Accounts Payable Automation for SAP: Five Things to Consider When Replacing Your Legacy System

24.11.2021

Topic: AP Automation | Digitalization

The speed of innovation is accelerating at an unprecedented rate. New technology hits the market, and products, applications and software once considered state-of-the-art become outdated in a flash. More and more, it’s less a matter of who’s bigger, and more about who’s lighter, faster, more agile, more usable, more compatible… the list goes on. A prime example of this is the pressure with which SAP is driving its innovations. If you aren’t already running S/4HANA, you undoubtedly will be very soon. To maintain their competitive edge, companies need to prioritize assessing the efficacy of their legacy systems and decide whether they’re worth maintaining and upgrading, or if the time has simply come to replace them.

What exactly is a legacy system?

Legacy system is the term used to describe a comparatively old computing system – often consisting of both hardware and software – that has been in use for many years. A legacy system typically continues to meet the requirements it was originally designed for. In the long run, though, it limits the organization it was meant to serve, since it doesn’t accommodate growth or interaction with newer systems.

Reasons to keep using your legacy system

Businesses evaluating the pros and cons of a potential replacement project may decide to maintain their legacy system. Here are some reasons that tend to come up:

• • Cost: The implementation of a new system often requires a high initial investment. Upgrading to new technologies will certainly increase business value in the long run, but decision makers at some companies believe the best route would be to opt against replacing a legacy system, not wanting to take the risk that the cost of implementation could potentially exceed value in the short term.
  • Reliability: A change from old to new technology is always associated with uncertainty and effort. Since there is no guarantee that the new system will meet the company's needs as well as the existing one does, some businesses prefer to keep the solution they know and trust.
  • Familiarity: Another factor motivating companies to stick to their legacy system is the fact that employees are familiar with it. They know exactly how to operate it, and they know what to expect as well. When processes and workflows have been working well for many years, the hurdle to making a change is significantly higher.

Despite the arguments above, holding on to a legacy system for too long can lead to a loss of profits and weaken a company’s competitive edge in the long run.

Reasons to replace your legacy system

A replacement project will obviously be necessary if the manufacturer of the legacy system no longer exists on the market or has discontinued its support. But there are plenty of other reasons for turning to new alternatives. After all, even if it still serves its original purpose, a legacy system can cause numerous disadvantages over the years: maintenance costs accumulate, data silos grow, and compliance and security requirements may fail to be met as antiquated software becomes incompatible with more modern technology.

Chances are, the replacement of your legacy system is long overdue.

Let's take a look at just a few of the benefits your company will gain by transitioning from your legacy AP system.

• • Flexibility: One of the prime advantages you can expect from retiring your legacy system and transitioning to a more updated solution is a significant increase in flexibility A system whose architecture is based on the newest technology allows for quick adaptation to changing internal and external requirements.

  • Process optimization: The next clear advantage will be the optimization you can expect in system performance. Time is money, right? So, with the increase in speed in all types of processing, you get more work done more quickly.

  • Lower capital expenses: Many modern software solutions are offered as cloud-based or a SaaS subscription model, so your company pays a monthly or yearly fee to use the software but doesn’t have to pay for a perpetual license or on-prem installation.

  • Long-term success: There’s no better guarantee for the long-term success of your organization than employing the latest technology in your business processes. You’ll not only attract young professionals who are digital natives and understand new, innovative solutions, an updated system also gives you the ability to cater the solution to your organization’s unique needs.

Still not sure if it’s time?

Replacing a legacy system is no trivial matter, and each company needs to determine its path on its own. We’ve shortlisted five decisive factors to help decision-makers involved in this process. If your AP team is currently evaluating the option of a replacement project, you might want to consider the following.

1. 1. Do you have a fully digital AP process in place?
      To achieve maximum flexibility and user-friendliness, a full end-to-end solution is your best option. It represents the entire AP workflow and eliminates the need for cross-system communication, which increases transparency in your organization.

   2. Is maintaining your AP system worth-while?
      Of course, you can maintain and upgrade your legacy system over the years. However, chances are slim that it will reach the same level of accuracy and efficiency of a fresh new solution developed with state-of-the-art technology.

   3. Do you have a single solution partner?
      Here’s what we often see when new customers come to us: multiple solutions, each serving one step in the AP process; and, as a result, inconsistencies and a lack of transparency. The time expenditure involved in bridging the gaps is a prime motivation in using a single partner for all process steps.

   4. Does your AP solution have AI capabilities?
      Using artificial intelligence, modern AP automation solutions can recognize patterns in large sets of data and offer reliable prediction functionalities. By doing so, AI helps improve both cash management and financial forecasting.

   5. Is your AP solution future-proof?
      To secure long-term success, your AP solution should be capable of “growing” with your company. This means enough scalability and flexibility to interact with new systems and adapt to new requirements. In addition, keeping up with the latest technology also attracts young talent in Finance, so you’ll be able to hire professionals who are knowledgeable about newer technologies and will “grow” with you, too.

We suggest taking a hard look at your business processes to determine whether your organization is running as smoothly as it could be. Asking yourself these five questions should make your decision to replace or maintain your AP legacy system easier.

The future won’t wait

Many organizations are still using legacy AP systems and have to deal with longer payment cycles and less control over working capital and myriad other issues. Optimizing processes delivers measurable cost-savings and increases productivity, but some companies are still resistant to change due to a lack of familiarity with new systems and maybe even fear of change.

Hence our suggestion that, when giving thought to a replacement project, you consider the accounts payable workflow as a whole and prioritize an end-to-end solution that maps the process in its entirety. Transforming your AP processes can improve agility and control, save time and money, and future-proof your company. To find out more, don’t hesitate to get in touch with us. We’ll guide you through the whole transition step by step.