With the ongoing digital transformation, decision-makers in businesses have constantly faced a dilemma in determining which technologies to invest in and when to take a hard pass. However, a modern ERP system is not a passing digital trend.
Your business’s success depends on it. This legacy vs. modern ERP systems comparison guide will clear the air for you.
Legacy ERP Systems
The legacy ERP systems were originally designed to accommodate and streamline various manufacturing functionalities, including business planning, finance & accounting, product management, inventory, etc.
They were built using legacy programming and installed physically on the manufacturing site. Every time a manufacturer needed multi-site capabilities, separate legacy ERP systems were stationed at different sites and if additional features were required, they had to be programmed separately too. While the once-innovative technology worked fantastically for a while, it could not sustain the growing need for more functionalities.
Ultimately, that led to siloed departments and repeated downtimes. On top of it, people had to extract and analyze data manually. If your business still has a legacy ERP system, it’s likely hampering your ability to gain a competitive advantage and thrive in a volatile market.
Modern ERP Systems
Modern ERP systems refer to cloud-based solutions that support company-wide deployment, several integrations, scalability, personalization, and centralization. They outperform legacy ERP systems in every aspect.
According to the 2020 Accenture ERP Report, about 46% of businesses are using cloud-based (private cloud) ERP solutions, while 25% are using on-site ERP systems.
Interestingly, 17% of them have deployed hybrid ERP, which is a combination of cloud-based and on-site ERP systems.
Also, it’s not just manufacturing companies that require ERP today. Though most companies with a supply chain are better off using an ERP system, almost any business can leverage it. Prominent examples include hospitality, construction, nonprofit groups, healthcare, etc.
So, are you missing out on something by not implementing a modern ERP system?
The following section will make that clear for you.
Legacy vs. Modern ERP Systems
The following table illustrates the key differences between legacy vs. modern ERP systems:
| Legacy ERP |
Modern ERP |
| Limited, costly, and time-consuming third-party integrations |
Quick, cost-effective, and easier integrations with a host of third-party tools |
| Takes years to deploy due to on-premise installation and manual integration |
Deployment may take up to six months, thanks to the pre-built design and centralized database |
| Does not provide real-time analytics. |
Offers access to business intelligence reports and analytical dashboards |
| Upgrades are a long-drawn-out process that can only happen manually. |
Upgrades are executed automatically (and frequently) via cloud |
| Supports only email communication |
Enables real-time communication with clients, suppliers, and other stakeholders through separate portals |
| Can be installed in different departments due to a lack of centralized structure |
Allows for enterprise-wide implementation |
| Becomes a barrier to a business’s scalability due to high cost, employee hours, manpower, and time |
Necessary for an expanding business, can fit the increasing number of customers, employees, departments, and orders |
| Cannot be customized as per a business’s requirements without exhaustive coding |
Little to no prior coding experience is required for customization |
| Cannot be accessed anywhere, anytime. Requires LAN and local desktops |
Can be accessed through a browser at one’s convenience |
| Necessitates expensive and frequent maintenance |
Modern ERP providers handle maintenance at their end |
| Requires physical monitoring for security, no security add-ons included |
Modern ERP providers implement high-security protocols |
| Greatly hardware-dependent, which becomes obsolete quickly |
Software dependent, cloud-based system |
Given the many benefits of modern ERP systems over legacy ERP systems, over 62% of businesses prefer it. Moreover, 50% of companies are upgrading their legacy ERP systems for the same reasons.
Intelligent ERP systems offer you a 360-degree view of your business across all departments, i.e., operations, finance, marketing, human resources, and sales.
Instead of playing catch-up, it’s high time to be an industry frontrunner by rapidly transitioning to a modern ERP system.
The Verdict
The legacy vs. modern ERP systems comparison clearly outlines the benefits of transitioning to the latter.
The high costs, limited integrations, sluggish upgrades, outdated programming, and hardware dependency are among the many reasons why adopting a cloud-based solution is a wise move for businesses of all sizes and across all verticals.
