Enterprise Resource Planning | News

Gartner Redefines Highly Customized ERP Systems as Legacy

• By Leila Meyer
• 02/04/14

Highly customized enterprise resource planning (ERP) systems will be considered "legacy" by 2016, according to a new report from Gartner.

The report, "Predicts 2014: The Rise of the Postmodern ERP and Enterprise Applications World," defines legacy as "any system that is not sufficiently flexible to meet changing business needs," which includes heavily customized ERP implementations.

According to the company, over the next 10 years the majority of organizations will gradually transition their legacy ERP systems to "postmodern ERP" systems, which will blend cloud-based solutions, business process outsourcing and on-premises applications. Gartner predicted that 30 percent of service-oriented organizations will move most of their ERP systems to the cloud by 2018 and more than half of organizations will do so within the next 10 years.

But the on-premises ERP systems won't disappear right away. Rather, they will remain static, while new functionality will be delivered by cloud-based solutions that integrate with the legacy systems. Therefore, the challenges for IT departments will shift from customizing in-house ERP systems to integrating various cloud-based solutions with the legacy systems.

While administrators still want solutions that are reliable and integrated, they also want to lower IT costs and increase flexibility, but according to Gartner, by 2017, 70 percent of organizations adopting hybrid ERP solutions "will fail to improve cost-benefit outcomes unless their cloud applications provide differentiating functionality."

In some cases, Gartner predicted, shifting to a hybrid solution will actually increase the total cost of ownership. "Most organizations still fail to recognize and plan for the total lifetime costs of their ERP solutions, whether on-premises, cloud or hybrid," said Carol Hardcastle, research vice president at Gartner, in a prepared statement. Organizations need to consider the cost of connecting solutions together and retraining staff or hiring new staff to manage the data, integration and vendors.

The full report, "Predicts 2014: The Rise of the Postmodern ERP and Enterprise Applications World," is available to Gartner clients on the company's site.