Why Do Companies Switch Their ERP? And What Do They Hope to Gain?
A company’s Enterprise Resource Planning (ERP) software is more than just a back-office tool. It’s the digital backbone of operations, helping to manage everything from finance to inventory, customer service, supply chain, and more.
So why do companies switch ERP systems? And what do they hope to achieve with a new one?
Why companies change their ERP systems
Because the ERP controls or integrates with virtually every software system in the company, changing ERPs is a serious investment of time and resources. But as technology and business needs evolve, many companies find themselves needing a modern ERP solution.
Here are the top reasons why companies change their ERP systems:
Outdated technology holds them back
One of the most common reasons companies switch ERPs is simply that their current system is outdated. Legacy ERP systems can be difficult to use, difficult to maintain, and missing modern features like cloud capabilities, mobile access, or seamless integration with other business applications. In some cases, the vendor might have stopped supporting the system, leaving companies vulnerable to security risks and operational inefficiencies.
Growth and scalability demands
As businesses grow, they often find that their ERP system can’t keep up. Companies need systems that scale with them, whether it’s expanding into new markets, handling more customers, or increasing transaction volumes. An ERP that worked for a small regional distributor might buckle under the pressure of national or global operations. Upgrading to a more robust ERP allows for smoother expansion and better support for growing teams and operations.
Poor integration with other systems
Modern business runs on interconnected tools like eCommerce platforms, CRM systems, third-party logistics providers, and more. Many older ERPs were never designed to integrate easily with these tools, which means employees are stuck re-entering data, patching together spreadsheets, or dealing with information silos. Modern ERPs function more as a software platform rather than an isolated software application, offering open APIs and built-in integrations that allow data to flow freely across the organization.
Insufficient reporting and analytics
Good data leads to good decisions. Unfortunately, many companies using outdated ERP systems struggle to generate accurate, real-time reports. They might be relying on batch processes or manual report creation, which slows decision-making and creates room for errors. A modern ERP typically provides real-time dashboards, customizable KPIs, and advanced reporting tools that give leaders a clear picture of what’s happening in the business in real time.
Too many manual processes
When employees spend too much time entering the same data into multiple systems or performing tasks that could be automated, productivity takes a hit. Manual processes also increase the risk of human error. Newer ERPs are designed with automation in mind, streamlining workflows and freeing up employees to focus on higher-value work.
Compliance and security requirements
Regulatory environments are becoming increasingly complex. Companies need ERP systems that help them remain compliant with rules like GDPR, HIPAA, SOX, or industry-specific regulations. Older systems may lack audit trails, user access controls, or other features required to meet these standards. A modern ERP provides built-in tools for managing compliance and securing sensitive business data.
High maintenance costs
Some management teams think that staying on their old ERP won’t cost the company money. However, maintaining an outdated ERP can be expensive, too. Costs can add up quickly for customizations, support, updates, and patches. Sometimes, it’s more cost-effective to switch to a modern, cloud-based ERP that reduces IT overhead and eliminates the need for constant maintenance in the long run.
What companies will gain with a new ERP
Switching ERPs requires a commitment from the company that can last months or even a year or more. When all is said and done, what does the company expect to gain after the implementation is completed?
Increased efficiency through automation
Modern ERP systems streamline business processes, reduce redundancies, and automate tasks across departments. Whether it’s automating invoice approvals or syncing inventory in real-time, automation leads to faster operations and fewer errors.
Real-time business insights
With better reporting and analytics tools, companies gain instant visibility into key metrics like cash flow, order status, inventory levels, and more. This real-time insight supports better decision-making and quicker responses to changing business conditions.
Enhanced customer experience
A modern ERP can improve fulfillment accuracy, speed up delivery times, and enable better customer communication. These improvements lead to higher customer satisfaction and stronger loyalty.
Scalability and flexibility
Companies want systems that can grow with them. A new ERP typically offers flexible configurations, industry-specific features, and the ability to add new users, locations, or functionalities without major disruption.
Cloud access and mobile functionality
Today’s workforce is mobile, and companies want tools that can be accessed remotely. A cloud-based ERP offers anytime, anywhere access, making it easier for remote employees, warehouse teams, and sales reps to stay connected and productive.
Stronger security and compliance
With built-in security protocols, role-based access, and audit trails, a modern ERP helps protect sensitive data and supports regulatory compliance. This is especially critical in industries like finance, healthcare, and manufacturing.
Long-term cost savings
While implementing a new ERP system represents a significant investment, it often results in significant long-term savings through reduced IT overhead, fewer errors, improved efficiency, and better business outcomes.
Ask ArcherPoint
Switching ERP systems is no small task, but for many companies, the benefits far outweigh the costs. Whether driven by growth, efficiency goals, or the need for better data, a modern ERP can provide the tools and insights needed to compete in today’s market. For companies considering a switch, the key is to focus on both the pain points of the current system and the strategic goals a new ERP can help achieve.
ArcherPoint specializes in Microsoft Dynamics 365 Business Central, a comprehensive ERP that can be used in the cloud or on-premises. Business Central includes finance and accounting, inventory management, manufacturing, distribution, and more, and it provides seamless integration with Microsoft 365, Microsoft Power Platform, and most modern business applications.
Contact ArcherPoint to find out if Business Central is right for you.