ERP Modernization is Mandatory for Digital Transformation
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April 21, 2022
Digital Transformation Context in Enterprises
Digital transformation is the process by which organizations bring in technologies across their businesses to enable a fundamental change that would lead to a higher level of efficiency and business agility that would in turn unlock new value for employees, customers, and shareholders.
It could be in the form of introducing AI or cloud computing to enhance customer experience or a redesign of the supply chain, making use of machine learning. Digital Transformation is not one application, technology, or IT project but about employing a broad range of technologies, in interrelated initiatives. This helps organizations evolve by leveraging recent technology in innovative ways while also impacting differentiation, growth and scale, profitability, risk mitigation, customer satisfaction, and speed-to-market.
The digital transformation journey is a chance for the company to reimagine its ways of doing things from the ground up and it needs a new mindset. It requires a shift away from traditional thinking and comes from a collaborative and experimental approach that can improve customer experience, drive employee innovation, and enhance company growth. Digital Transformation makes an organization flexible to react to changes that affect the macro and micro factors of a business. It brings in more revenue, higher growth, and the capability to stay ahead of the curve.
What does Digital Transformation include?
The digital transformation strategy of any enterprise typically looks at:
- Replacing existing systems with new cloud computing capabilities
- Moving enterprise workloads to the cloud
- Using platform-led modular architecture built on open-source software for application modernization and maintenance
- Providing pathways for micro-services and APIs (Application Programming Interfaces)
Digital Transformation vis-à-vis ERP Modernization
Many a time, a change in an organization’s ERP system is talked about as digital transformation. ERP modernization is upgrading the old ERP to a new one and is one of the more significant activities under the digital transformation umbrella. ERP modernization helps retool the finance department, operations, and supply chain, with the help of technology to better manage the challenges of the future.
On the other hand, achieving operational efficiency is the prime intent behind digital transformation, using technology and concepts like ERP, big data, analytics, and IoT (Internet of Things). A technology like ERP plays a key role in digital transformation with its ability to bring significant process changes.
What is ERP Modernization
ERPs have been around for a long and there could be businesses with a system that is 10 to 20 years old or even earlier. However, the technology foundation could be an obstacle to business transformation, after multiple upgrades, customizations, and add-ons.
The organization would want to build an enterprise that can respond immediately and intelligently to real-time data, modern business systems and challenges, and this requires agility across the information framework. Enterprise resource planning (ERP) systems have been the backbone that connects all operations, from sales and customer management to inventory and finance. ERP systems would however need to be upgraded and modernized to be able to support the development of business in the future.
Modernizing the ERP system helps companies grow by managing the processes that are relevant to day-to-day business and helps the company progress with digitalization and business strategy. Modernizing the ERP is the process to enhance the company’s ability to act and develop and thus pave the way for a successful future. Modernizing ERP systems provide flexibility and functionality, bringing cloud and other newer technologies to start a transformation.
Difficulties in Modernizing ERP
- Legacy ERP solutions are noted for their rigidity. This lack of flexibility and doubts about security is a game-breaker in the modern competitive business environment
- Such software may have been created when the company dealt with local business, but the present-day globalization of market reach requires a different approach
- Integrating the ERP with other software that is adopted by the company
ERP modernization Issues in Enterprise Digital Transformation
Digital transformation requires ERP for the capability to bring revolutionary changes in various processes of modern business. Some fundamental issues in Enterprise digital transformation when ERP modernization is not a priority, are:
- Costs get inflated, towards renting cloud facilities licensing or buying software, supporting legacy software, and paying for the team to run and maintain it
- Traditional ERP system has no multi-tenancy support, and this reduces the scalability and efficiency of the system, in the absence of ERP modernization
- Adaptability problems could be experienced especially in modern technologies like IoT or 3D printing if the legacy ERP is used
- Integration and information sharing with CRM, EDW, various apps, and other newer technology aimed at introducing digitalization into business practices could be a concern
- Opportunities could be lost in expanding the technology stack to leverage business intelligence and analytics based on big data
- Centralization and accessibility of data for access by stakeholders through any internet-connected device can be achieved better by ERP modernization
- Security and compliance can be maintained at the highest level through ERP modernization
Benefits of ERP Modernization
ERP modernization provides the following benefits:
- Cost reduction: Specifically in the context of supporting the legacy software and maintaining on-premises servers and a team of specialists to do it- despite the cost of renting cloud facilities and using their software.
- Scalability: The (now modernized) ERP can be scaled up whenever the organization expands.
- Adaptability: Modernizing ERP provides the flexibility to add innovative technologies (like IoT or 3D printing).
- Integration-friendly: The modernized ERP can be integrated with various apps and solutions such as CRM, or EDW.
- Central access of data: Being stored in a central virtual place, the data of the modernized ERP can be accessed through any internet-connected device leading to greater worker productivity.
- Security and compliance: Higher safety as well as compliance with all existing legal standards and regulations.
- Driving Innovations: It is easier to drive innovation and harness emerging technologies, such as machine learning, chatbots, and AI.
- Accurate Predictions: A modern ERP enables more accurate forecasting and scenario modeling to evaluate demand. It indicates if product lines should be adjusted accordingly. Faster and more accurate predictions combined with more insights enable businesses to act proactively, rather than reactively, to change or disruptions.
- Greater agility to keep pace with the market since data is in the cloud and a connected architecture provides visibility and flexibility.
- Responsive to customer needs since companies can see what is coming and adapt internally to external trends and changes.
- Greater visibility and transparency of the supply chain is another benefit of ERP modernization that leads to improved customer communications and greater brand value while also making market responsiveness faster by up to 80%.
- Top-line enhancement: Modern ERP leads to lower maintenance costs and reduced total cost of ownership (TCO) apart from improved productivity, operational efficiencies, and enabling meeting growing customer demand - all helping to increase profitability.
Industry Examples
ERP vendors and solution providers help modernize the platform and infrastructure for their ERP installations by leveraging the latest technology options available. Such modernization services provide the full range of services from advisory to hosting including cloud services and migrations to the cloud, as well as support services, based on the latest ERP software and technology advances to increase flexibility and reduce overall costs.
SAP helps its customers migrate their legacy systems to SAP S/4HANA, having maintained their ERP system over the years with new integrations, processes, applications, and key performance indicators.
With SAP, business processes and data are transformed by modernization and provide greater value to businesses especially when they embrace digital transformation. The company is terminating support for the SAP Business Suite with traditional databases in 2025 and this has accelerated the decision to modernize its ERP, by moving to SAP S/4HANA for many of its customers.
Similarly, Oracle E-Business Suite (EBS) customers have an option to modernize their implementation with an upgrade to R12.2 since the premier support for Oracle EBS R12.1 ended in December 2021.
This modernization helps customers manage integrations to third-party applications with fewer resources besides reducing the complexity of the Oracle ERP ecosystem and third-party applications with a unified data platform for developers and business users. It helps connect legacy and modern applications while reducing the risks and speeding up the shift to the cloud.
RTS in ERP Modernization
Resolve Tech Solutions is an SAP gold partner and is a major provider of SAP modernization services. It provides end-to-end services in this area including advisory, design, implementation, testing, and application management. RTS provides technology and domain expertise for reengineering, upgrading, and configuring SAP solutions aligned with industry best practices. The range of services in SAP modernization offered by RTS include:
- SAP S4/HANA Migration Advisory
- SAP S4 Design & Implementation
- SAP Application Management Services
- SAP BTP Integration Services
- Consulting & Strategic Resourcing
In addition, the company provides Cloud Migration & Maintenance and specializes in providing cost-effective SAP configuration and implementation services including package selection, customizations, and industry best practices. RTS has the experience, innovation, automation, and transformation ability to achieve the speed, agility, and cost benefits of cloud modernization on platforms such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud, or applications like SAP and Oracle. It provides support for Oracle, HANA, MS SQL Server, MaxDB, and SAP ASE (Sybase). RTS brings to bear its expertise, planning, setup, configuration, migration, and management to Oracle Cloud Infrastructure with its managed services offering. The company has a portfolio of over 150 successful projects executed through experienced consultants and strong partnerships.
