The 2019 estimated spending on digital transformation by small businesses worldwide comes in at around $1.18 trillion. Trillion with a T. That’s pretty significant, especially when you consider its 17% increase in spending from 2018.
Despite the cost and effort required by solution upgrades of this magnitude, 70% of organizations fail to see their digital transformation plans to a satisfactory completion. Of the $1.18 trillion spent last year, an estimated $900 billion went to waste. If your digital journey is on the horizon, you may be wondering how companies let this happen and why some digital transformations flourish while others miss the mark?
What is digital transformation?
Whether or not the terminology speaks to you, your digital transformation is about ‘out with the old, in with the new.’
From CIO: “Ideally led by the CEO, in partnership with CIOs, CHROs and other senior leaders, digital transformation requires cross-departmental collaboration in pairing business-focused philosophies with rapid application development models.
Such sweeping changes are typically undertaken in pursuit of new business models and new revenue streams, driven by changes in customer expectations around products and services.”
Integrating modern technology across your entire organization fundamentally changes how it performs, engages, and delivers value to your workforce and customers. It includes and requires a cultural shift, too, one which forces your company to steadily challenge the status quo for better results in the end.
The Status Quo
Think of your legacy system as your status quo and, like many businesses before you, hinder your digital transformation efforts. Upgrading from legacy systems is a process often perceived as costly, challenging, cumbersome, and even dangerous, depending on how grim an outlook you want to take. This perception doesn’t account for employee resistance stemming from staff who are comfortable with your existing system’s status quo. Their reluctance stems from knowledge of the current system and longstanding workarounds, of course. But company leadership must understand and recognize employees’ fear of being replaced by automation often accompanies the transformation.
What Are Legacy Systems?
A primary reason for transformation fails begins with an organization’s legacy system. A legacy system is a computer system, software solution, or similar outdated technology. More often than not, legacy systems are difficult to maintain but remain critical to the organization’s workflow processes – even when those processes are littered with manual workarounds where the legacy technology falls short. Updates are less for enhancing the system and instead bandaids on top of real issues, requiring companies to use other systems and spreadsheets to fill the gaps. And since these outdated systems require so much human involvement, they are prone to errors, duplicity, and simply inefficient systems for businesses hoping to grow.
Legacy systems often have industry-specific functionality that creators, realizing quickly they could not sell their outdated technology to new customers, added features only to meet existing customers’ needs. Eventually, these systems become obsolete, unable to be updated at all, and effectively reach their end-of-life.
Leaving Your Legacy
Out of convenience and frugality, some companies attempt to eek out every last drop of their legacy systems, even when using these outdated systems can create significant setbacks and damage your business. Ultimately, you are left stranded unless you discover the importance and path to an enterprise resource planning (ERP) replacement.
Companies move to ERP systems for many reasons, most commonly when their current legacy system can’t keep up with modern processes. As is often the case, a company grows and needs better technology and more productivity to remain competitive.
If your current technology has simply become too painful or too expensive to let inefficiencies continue to rule the day, you’re probably considering all the benefits that come with ERP. Typical among these are:
- Operating business from a single system
- Business process improvement
- Improved data analysis & forecasting
- Increased visibility into overall operations
- Improved management reporting
- Streamlined inventory & warehouse operations
- Increased flexibility to grow & scale
Implementing an ERP system is time-consuming and downright challenging. They are highly complex systems that transform companies from . That’s intimidating to some, especially those comfortable with the status quo.
And the clock is working against them, and you if you let it. The competition will continue to make strides toward greater efficiencies, automation, and real-time visibility to drive more informed decisions. The market will continue to evolve, and so too will the means your company uses to guide and increase productivity. When your legacy system has significant vulnerabilities that harmfully affect negatively affect your business, it’s holding you back.
Find out how we can take you to peak performance in the accounting department and across your entire footprint with speed, accuracy, and insight through modern enterprise resource planning.