Your ERP is the beating technology heart of your business. When an ERP is disrupted, it affects everything. Modifications and upgrades are expensive and time-consuming. Success is not guaranteed. Yet established ERPs are increasingly becoming barriers, slowing modern companies’ use of newer technologies. They have to change.
The conflict between the immovable ERP and the unstoppable cloud era stresses many business and technology leaders. But there is a middle road called platform integration: keep the power of your ERP and enjoy the new advances in tech without breaking your budget or business.
The original business software
ERP (Enterprise Resource Planning) software is one of the original modern business digital tools. It arrived sixty years ago and evolved from manufacturing management software to an all-encompassing business system.
While many other original technologies have been replaced, the ERP remains a fixture in modern enterprises. This is a big reason why we must respect ERPs, says Heinrich Swanepoel, Head of Growth at payroll and HR cloud platform PaySpace:
“The ERP might seem like an old technology, but that’s not a fair characterisation. Some ERPs are very modern, and vendors like SAP and Oracle are even moving into the cloud. But ERPs accrue a lot of complexity. They are like a sprawling mansion where the owner keeps adding rooms or changing the decor. If you say, ‘Hey, we should tear this thing down’, they will not agree with you, and it might not even be the best course of action.”
Yet ERPs do have a big drawback. They are monolithic systems containing everything inside their structures, typically done through modules adding new functions to an ERP. After adding hundreds of interrelated modules, it becomes complicated and expensive to upgrade an ERP. A recent example is the retail group Spar, which lost R1.4 billion in less than a year due to a failed ERP upgrade.
Yet many ERP owners face the prospect that they must one day migrate their ERP to the cloud (SAP has set a 2030 deadline for migration to its cloud-hosted software).
Time to panic? No, you can have your ERP and cloud services if you embrace the opportunity of integrated platforms and work with a partner who knows how to make this happen.
Get the cloud, keep the ERP
Modernising an ERP typically has three daunting options. First, you can rip-and-replace the system at great expense and business disruption. Second, you can lift-and-shift the system onto a cloud host, which severely limits the benefits you’d receive. The third is to make limited peripheral changes to an outmoded system that will block other technology progress.
“Let’s say you want to add third-party artificial intelligence services,” says Swanepoel. “A cloud-native environment makes that easy. But with an on-premise ERP, you will run into many obstacles, such as overcoming data silos or adding an AI module. An ERP is a great business tool, but an older ERP can be a massive technology roadblock.”
Fortunately, there is a fourth option, “You don’t need the ERP to do everything. It can be your central service or record, and you can integrate other services onto it that bring modern features with them.”
For example, you can replace your ERP’s payroll engine with a third-party cloud-native platform specialising in new payroll and HR features. This platform doesn’t necessarily replace the ERP or user interfaces. It can sit in the background, using the ERP’s data to make payroll calculations that it feeds back into the ERP. And that’s only the start.
“A cloud-native payroll engine can do advanced things like hyper-automation, on-demand and tailored reporting, integration with different parts of the business, and automatic updates of tax tables and regional laws. The platform vendor can roll those changes out universally and without the clients needing to do anything—that’s a big improvement over the long and expensive process of upgrading an ERP’s payroll module.”
Unlock the future with the right partner
You can integrate specialised cloud-native platforms into your ERP, enhancing specific business functions. The ERP doesn’t need to be disrupted, yet you add modern technology features to your business.
You maintain the core ERP system and augment that with cloud-native platforms. Since your ERP is the system of record, you can replace those peripheral platforms as your business changes. No more multi-million rand projects that are likely to fail and cost even more.
But there is a catch: the cloud service provider must have integration experience, be willing to walk the journey and do what it takes to make the integration work. Swanepoel gives an example:
“We’ve worked on projects where the client needed their payroll data to be migrated and tested quickly, often requiring dual payroll runs to test the data integrity and accuracy. That is not easy to do, and our developers even built custom tools to make it happen. A service provider must be willing to go the extra mile to marry an ERP with modern platforms. Get it right, and the results are astounding.”
Successful integrations create new opportunities, such as real-time analytics and self-service tools for employees (imagine staff requesting payslips via an automated Whatsapp bot). One can modernise, consolidate and automate robust processes, introduce AI services, and more.
You don’t need to replace your ERP or upgrade it in an expensive, multi-year project. With the right partner and platform, you can enhance your ERP and banish the fear of altering this crucial business software pillar. You can enjoy both worlds, limit your technology debt and complexity risks, and be a part of the modern digital economy.