Five reasons to modernise core business systems
Upgrading to modern business systems and services is not just a step up. It's a watershed for how companies can run their affairs.
Vendors and solution resellers push for new system upgrades. Customers have responded by establishing prudent spending cultures, often because IT budgets are among the largest in companies. This delicate tug-o-war between sweating assets and keeping the edges sharp drifts back and forth, and over time, everyone comes out more or less in the green.
But not anymore. Forget for a moment the risks of accruing too much technical debt through legacy systems. Changes are sweeping across the IT landscape, replacing past systems with a new generation that is functionally and philosophically a light-step ahead for business management.
How can such a statement be justified? We asked Bernard Ford, CEO of One Channel and whose career has revolved around business systems, why this new era of modernisation is different.
It's the biggest shift since the 80s
Business systems took a revolutionary step forward in the late 1970s-1980s. Mainframes made way for client-server architectures, software became more affordable and accessible, computer skills started permeating at homes and schools, systems became more modular and networks started appearing on business sites. The early digital incarnations of enterprise resource planning, business process management and the indefatigable spreadsheet appeared. It was a big change in how companies operated.
This new wave of modernisation is comparable to that era, says Ford: "The impact of today's modern core business systems is as big as those changes, if not bigger. Ignoring the changes today is as bad as if you ignored computers back then. It's not always obvious, because the big change is in how technology is consumed. That can mean different things. The switch from opex to capex, but also new agile innovation processes as seen with DevOps or inspecting real-time reports on a phone dashboard."
Modern systems talk to a modern world
That final point about consumption touches on a broader theme: our entire world is changing owing to modern systems. Just consider the laboured example of smartphones: they are everywhere and they can be a fantastic portal to information. A business that modernises its IT can start exploiting those opportunities to get more insight on its customers and its own operations.
Older systems can't do this for a simple reason: "There is simply too much data for humans. Machines are much faster and can handle the volumes of data being generated today. But, it's not just because they are machines. If you attempted to manage today's data with legacy systems, it would cost a fortune because they are not designed to manage so much. Modern systems incorporate efficiencies that reduce costs. A common example is how cloud services can scale to offer computational power for data processing at fractions of the usual costs. Those are advantages you can't just retrofit into older systems."
Customer-facing is in
Another significant difference between older and more modern systems, such as post-modern ERPs, is how they are orientated towards the customer. Ford explains that customer-centricity is not a fad or buzzword, but a change in business philosophy enabled by modern systems: "Why has it been so hard to create omnichannel customer experiences or 360-degree customer profiles across all your business channels? It's because these concepts actually require a high level of co-operation across various business silos and their systems. Traditional business systems don't work like that. They are inward-facing and orbit around a central pillar, usually finance. Modern systems are outward-facing, because digital systems no longer stop at a company's door. You can really get closer to customers and they can get closer to you. This includes internal users. Employees are also customers to the system."
Modern workforces want modern systems
Upgrading to a modern business system is not the same as the usual technology improvement. If you get a new laptop, it's often still the same as what was replaced, only more powerful. Those are incremental, evolutionary changes. But modern systems such as cloud-native ERPs are called revolutionary for a reason, enough to generate expectations among modern workers.
"People today are a lot more hands-on with technology. They expect the technology to work as they need it. We're still in the infancy of this movement, yet not far from actually just talking to business applications. The way people interact with systems is changing, driven by many factors like low-code and AI. Most of those advantages stem from the multi-cloud world. Old systems can't integrate with that world, so that wipes 90% of the advantages. They can't match the expectations people develop from modern workplaces."
More agility to the small guys
It is a misconception that the modernisation message is directed only at big enterprises. Though costs kept new business systems out of reach to smaller companies, today paints an entirely different picture. Systems can be introduced at a small scale and funded on monthly or per-user operating costs. For example, a post-modern and cloud-native ERP can easily be deployed in an SME, as long as it has PCs, smartphones and an Internet connection.
"This gets me more excited than anything else," says Ford. "A large part of my career has been around core business systems and they have always been big, expensive and difficult to manage. This has been flipped. The cost model has been flipped. Old systems get you stuck, while modern systems grow, shrink and change as you need them to. Smaller companies can now punch above their weight without spending heavily on IT systems or skills."