Most organizations are planning — and failing at — ERP modernization

Dive Brief:

While 94% of organizations are deploying a composable enterprise resource planning strategy to modernize legacy technology, over half report project failure, according to a Boomi survey of 1,675 CTOs and enterprise architects released Tuesday.
For 62% of respondents, the lack of understanding around total cost of ownership is the top reason projects fail. Fifty-nine percent blamed a lack of buy-in by end-users for failure and 54% said reliance on bespoke or point-to-point applications leads projects to fall short.
Over half (58%) of organizations plan to move ERP systems to the cloud, according to the Boomi survey. The goal for one-third of companies is to streamline processes and improve worker productivity, while 32% anticipate IT agility improvements and 30% want to enable further innovation through modernization efforts.

Dive Insight:

ERP upgrades are important as companies modernize their supply chains to create better inventory visibility and forecasting. But implementation has to go right to reap the potential benefits.

The C-suite is finally buying into the value of tech and digital investments, but technology leaders still struggle with consistently successful ERP modernization projects.

More companies have the digital capabilities and leadership required for digital transformation today than they did in 2018, according to a Capgemini survey. And, in the next 12 months, 31% of organizations will increase transformation spending due to COVID-19.

Operating on legacy technology isn't all bad, as long as organizations maintain security and a workforce knowledgeable on how to run it, because businesses can still innovate around it.

But companies do show an interest in wanting to modernize ERPs.

Nike started working to replace its ERP system last year for better visibility across financial and inventory ecosystems, while Campbell relied on ERP modernization to absorb a $5 billion acquisition, CIO Francisco Fraga said in September 2020.

To overcome the hurdles to modernization and realize its benefits, technology leaders will have to be more than just tech savvy. Tech leaders can benefit from partnerships with teams across the organization and a strategic initiative to focus on more than just keeping the lights on.

"The CIO’s role isn't to suggest technology for technology’s sake," Kelby Zorgdrager, CEO and founder of DevelopIntelligence told CIO Dive earlier this month. "The CIO is a partner to the business, who digs deep to understand the true needs, and then works with a team to design a technology road map for achieving specific organizational goals."

The business-centered mindset enables successful transformation by providing a broader view of company needs and how the technology deployed can further those efforts without disruption.