On-premise enterprise resource planning (ERP) software is rapidly becoming obsolete in the age of the cloud, Forrester said, but that doesn’t necessarily mean it’s time for every business with a legacy ERP to kick it to the curb.
Forrester’s recent research found that 69% of software decision makers plan to retain their current business apps, despite the fact that application development and delivery (AD&D) professionals cite legacy on-premise applications as a major obstacle to their software strategies. This presents a challenge for AD&D leaders, Forrester said, who need to understand why software decision-makers are hesitant to ditch legacy on-premise software if their digital transformation plans are to succeed.
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“Vested interests on both sides [of the on-prem vs. cloud ERP debate] are trying to influence the decision in their favor, so AD&D leaders need to ignore the hype and make objective, pragmatic decisions,” Forrester said. To that end, they give lists of reasons for, and reasons against, replacing on-premise ERP software. Forrester also has a few modernization tips for those who intend to keep their current legacy software.
Why you should ditch your legacy ERP software
Forrester coined the term “digital operations platform” to refer to a “new breed of core business applications” that “handle many of ERP’s workloads but with very different architectures that make them more flexible, open and easier to use.” It’s this new type of platform that Forrester said SaaS advocates are pushing for when considering a migration away from on-premise ERP software.
Those pushing for DOP to replace ERP want to do so for several reasons:
- ERPs use solid instances, hard-coded processes and other elements of rigidity that make agility and adaptation to customer needs more difficult.
- Modern SaaS DOP software has overcome many elements of old UI design that hamper productivity and make it necessary for workers to do more things manually.
- DOP software is a new generation, and it takes advantage of newer business concepts, like proactive notifications to help make businesses able to react faster instead of older software that made that information available, but only if users drilled down to find it.
In essence, SaaS DOP advocates see ditching ERP as a way to move their organization into the latest generation of business software, which prioritizes flexibility, agility and proactivity.
Why you may want to keep on-premise ERP software
There’s still a lot of inertia in favor of on-prem ERP software, Forrester said, citing the fact that SAP has had to extend support for its Business Suite 7 on-prem ERP until 2027, five years beyond what it had planned to. SAP has been pushing its customers toward its cloud-based S/4HANA for several years, but some customers simply aren’t ready to move. Here’s some of their reasons for being hesitant:
- Software decision makers say that they have a variety of priorities, and an ambitious, expensive and risky transformation program distracts from those priorities.
- Legacy ERP software is often built for specific industries or use cases, and DOP simply isn’t a good fit for many industries, who would spend far too much time and money trying to make a one-size-fits-most product fit their specific needs.
- Complex legacy systems can’t simply all be shut off at once, and even with some business units adopting cloud products many will have to wait their turn. Ergo legacy ERPs need continued care and support, even once migrations have begun.
To sum it up, software decision makers are worried that a big migration project will derail current initiatives, be a pain to make work as well as legacy systems and they can’t all simply be turned off at once, making it impossible to take legacy systems out of the discussion.
What to do when you can’t get rid of legacy ERP
“The alternative to digital transformation is not doing nothing; it’s digital evolution,” Forrester said in the report.
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In instances where an organization can’t, or don’t want to, completely eliminate legacy on-prem ERP systems Forrester makes four specific recommendations:
- You can reduce your legacy ERP’s footprint by moving functional areas to new discrete pieces of SaaS software that can later be integrated into a DOP. This also has the added effect of slowly disentangling legacy software from your organization so it’s easier to remove once the time has come.
- Digital process automation and low-code software can help modernize legacy ERP user interfaces by reducing some manual processes and hiding old elements of ERP interface behind easier-to-use workflows.
- Robotic process automation can be used to eliminate tedious tasks. Forrester issues a warning alongside that recommendation, though: Don’t spend money automating fundamentally flawed processes. Evaluate them before automating them.
- Switch to a third-party support provider that can save you maintenance costs on legacy ERP software from companies like Oracle and SAP. Forrester said that yes, you do sacrifice some upgrade rights, but those are moot in the face of an eventual (and inevitable) migration to a subscription-based SaaS product.