5 Signs it’s Time to Upgrade to a Cloud ERP

From Slack chats and Google Docs to Amazon, Netflix, and Uber Eats (or car), most of us rely on a whole roster of familiar cloud apps and services to run our personal and professional lives. 

In other words, we’re living in an era where “cloud” has become this “boring” digital default.

So, even if you look at “the cloud” through this narrow enterprise ERP lens, it makes complete sense that the entire conversation will most likely turn into a very “black-and-white” narrative. 

The prevailing wisdom is, “You can’t compete if you’re not in the cloud.” And, yeah, in a lot of industries, that’s true. Retailers, software providers, and others don’t stand a chance if they’re still relying on on-prem ERPs and a network of fragmented, entry-level apps.

However, in our experience, that sense of urgency is overblown. We work with a lot of small distributors and field service providers. They know they’ll need to upgrade at some point, but most are only just embarking on their digital transformation journeys. And so are their competitors.

Let’s be clear: we’re not gunning for an on-prem renaissance. Moving to the cloud is the only way to take advantage of cutting-edge tech like AI, ML, automation, and the IoT. Which, of course, are fast becoming essentials for businesses in every industry.

Here, we take a look at five signs it’s time to move to a cloud ERP ASAP — and why inaction could be an existential threat.

1. You Can’t Reach Critical Goals

It doesn’t matter if you’re failing to hit growth targets, sales quotas, or efficiency goals, struggling to make profitable decisions, or understand your customers, whatever. 

If your ERP is a barrier to achieving your strategic objectives — or even just makes it hard for your employees to do the jobs they were hired to do —  it’s time to look for a new, cloud-based system that can support current needs and future plans.

We’ve discussed how legacy ERPs prevent companies from driving growth, making quick decisions, or even accessing key information in multiple blog posts (you can read more about this here, or here).

But, here are a couple of examples that demonstrate the business impact of moving to the cloud: 

LoxamHune

Equipment rental company LoxamHune adopted a holistic, cloud-based system to achieve efficiency and sustainability goals.

The company worked with two Microsoft partners, first to consolidate all legacy apps into Dynamics 365 Business Central, then to implement D365 Sales, Marketing, and Field Service. CEO Luis Angel Salas told Microsoft that D365 allowed LoxamHune to increase decision-making speed and improve operational efficiency. He says the company now has a complete picture of all processes across all of its business lines: equipment rental, maintenance, energy production, events, and operator training.

This has allowed them to respond to unexpected conditions in near-real-time, rather than scrambling to manage the fallout later on.

Additionally, moving to a consolidated cloud ERP enabled LoxamHune to measure its carbon footprint and take data-driven action toward reducing its environmental impact year-over-year. 

Curran

Another company, Curran replaced QuickBooks with Acumatica’s cloud ERP. 

The luxury outdoor furniture and flooring retailer had long relied on a mix of legacy apps and paper-based processes to run business operations. This approach was hindering employee productivity and preventing users from running basic reports about sales numbers, inventory, customers, and overall financial performance. 

Curran worked with a consulting group to guide the migration process — helping the company create an RFP, map workflows, and consolidate operations into one unified platform — Acumatica ERP: Manufacturing Edition. 

Post-migration, Curran has achieved major gains in data accuracy and employee productivity. These improvements enabled the company’s expansion — increasing revenue by 300% in just over three years.

2. The Customer Experience is Suffering

Look, outdated tech makes it hard to give your customers (and partners, suppliers, and employees) the experiences they expect. 

According to the NetSuite white paper “8 Ways Legacy ERP Harms Businesses,” old ERP systems prevent companies from engaging in today’s interconnected world. 

In it, experts say customers are no longer willing to call customer service during business hours to get an ETA on a recent order. They want to log into their account to check their order status right now — without sitting on hold or waiting for some service agent to email them back when they get around to it. 

The NetSuite paper also touches on something really important. Channels like Shopify, Amazon, Etsy, and Walmart, are perfectly positioned to help brands drive additional sales. Your website might represent a “home base,” but these third-party channels allow you to reach customers where they’re already shopping. 

Without an interconnected system in place, it’s hard to manage sales across all these different platforms. On-prem systems or piecemeal solutions make it difficult to sync data across channels. Meaning, if you’re selling products on your website, Amazon, and partner networks, none of those channels are working from accurate inventory data. 

As a result, you might end up selling products that are already spoken for. Customers wait weeks or months for orders while front-facing sales and service teams are forced to face their ire. 

Even if your business model doesn’t include this type of multi-channel sales strategy, legacy ERPs can still cause plenty of trouble. For example, you might have an “information problem,” in which you lack the 360-degree view you need to understand and anticipate customer needs. 

Or, perhaps your technology is slowing you down. Maybe you can’t analyze, interpret, and operationalize data fast enough to keep pace with consumer demands. Maybe you just can’t respond to incoming inquiries across 10+ different channels at all hours. 

Or, it might be that you have all the info you need, but struggle to interpret those insights and use them to drive customer outcomes. 

One of our clients, a bipartisan public affairs firm, reached out to us because they were struggling to manage CX, sales, and marketing strategies. They knew they needed a marketing automation system, and we helped them build a cloud-based platform that made it easier to strengthen customer relationships and create personalized customer journeys. 

While the focus here was primarily on CRM solutions (D365 Marketing, Sales, and Customer Insights), our client was able to reach their goals because these solutions connected to a single cloud-based ERP. 

Ultimately, answering the “cloud upgrade question” is about figuring out why you’re struggling to support your customers in the way they want to be supported. If it’s because you’re missing key information, you’ll want to fill those gaps first. Then, from there, you can determine where you’re still falling short. 

3. Maintenance Costs Are Out of Control

In most cases, ERP systems are designed to support your business for the next 10+ years. 

But, years of mods, tweaks, and tricky workarounds take a toll on the bottom line. Manual upgrades, patches, maintaining custom code – these updates and workarounds come with a lot of complexity that only compounds over time. And, eventually, you’ll reach a point where making changes to legacy systems becomes too labor-intensive, time-consuming, and fraught with risk to continue on this path. 

Upgrading to a cloud ERP can help you save money on multiple fronts. For example, cloud providers cover the costs of running and maintaining servers, storing physical assets, and ensuring business continuity and system security. 

They also provide automatic software updates, rather than releasing patches or downloadable upgrades you’d have to implement yourself. So, overall, you’re not just slashing direct spending on things like equipment, energy, and storage. You’re saving time otherwise spent reconfiguring your system to accommodate upgrades.  

As a result, you can expect more predictable costs, making it easier to manage cash flow and reallocate resources for future investments.

Cloud ERPs also help you save money by unlocking efficiency gains. As an example, food manufacturing company Ruprecht was able to save over $1M in annual operating costs by replacing its legacy solution (QuickBooks and a custom on-prem ERP) with SYSPRO. 

According to CIODive, some companies are putting ERP projects on hold due to uncertain economic conditions. But, recent Forrester data suggests that many still have plans to move forward with ERP modernization, even as overall tech spending slows. 

ERP upgrades are expensive and disruptive under even the best circumstances. In this environment, these projects face increased scrutiny. And, now, IT leaders must weigh risks and potential rewards of moving forward against delaying crucial investments. 

4. Your Current System is a Security Threat

Legacy ERP systems are more susceptible to security threats than their cloud-native counterparts.  

For starters, it’s really hard to keep up with patching, updates, and other routine security tasks. On-prem ERPs often contain unsupported apps, customizations, and complex configurations. 

Already, that means there’s a lot that can go wrong. Implementations often take a long time and it’s easy to make mistakes — leaving you exposed until you get things sorted out. 

There’s also the fact that legacy ERPs typically need to be updated manually — by an actual human. That means, you might miss a critical update here and there, or struggle to ID and respond to known vulnerabilities fast enough to prevent a breach, comply with consumer privacy laws, or notify customers when their data has been compromised. 

According to Sage, using outdated processes such as sharing financial data via emailed spreadsheets puts your company at risk. Each time you share information through an unsecured channel, say, texting or emailing links to contractors and vendors, you lose more control over sensitive data. 

Per Scott Freedman, Director of Marketing at Sage Intacct, when information changes hands through informal channels, you don’t know who has access or who might be changing it.

It’s worth noting that there’s a lot you can do to protect on-prem ERPs from ransomware and other security threats. However, older systems may not be compatible with the modern security tools businesses need to keep themselves safe in the cloud. Think — single sign-on (SSO), multi-factor authentication (MFA), AI-driven detection & response, automated testing, and so on.

Legacy platforms might also lack reporting capabilities like threat detection and audit trails, as well as encryption methods required by regulators. 

Another big issue here is data integrity. When you’re working with legacy tech, you’re often relying on a patchwork solution where some data lives in the cloud, while some lives in your on-prem servers. 

So, you might use an on-prem ERP to manage core financials, inventory, and operations, but rely on a collection of disparate SaaS apps for things like sales, marketing, and customer communications. 

Yes, you can sync data manually or via scheduled updates, but you won’t be able to ID and respond to security threats in real-time. And, some updates will inevitably slip through the cracks, creating “multiple sources of truth” that undermine your ability to understand your business and make decisions that support its longevity. 

By contrast, cloud ERPs are more integrated, and thus, can provide comprehensive coverage. They also allow you to take advantage of AI, ML, automation, and other cutting-edge tech and establish granular control of your entire digital estate. 

We put together a piece, Elements of a World-Class Ransomware Strategy, that covers this in more detail.

5. You’re Running into Compliance Issues

Legacy ERPs can cause a number of compliance issues that could put your business and its customers in hot water. 

For example, if you’re using an older, on-prem system, you’re responsible for making sure all apps, integrations, and data sources are in compliance with the latest requirements. 

That means, someone in your org needs to stay on top of regulatory changes in every market you serve, then manually update the entire system — one component at a time. The more customizations and integrations in your system, the harder it is to meet critical requirements. 

Even if you’re just talking exclusively about something like consumer privacy protections, you’re dealing with a complex, error-prone process that can leave you vulnerable to hefty fines, legal action, and reputational damage. Different countries and even individual states have different requirements, and you’re required to meet them all. 

In other industries like healthcare, financial services, and manufacturing, companies face even more stringent requirements that cover everything from quality control and consumer safety to security protections and traceability. 

On top of all that, you’ll also need to be able to track compliance initiatives and report on your status in a particular way. 

Most cloud ERPs come standard with baked-in controls that make it easy to enforce and maintain compliance requirements. Many solutions even include AI and ML capabilities that will automatically update your entire system to reflect changing regulations. 

While this might all sound overwhelming, tackling compliance challenges doesn’t have to happen all at once.

As an example, Velosio worked with medical device company AtriCure to modernize its record-keeping practices to ensure compliance with US and EU regulations. 

AtriCure is the first company to receive FDA approval for technologies designed to treat Atrial Fibrillation (Afib), so clearly, they’re on the cutting edge of innovation and clinical science. 

Yet, when they first reached out to us in 2018, the company was still using paper-driven processes to manage and track inventory, service histories, and maintenance records. And, they had been using the same Microsoft Dynamics GP system for over ten years. 

Our experts knew AtriCure had a long DX journey in front of them, so we opted to approach this migration in two phases. 

First, we “lifted and shifted ” close to 50 disparate systems to the cloud – including AtriCure’s on-prem GP platform and several CRM solutions it was using to support sales, service, and the rest of the business. 

By establishing one-way integration from Dynamics GP to D365 Field Service, we were able to ensure that equipment data is represented accurately across both systems. That way, the company can ensure they meet compliance, quality, and basic CX standards. 

Phase two will focus on two-way integration (aka: real-time data-syncing) across all platforms – allowing AtriCure to streamline service operations, lower costs, and leverage insights to boost overall performance. 

What we’re saying is, ERP upgrades often happen in stages. You’re tackling high-risk issues like compliance or QC first. Then, after you’ve addressed your most urgent threats, you can migrate the rest of your business to the cloud, one step at a time – depending on your strategic objectives or priorities. 

Final Thoughts

Again, sticking with on-prem legacy systems doesn’t bode well for the future of your business. Cloud migration is an inevitability — but it can’t happen overnight. It’s a phased process that happens incrementally, often over long periods of time.

If you’re just getting started on this journey, the initial focus should be on solving for critical areas first, then unifying the entire operation into one digital ecosystem. 

Velosio’s ERP experts know this is a lot to take on without the right experts on your side. For more than three decades, we’ve helped clients select and implement the ERP systems that enable them to modernize operations and fuel long-term growth. 

Get in touch to learn how we can help.