Eilidh Semple, Senior Account Manager at Absoft, explains why sticking with outdated SAP systems is risky business.
While the upfront cost of upgrading SAP systems can appear daunting, the consequences of not doing so are often far more significant. Businesses that delay upgrades to key elements of the system risk accumulating what is known as technical debt – time that is owed to IT systems, resulting in teams skirting the issue and finding workarounds, rather than addressing the heart of the problem. In the context of SAP systems, this takes the form of a backlog of necessary updates and maintenance to its essential systems, resulting in stifled innovation, and reduced system agility to adapt to client demands.
Consider a scenario where a business runs on outdated software. While it may seem stable initially on the surface, it misses out on opportunities for efficiency gains and competitive advantage. Perhaps more concerningly, running on outdated software presents further cybersecurity challenges too.
Recent data from the Information Commissioner’s Office (ICO) shows that more businesses are experiencing security breaches now than ever before, with almost a quarter of the over 3,000 breaches reported in 2023 (22%) occurring in finance, highlighting the scale of the problem. More recent findings from the National Audit Office (NAO) show that the inefficiency problem is also prevalent within the UK government, which invests heavily in maintaining legacy systems that deliver poor quality data and drive up service costs.
Operational inefficiencies and economic impact
Beyond technical debt and cybersecurity concerns, operating with outdated SAP systems can also significantly impact efficiencies and incur higher economic costs. According to Forbes (2024), businesses that delay upgrading their software systems face escalating costs in maintenance and support. This additional spending is compounded by decreased operational efficiency, stemming from software limitations that hinder streamlined processes and overall responsiveness to key clients and projects.
Outdated systems are also prone to higher maintenance costs due to the need for specialised support in the event of system failures, which can disrupt business operations further. Moreover, the inefficiencies introduced by outdated SAP systems contribute to higher labour costs, as employees spend more time navigating workarounds and managing outdated interfaces, rather than focusing on value added tasks. These outdated systems also limit scalability and agility, both of which are essential attributes for business aiming to adapt swiftly to market changes and scale operations efficiently.
The path forward: Strategic system management
Recognising the risks associated with inertia is the first step towards mitigating them. Proactive management of SAP environments ensures that businesses remain aligned with their strategic objectives and remain able to deliver projects well and on time, fostering agility, innovation, and sustainable growth. However, a significant part of this is investing in the right upgrades at the right time. It is about maximising Return on Investment (ROI) by leveraging modern technologies that streamline operations, but also enhance overall business performance.
A key way to achieve this is to adopt SAP’s cloud-first, ‘adopt not adapt’ model, which avoids extensive customisations. This approach uses best practice scenarios to define processes and embraces six-monthly product enhancements, reducing implementation time and costs. Businesses can migrate to SAP S/4HANA via several options: the Software as a Service (SaaS) model offers standard products in a public cloud with automatic updates, the Private Cloud Edition (RISE) allows companies to choose their hosting service, providing control over security and upgrades, and businesses can maintain their own SAP system in the cloud, preserving customisation flexibility.
Partnering with consultants who understand the cloud-first, standardised approach can help to deliver smoother implementations. Dedicated support teams support Fit to Standard workshops and continuous improvement using the SAP Business Technology Platform, enabling custom app creation without complicating the core system.
Conclusion
While many businesses focus on the initial cost of implementing new ERP systems, maintaining outdated SAP systems can lead to significant unexpected costs over time. These include higher maintenance expenses, increased labour costs due to inefficiencies, and potential security risks impacting operations and eroding client trust.
If companies were to break down these long-term expenses today, they would likely find that investing in new ERP systems is not only a necessary step towards modernisation, but also a strategic move towards long-term cost effectiveness and sustainable growth. This broader perspective often reveals that while initial costs of new ERP systems may seem high, the cumulative expenses of maintaining outdated systems can exceed these costs considerably.
While the prospect of upgrading SAP systems may initially appear daunting, the risks associated with maintaining outdated systems far outweigh the challenges of proactive management. Businesses also need to consider the long-term benefits of system upgrades, including improved productivity and reduced operational costs. By partnering with experienced consultants, for example, it is possible to navigate system upgrades effectively, while at the same time minimising disruption, and capitalising on new business opportunities.
Moreover, opting for a cloud-first, ‘adopt not adapt’ model can help to streamline the process further, bring down costs, and ensure that the system is a good fit for specific business processes. Embracing change not only safeguards businesses against falling behind their competition and security threats, but also positions them for success to take advantage of the capabilities of new system upgrades and software suites both in the present and into the future.
