5 Signs Your Business Has Outgrown Its Current ERP System

As mid-market businesses grow and evolve, their needs often surpass the capabilities of their existing
Enterprise Resource Planning (ERP) systems. What once served as a robust solution for managing business
processes may now hinder efficiency and growth. This blog post explores five telltale signs that indicate your
business has outgrown its current ERP system, helping you identify when it’s time to make a change.

The Cost of an Outdated ERP System

An outdated ERP system can be a significant drain on your resources. Hidden costs such as inefficiencies,
increased manual labour and delayed decision-making can mount quickly. These issues not only affect your
bottom line but also place your business at risk of falling behind competitors who leverage more advanced
solutions. Recognising the signs that your ERP system is no longer adequate is the first step towards
addressing these hidden costs and mitigating risks.

Sign #1: Increasing Reliance on Manual Processes and
Workarounds

When your ERP system no longer supports your business processes effectively, employees resort to manual
processes and workarounds. These may include using spreadsheets to track data or performing tasks
outside the ERP system.

A Real-World Example

A manufacturing company finds that its inventory management module is insufficient, leading employees to
use separate spreadsheets to track inventory levels. This results in duplicated efforts and increased chances
of errors.

Its Potential Impact on Business Operations

Reliance on manual processes decreases productivity and increases the risk of data inaccuracies. This can
lead to operational bottlenecks, customer dissatisfaction and ultimately, lost revenue.

Sign #2: Lack of Real-Time Visibility Across Departments

An effective ERP system provides real-time insights into various aspects of the business. If your current
system lacks this capability, you may struggle to obtain up-to-date information, leading to delayed decision-
making.

A Real-World Example

A retail company cannot access real-time sales data across its multiple locations, making it difficult to
manage inventory levels accurately and respond to market demands.

Its Potential Impact on Decision-Making & Efficiency

Without real-time visibility, your business operates in the dark, making it challenging to make informed
decisions quickly. This can hinder your ability to respond to changes in the market, optimise operations and
maintain a competitive edge.

Sign #3: Difficulty in Scaling Operations to Meet Growth

As your business grows, your ERP system should be able to scale with you. If it cannot, you will encounter
limitations that prevent you from expanding operations smoothly.

A Real-World Example

A distribution company experiences a surge in orders but finds its ERP system cannot handle the increased
volume, resulting in delayed shipments and frustrated customers.

Its Potential Impact on Business Expansion and Competitiveness

Difficulty in scaling operations can stunt your business growth. An ERP system that cannot keep pace with
your expansion can lead to missed opportunities, decreased customer satisfaction and loss of market share.

Sign #4: Limited Integration with New Technologies

Technology evolves rapidly and your ERP system should be able to integrate with new tools and
technologies. If your system lacks this flexibility, it can impede innovation.

A Real-World Example

A tech company wants to implement advanced analytics and AI tools to improve decision-making but finds
that its outdated ERP system cannot integrate with these new technologies.

Its Potential Impact on Innovation and Staying Competitive

Limited integration capabilities restrict your ability to leverage new technologies, hindering innovation.
Staying competitive requires the ability to adopt and integrate cutting-edge tools seamlessly.

Sign #5: Increased IT Costs for Maintenance and Support

Older ERP systems often require more maintenance and support, driving up IT costs. These resources could
be better spent on strategic initiatives rather than on keeping an outdated system running.

A Real-World Example

A healthcare provider spends a significant portion of its IT budget on maintaining an old ERP system, leaving
little room for investing in new solutions that could enhance patient care and operational efficiency.

Its Potential Impact on Budget and Resource Allocation

High maintenance and support costs divert resources from strategic projects that could drive growth and
innovation. This can limit your business’s ability to stay agile and competitive in a fast-paced market.

Create A Self-Assessment Checklist

To determine if your business has outgrown its current ERP system, consider the following questions:

 Are employees increasingly relying on manual processes?
 Do you lack real-time visibility into key business metrics?
 Is your ERP system struggling to scale with your business growth?
 Does your ERP system have limited integration capabilities with new technologies?
 Are your IT maintenance and support costs rising?

If you answered “yes” to any of these questions, it might be time to evaluate your current ERP system.
Multiple “yes” responses strongly indicate that your ERP system is hindering your business operations and
growth.

Your Next Steps to ERP Improvement

For businesses experiencing these signs, you have two primary options: optimising your current ERP system
or replacing it with a new one.

Optimisation

This involves enhancing your existing system to better meet your needs. It’s suitable if the system is
fundamentally sound but needs some updates or additional modules.

Replacement

When the existing system is beyond optimisation, replacing it with a new ERP solution may be the best path.
This process involves:

 Conducting a thorough needs analysis
 Evaluating potential ERP solutions
 Selecting the ERP system that best fits your business requirements
 Planning and executing the implementation process

Before making any changes, conduct a detailed process analysis to understand your current workflows and
identify gaps. This ensures that the new system aligns with your business processes and goals.
Taking action now can help you avoid the hidden costs and risks of an outdated system, positioning your
business for continued success. To get started, download our comprehensive ERP evaluation guide and take
the first step towards optimising or replacing your ERP system.