Feature
Change is inevitable, and most organizations recognize the need to evolve to stay competitive and meet the demands of the future. However, modernizing technology and updating existing enterprise resource planning (ERP) strategies can be challenging for the chief information officers who often lead these initiatives.
Nearly 40% of CIOs and chief technology officers say their company’s technology isn’t fully prepared to support new business models, according to a 2024 PwC survey. Many of these tech leaders cite the pace of technological innovation as their top barrier to modernizing, but many other challenges stand in their way.
The Biggest Challenges for CIOs
“I think people get stuck in the mode of, ‘I have an operating model. I’m just going to run with it,’” said Matthew Guarini, executive director of the Technology Business Management Council.
But identifying and getting ahead of trends is “paramount,” Guarini said, and technology is the cornerstone of that, as it helps companies “flex your organization, change processes, move people around — those are all key things to help facilitate your organization and get you to the right spot.”
However, CIOs face hurdles within their companies when trying to implement these strategies, such as:
Thinking of ERP Solely as a Tech Problem
Many organizations simply aren’t prepared to deploy new technology, business models or ERP strategies, said Abby Clobridge, founder and fractional CIO at FireOak Strategies in Durham, NC.
Too often, these initiatives are treated like technology problems alone, rather than organizational challenges, Clobridge said. As a result, companies may not involve all the stakeholders affected, which means the strategy misses the mark.
A recent Gartner survey found that 75% of ERP strategies aren't well-aligned with overall business strategy, and by 2027, more than 70% of ERP initiatives are expected to fail to meet their business objectives.
Outdated Views of ERP Value
“Most organizations still view ERP as a cost center rather than a profit generator, which fundamentally limits their vision for what's possible,” said Michael Virnoche, founder and fractional CTO at V&F Consulting Services in Syracuse, New York.
It’s common for company leadership to view technology as “just an expense to minimize rather than an investment to leverage,” Virnoche said. Consequently many won’t allocate the necessary resources for true transformation. Instead, they wait until something malfunctions.
Virnoche said he’s seen companies using 20-year-old systems because “they still work,” while their competitors use updated ERP to cut operational costs and accelerate business growth.
Being Stuck in the Past
Systems typically weren’t built to make change easy, and rigid processes can make it difficult for organizations to pivot or integrate new technologies, said Kevin Sullivan, global and U.S. Oracle Alliance practice leader at PwC U.S.
“Legacy ERP is haunted by the ghosts of decisions past,” Sullivan said. “A real ERP modernization forces companies to dig up every flawed decision they’ve ever buried in process workarounds.”
Getting stakeholders within a business together on these decisions can be a “massive exercise,” however, Sullivan acknowledged. It takes time and resources to migrate data and test new tech and processes.
Encountering Resistance
There’s commonly a lack of communication within an organization about how the ERP will affect the entire business, Clobridge said.
Company leaders often resist change, too. They may have mastered the current system and worry that their expertise will become obsolete, Virnoche said.
“I recently worked with a company still running manual processes costing them $2 million annually in inefficiencies, but they thought they were saving money by not upgrading, because they couldn't see the ROI in business terms rather than technical features,” Virnoche noted.
How to Overcome These Problems
While implementing modernization strategies come with problems, there are ways to overcome these challenges:
Involve the Right People
ERP and modernization efforts affect many parts of a business. CIOs need to examine the strategies beyond a “technology lens,” Clobridge said. Otherwise, they’ll miss the complexities of existing business processes.
“Generally, IT doesn’t know the details of all the intricacies of the business,” Clobridge noted. “So, you have to get all the right people involved.”
Without collaboration between tech and business, “You’re never going to be able to design the right solutions that are going to give you the flexibility you need,” Guarini said.
Before planning a tech modernization strategy, get the leaders from all affected areas of the business together to discuss their business problems and potential solutions, Clobridge said. Let this guide the process so details aren’t missed and strategies are planned well and implemented effectively to prevent problems later on.
Conference
Oct
20
Gartner IT Symposium/Xpo Orlando 2025
Register
Conference
Oct
27
Gartner HR Symposium/Xpo Orlando 2025
Register
“If people can ask questions and get their voice heard and make sure that their concerns are being listened to, it goes a long way,” Clobridge said.
Demonstrate the Value
CEOs often feel pressure to invest in technology before they understand its benefits to the organization, Guarini said. So it’s important to emphasize what modernization strategies bring to a company as a whole.
“Start by reframing the conversation from ‘ERP implementation’ to ‘profit acceleration initiative,’” Virnoche said. “Find your organization's biggest revenue leak and show how modern ERP can plug it.”
Every company has inefficiencies, which cost them money. Calculate that cost and demonstrate how digital transformation pays for itself, Virnoche suggested.
“Build your business case on revenue generation and competitive advantage, using phased implementation to target a painful manual process affecting revenue-generating teams first,” Virnoche said.
For example, Virnoche worked with a mortgage services company using systems from the early 2000s. The company’s chief financial officer viewed technology solely as overhead. After implementing an automated workflow that saved the CFO’s team 20 hours a week, freeing analysts for strategic work instead of manual tasks, the CFO came around to the value of modernization.
“The key was showing how technology investment directly impacted the bottom line through specific wins,” Virnoche said.
Design for the Future
CIOs should “plan for the next pivot,” Sullivan said. “To unlock new models, the digital core must shift from being the memory of how things were done yesterday, to the muscle for how they will be done tomorrow.”
Incorporate artificial intelligence into new workflows to improve automation, for instance. This will help staff “sense process issues faster, think improvement levers better and act on fixing them sooner, so you can drive continuous performance improvement,” Sullivan said.
Organizations and their CIOs don’t need to reinvent the wheel. Sullivan suggested starting with a preconfigured model or blueprint, or an existing software stack.
Define and Measure Success
CFOs may be most concerned with ERPs going live “on time, on budget,” Sullivan said. But successful ERPs “rewire the business for clarity, speed and adaptability,” he added.
Organizations must invest the time to effectively roll out a strategy, Clobridge said. She suggested spending more time on planning to reach specific business goals and targets.
Outline what needs to be accomplished within specific time frames, but also make sure the plan won’t keep a department from getting its work done, Clobridge said. If the deployment isn’t going well, don’t be afraid to hit the pause button and regroup, she said.
“Invest the time to plan it well, because it will go smoother, it will cost less and you’ll get to the end goal faster,” Clobridge said.
Editor's Note: Read more about updating legacy technologies below:
- Lessons on Legacy Tech From the Delta Airlines Outage — While it's still being decided what's to blame for the week of Delta flight cancellations in July, it's a good reminder to maintain legacy tech.
- Legacy Systems Just Won't Quit, So Here's How to Manage Them — Behind the sleek facade of many modern brands sits a 20-year-old ERP system or similar legacy tech. How can we make it easier to work with these tech dinosaurs?
- Cloud vs. On-Premises ERP? It's a Tough Choice — While signs suggest organizations are looking at migrating their ERP to the cloud, it's not as straightforward as it seems. Here's why.
