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‘Old school’ ERP was always destined for obsolescence. A revolution back in the 80s, it enabled enterprises to plan for best use of collective resources, beit cash, people or skills and as a result, firms quickly came to view it as a vital business tool. Designed to capture Accounting and other Ops events, moving transactions between systems, and assisting fragmented silo working – ERP systems promoted real efficiency within companies.
This was 30+ year ago. How have they actually endured so long? Who still uses VCR, cassette tapes, disposable cameras, dial-up modems, fax machines, CRT monitors, or floppy disks?! But what exactly makes traditional ERP systems obsolete? Why do they fail to give modern organisations the gains in productivity, efficiency, or effectiveness that vendors promise? Six flaws of traditional ERP systems include:
Modern companies are finding that their current ERP system cannot take them where they need to go. It is difficult to properly value a business’s ability to adapt and evolve—to meet new market imperatives and gain an edge on competitors. But few would deny the vital importance of versatility and dynamism in today’s economy.
ERP began with a simple purpose: to increase productivity, efficiency, and effectiveness across enterprises. However, instead of an asset that delivers such value, traditional ERP systems have become a liability requiring too much ongoing cost and complexity to operate. They were never designed for the digital age. Instead, traditional ERP systems centered on plant, equipment, inventory, and cost accounting.
Modern businesses tend to prioritise data over plants, factories, equipment, and inventory. Data and intangible assets have overcome preoccupation with the tangible. Airbnb is worth more than Marriott without owning a single hotel. Uber is valued at over $50bn without having a single taxi in its inventory. Facebook exceeds the worth of companies with thousands of distribution centers, truck fleets, hundreds of thousands of employees, and billions in inventory.
The tide has shifted and data now rules the economy.
Traditional ERP’s deficiencies do not end there. What was irritating a decade ago is crippling today. Everything about older ERP systems was designed to capture and process the most important internal business events, not the myriad of external data points critical to success in today’s economy. Vendors optimised traditional ERP solutions for on-premise activities, not globally distributed teams. However, who does business that way anymore? With the advent of “big data”, businesses now expect to identify thousands – even millions – of action items from a single data set, items ranging from the repetitive to the unique. The future requires that business systems process millions of events at a time, not simply millions of transactions at a time.
Granted, as illustrated above, traditional ERP systems do deliver some value, but only enough to create a false sense of hope. Almost always, any added value is entirely offset by the significant overhead required to maintain and update the system. While excellent in the abstract, traditional ERP fails to execute its founding premise: helping organisations ensure the best use of collective resources. ERP deployments tend to come at a significant price, and the business benefits can be difficult to justify and understand.
ERP systems are now built to fulfill your amitions
Value-oriented ERP has now overtaken the traditional ERP. Xledger for example, focuses on unified enterprise management. While traditional ERP tried to coordinate disparate functions, Xledger aligns those functions into a unified, logical process where everything interrelates. Therefore it is optimally suited to the modern, data-driven organisation. The Xledger system heightens clients’ productivity by automating key accounting functions, which then promotes strategic decisions with real-time insight, and empowers organisations of any size to grow without fear of obsolescence.
You no longer have to settle for liking the idea behind your ERP system, you can love the system itself.
This blog post was adapted in the UK (Original USA Blogger – Nathan MccCann).