The Legacy of ERP
Enterprise Resource Planning (ERP) systems are the key to creating a single source of truth for growing companies. Many of today’s best ERP systems are built on the legacy of 1980’s software. These legacy ERP systems have proven resilient, adaptable and capable of scaling. Over the past 20 years, new cloud technology offers a new promise of success. So why are older technology proving so hard to kill?
Lessons from Microsoft, Sage and SAP
Microsoft, Sage and SAP are not the only leading software developers to struggle maintaining legacy and cloud business management systems. However, all three have acquired, built or developed on new cloud technology while focusing on customer satisfaction for existing accounting software. Balancing needs to constantly update existing software with ever changing technology while taking advantage of new technology capabilities requires significantly more funding than single focused development. The good news for customers and legacy ERP software is that these billion dollar behemoths have significant resources!
Microsoft’s Dynamic Business Central
Microsoft Dynamic 365 Business Central is the current name for Microsoft’s mid-market cloud ERP software. Microsoft Dynamics is built on the Microsoft Azure cloud, SQL Server, and accessed via Microsoft Edge. Its roots are from the Microsoft Dynamics NAV (Navision) or Microsoft Dynamics AX (Axapta) legacy ERP. That Microsoft “stack” integrates with Microsoft Sales and Microsoft Dynamics Relationship Sales (CRM) and other Microsoft resources and tools. Business Central is powerful, subscription priced affordable, and the clear focus of Microsoft’s development efforts in business management tools.
Great Plains was one of the first truly Windows based accounting packages back in the 1980s. Led by Doug Burgum, the eclectic leader and now Governor of North Dakota, Great Plains grew exponentially before its IPO and eventual sale to Microsoft in 2001 for $1.1 billion. After buying Great Plains (GP), Microsoft purchased Navision A/S in 2002 and acquired Navision (NAV) and Axapta (AX). Shortly after these acquisitions, Microsoft announced Project Green as the plan to merge the three products into one. Project Green was a marketing blunder throwing fear, uncertainty and doubt into the future of all three products.
Rumor, inuendo and many stories of lore talk about how Microsoft realized that GP technology could not make the transition to the cloud. AX and then NAV became the core of Project Green which is now called Business Central (BC). Combining the products continues to prove easier said than done, but BC is now a “true cloud” application.
Microsoft Dynamics GP Lives On!
Through all of the name changes and development of Business Central, Great Plains continues to have a strong following and fiercely loyal customer base. Fueled by its users, organizations like Great Plains User Group (GPUG) and Dynamics Communities foster knowledge sharing and promote best practices with GP. Dynamics Communities now supports all Dynamics products with year round learning through blogs, forums, and its annual conference.
Dynamics GP also lives on through its vibrant and diverse community of third party enhancements. Companies like Cavallo have been supporting GP for over 20 years with solutions that extend functionality. Cavallo, originally called Sales Pad, helps GP customers eliminate redundant, error-prone processes to improve efficiency and turn inventory into cash. The 100’s of solutions like Cavallo built for GP are being retrofitted and adapted to Business Central.
Great Plains as a company and a name may no longer exist, but the legend lives on! Many customers have used GP for 10, 20 or 30 years and are very comfortable with it. Although Microsoft has created many incentives over the past 20 years to migrate, change is disruptive. Often customers are unaware of better alternatives, or have enhancements which serve as pain killers. The strong community of users and enhancements allow continued use of the legacy ERP formerly known as Great Plains.
Wisdom of Sage
Sage Software entered the North American market in 1998 with the acquisition of State of the Art, Inc.(SOTA). Best known for its Master Accounting Series for the 90’s (MAS90), SOTA also developed Sage 500. SOTA was a dominant player in the 1980’s and 1990’s through its domination of the CPA mindshare. Shortly after acquiring SOTA, Sage acquired Peachtree Software. Peachtree, now known as Sage 50, previously dominated the entry level accounting system market the way QuickBooks does today. Sage did not end its buying spree in the 1990’s. Sage acquired many other products including Timberline (Sage 300 CRE), ACCPAC (Sage 300), Addonix (Sage X3) and more recently Intacct.
The Cloud is Intacct
After numerous acquisitions, and several attempts at modernizing applications to be browser based, Sage decided it needed cloud native applications. Its first development effort was the Sage Live or Sage One built on the Salesforce.com platform. Many questioned the approach of building on a competitor platform, and Sage found it difficult to build a complex new product from scratch. Subsequently Sage began and continues to acquire a variety of cloud software with the key acquisition of Intacct in 2017.
In addition to a pure cloud pedigree, Intacct harkens back the relationships with the AICPA that created the success of MAS90 (now Sage 100). With extremely strong financial capabilities, Sage has won back the market for the CPA’s Client Accounting and Advisory Services practices. Sage designed programs specifically for outsourced accounting services CPA firms with Sage Intacct. Now, Intacct is the product of choice in not-for-profit, professional services, franchises and several other industries.
More importantly, Sage consistently surveys and listens to their customers. With knowledge from its large customer base, using artificial intelligence Sage is turning data into actionable insights. For example, Sage goes beyond data capture in Accounts Payable and uses machine learning to find outliers in data and alert users.
- Deliveries don’t typically happen on Sunday from this vendor!
- Why are we receiving a higher quantity than ordered?
- We typically receive 1,000 per order not 10,000, is this a mistake?
Sage is also looking to use these tools with cloud acquisitions like Lockstep to extend the functionality across applications. Imagine your AP system validating addresses, automating tax rates, or checking credit of your prospective customers. To many the cloud sounds like “big brother watching over you.” However; if big brother in the cloud is working for you, it can save you time and money!
100 Lives of Sage Business Management Software
The cloud may seem like it is everywhere, but Sage 100 is still installed everywhere. Like Dynamics GP, Sage 100 has a robust eco-system of third party products extending functionality and making it “cloud connected.” Sage Inventory Advisor (also known as NetStock), provides powerful insights to convert inventory into cash.
With 40 years of development and ongoing support from the publisher, Sage 100 has features and functions that rival large enterprise software. For example, the ability to delete, rename and merge customers and vendors is unheard of in most software, but standard in Sage 100. Sage works closely with the partners and customers to prioritize enhancements. Sage sponsors the 90Minds annual Meeting of the Minds conference and participates in a group called the “Mod Squad.” Mod Squad captures feedback on potential enhancements and ideas on how to code them.
Although many former Sage 100 customers love their new cloud based ERP systems, over 10,000 companies continue to thrive with its rich feature and function set. Customers may complain when there is a hiccup due to technology retirements but love the stability of this otherwise tried and true product.
Systems And Processes (SAP)
SAP put the ERP into systems and processes. According to Thompson Data, SAP customers include: 92 percent of the Forbes Global 2000 companies, 98 percent of the 100 most valued brands, and 97 percent of the greenest companies (Newsweek). Lesser known is that SAP classifies over 250,000 of its 378,000 customers as small to midsized businesses. This list includes users of Concur expense management and over 70,000 companies running SAP Business One for their ERP system.
RISE and GROW with BTP and $/4 HANA Public Cloud
SAP is known for its big systems for big companies with big results. SAP is also known for big issues when things go wrong. Accordingly, SAP it spent a ton of time and money building tools to streamline implementation.
- RISE with SAP is a bundle of products and services to provide digital transformation as a service. SAP products can scale to the largest of enterprises and accordingly are extremely functional, flexible and resultingly complex. RISE makes the transition to an SAP Cloud powered by S/4 HANA easier and more cost effective through embedded workflows and commercial simplification.
- GROW with SAP is similar to RISE, but targets mid-market companies below $1billion in revenues. Where RISE bundles and simplifies S/4 HANA and other products for consumption on premise or in the cloud, GROW is a “Public Cloud” multi-tenant deployment of S/4 HANA by SAP with some pre-packaged configurations.
- The SAP Business Technology Platform (BTP) is a collection of cloud computing power and low-code/no-code tools to automate and integrate processes.
Pre-packaging solutions, multi-tenant deployment and bundling of services are proven approaches to lowering costs and delivering value. SAP S/4 HANA is a rocket ship, capable of soaring to heights well beyond the reach of most small to mid-sized companies. For private equity backed companies that seek to be unicorns (reach $1 billion valuation), GROW may be a great option. For small businesses and most mid-sized companies, rocket science is not a core competency.
SAP’s One Hidden Business Gem
In 2002 SAP acquired Top Manage ERP and rebranded it SAP Business One (B1). Originally developed in Israel and branded “Menahel” (Manager in Hebrew), Top Manage had quickly grown to over 3,500 installations with versions for the Middle East, Europe and Latin America. The acquisition was strategic for SAP for multiple reasons:
- TopManage was developed specifically to meet the needs of small to mid-sized businesses.
- The executives from TopManage immediately took executive positions with SAP. Shai Agassi became a member of the Executive Board and was responsible for SAP’s global technology strategy and execution.
- SAP Business One serves as a feeder system for the eco-system of SAP’e enterprise customers.
In 2003 SAP brought Business One to North America. I-Business Network negotiated a deal to offer SAP Business One on hosted equipment utilizing “indefinite financing agreements” beginning B1’s transition to the cloud. SAP Business One 2004 was redeveloped into a single global code base with localizations for tax and regulatory requirements.
Is SAP Business One a Legacy System?
Like most legacy software with over 25 years of history, SAP Business One is feature rich. Legacy ERP tend to run with client-server technology. The SAP on-premise version has a rich client that uses this technology and could very easily be labeled legacy ERP. However, SAP has invested billions of dollars upgrading and modernizing SAP Business One over the years.
When SAP bought Sybase for its HANA in-memory database system, it used SAP Business One as the test case to migrate ERP from SQL Server to HANA. Using HANA on Linux as its base platform SAP has made SAP Business One into a “true cloud” product:
- The HANA “service layer” provides secure access to database objects via the internet.
- With the “loosely coupled” service layer integration technology, SAP built a browser based user interface for all of its applications.
- The SAP Cloud Control Center enables automated secure provisioning of Business One in a multi-tenant architecture.
- SAP Business One integrates seamlessly with Microsoft 365 office applications in the browser
Is SAP Business One legacy ERP?
- Yes – B1 is available on premise with client server technology on SQL Server
- No – When deployed in a multi-tenant cloud via browser.
When is it Time to Abandon Legacy ERP?
When should you change system? The time depends upon who you ask
- Software Publishers – Te time is now
- Satisfied Users – Why change!
- If you ask me, the answer is not so simple.
The key question is why. Why should you consider changing systems? Changing business management software is one of the biggest decisions a company can make and will impact performance for years. In the case of SAP Business One or Dynamics NAV, patience may have been the best answer to get the best of both worlds.
- If you are on QuickBooks, the answer may be growth or more advanced capabilities. Our blogpost 8 QuickBooks Upgrade Scenarios and our QuickBooks Self-Analyzer can help.
- Modernizing a legacy software is more frequently about integrating and automating processes. The video on our System Selection Services page outlines the process of selecting software.
- Schedule a no-cost, no-obligation System Selection Exploration call to help you think through the process and determine your next steps
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