Why Modernizing Your ERP System to the Cloud is a Strategic Imperative
Modern organizations face a multitude of challenges that are testing the limits of their existing technologies.
As the demands of e-invoicing, environmental, social, and governance (ESG) compliance, hybrid work models, cybersecurity, supply chain reconfiguration, and the integration of artificial intelligence (AI) and many other urgent business topics continue to grow, many companies are finding that their legacy on-premises Enterprise Resource Planning (ERP) systems are no longer up to the task.
The disconnect between the capabilities of these outdated systems and the needs of modern organizations is becoming increasingly apparent, and the consequences of not migrating to Cloud-based solutions are mounting.
Embracing new applications and technologies in other parts of the organization while relying on legacy ERP systems is building a façade of modernity on foundations that will only get older and less stable over time.
IDC InfoBrief, sponsored by Unit4, Maximizing Your ERP Transformation through Cloud Migration (doc #EUR252433524, August 2024)
The Decline of On-Premises ERP Systems
According to a recent IDC InfoBrief sponsored by Unit4, Maximizing Your ERP Transformation through Cloud Migration, the number of organizations that found their ERP systems adequate dropped sharply from 70% in 2021 to just 38% in 2024. This steep decline highlights the growing dissatisfaction with on-premises ERP systems as businesses struggle to adapt to new operational demands.
While many companies have invested in modern customer-facing technologies, they often neglect the critical need to upgrade their back-office systems. This creates a dangerous imbalance where shiny new tools are built on an aging and increasingly unstable foundation.
The longer organizations cling to their legacy ERP systems, the more they expose themselves to a range of escalating risks. These include:
- Rising Software Maintenance Costs: As ERP systems age, the cost of maintaining them increases, diverting funds that could be better spent on innovation.
- Shortage of Legacy Skills: The pool of professionals skilled in maintaining older ERP systems is shrinking, making finding the necessary talent harder and more expensive.
- Growing Complexity and Fragmentation: As businesses add more applications to their legacy ERP systems, they create a tangled web of integrations that becomes increasingly difficult to manage.
- Operational Fragility: Aging systems are more prone to failures, which can lead to significant operational disruptions.
- Heightened Security Risks: Legacy systems often lack the advanced security features needed to protect against modern cyber threats.
- Degrading Employee Experience: Outdated systems can frustrate employees, leading to lower productivity and job satisfaction.
The Benefits of Cloud-Based ERP Systems
In contrast, modern Cloud-based ERP systems offer a range of benefits that can help organizations overcome these challenges and build a solid foundation for future success. These systems provide:
- Enhanced Security: Cloud providers offer state-of-the-art security measures, including encryption, access controls, and regular updates, to protect against cyber threats.
- Scalability: Cloud-based ERP systems can easily scale up or down to meet changing business needs, allowing organizations to grow without the constraints of outdated technology.
- Integration: Modern ERP systems offer seamless integration with other business applications, enabling a connected enterprise that improves data flow and operational efficiency.
- Innovation: Cloud-based ERP systems provide easy access to the latest features and innovations, ensuring that organizations are always at the forefront of technology.
- Standardization and Configurability: These systems offer a balance between standardization, which simplifies processes, and configurability, which allows organizations to tailor the system to their specific needs.
- Improved Collaboration: Cloud-based systems enable real-time collaboration across teams, improving communication and decision-making.
- Better User Experience: Modern ERP systems offer intuitive interfaces and mobile accessibility, enhancing the user experience and increasing employee productivity.
Why Speed is of the Essence
Given the substantial benefits of Cloud migration and the escalating risks of maintaining an on-premises ERP system, it’s clear that the time to act is now. Cloud migration is not just a technical upgrade; it’s a strategic imperative that requires immediate attention.
Starting the migration journey sooner rather than later is crucial for several reasons:
- Reduce Exposure to Failures: The longer an organization relies on a legacy ERP system, the more it risks system failures that can disrupt operations and damage its reputation.
- Limit the Costs of Relying on Legacy Systems: Migrating to the Cloud can significantly reduce IT overhead, allowing organizations to allocate resources more effectively.
- Gain Access to the Latest Innovations: Cloud-based systems provide quick access to the latest technologies, helping organizations stay competitive and responsive to changing market conditions.
- Improve Internal Process Efficiency: Modern ERP systems streamline processes, improving efficiency and reducing the likelihood of errors.
- Enhance Employee Experience: By providing a better user experience, Cloud-based ERP systems can boost employee satisfaction and productivity.
- Become More Customer-Centric: Cloud-based systems enable organizations to respond more rapidly to changing customer needs, improving customer satisfaction and loyalty.
The Cloud Migration Journey
While the benefits of migrating to the Cloud are clear, it’s important to recognize that Cloud migration is a long-term project that requires careful planning and execution. Organizations need to assess their current IT environment, determine the right Cloud solutions, and manage the transition process to minimize disruptions.
Despite the complexity of the migration process, the rewards are substantial. By moving to the Cloud, organizations can build a more agile, resilient, and innovative business that is better equipped to meet the challenges of today and tomorrow.
How Unit4 can help with your Cloud migration journey
The time for hesitancy is over. The growing dissatisfaction with on-premises ERP systems, coupled with the increasing risks and costs of maintaining them, makes Cloud migration a strategic necessity.
By leveraging Unit4’s expertise and best practices, we help organizations achieve a successful and efficient Cloud migration, enabling them to fully capitalize on the advantages of a Cloud environment.
Organizations that move quickly to modernize their ERP systems will not only reduce their exposure to operational failures but also unlock a range of benefits that can drive long-term success. The journey to the Cloud may be complex, but the cost of inaction is far greater. Now is the time to act—before your organization gets left behind.
You can download the full IDC InfoBrief, sponsored by Unit4, Maximizing Your ERP Transformation through Cloud Migration here and you can find more information on our Unit4 Cloud migration journey here.
