry — gives you the ability to tap into valuable industry experience, build future-proof strategies and stay ahead of trends.

    To transform their ERP architecture, organizations can consider investing in IT architecture, such as next-generation ERP systems like SAP S/4HANA.

    Kaisa Korri

    Partner, Consulting, Technology Consulting, EY Finland
    Picture of Kaisa Korri

    How can EY teams help?

    The EY organization has helped clients deploy large-scale, end-to-end ERP processes that work for their specific business needs — in many cases, in a multi-ERP partner ecosystem. An understanding of the wider value chain, the latest industry insights and global technology solutions position EY teams as a competent ERP transformation collaborator. This involves a combination of understanding how people's ways of working and the processes will change and how the implementation will unleash business value.

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    Summary

    To ensure optimal performance in a constantly changing business environment, it is crucial to reassess your ERP ecosystem. An outdated ERP system can result in inefficiencies, missed opportunities and decreased productivity. Selecting the right partner for your ERP transformation is important, with parameters such as expertise, industry knowledge and support for customization being critical considerations.

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