Legacy systems are cost drivers. Working with them is often inefficient and has little to no automation. Due to their age, the platforms do not support various third-party applications, they are increasingly error-prone and/or have security vulnerabilities. As soon as one or more of these problems are present, it is very likely time to get rid of legacy systems and switch to a modern system. However, if your tech stack is a combination of e-commerce system and ERP, the question often arises as to which platform should be changed first.
We want to get to the bottom of this question in this article and clarify why it is usually better to swap the commerce system first.
Table of contents
As a Shopify Plus agency, Latori has already migrated numerous national and international shops to Shopify Plus or implemented completely new stores under the system. We can also support your project, just get in touch!
What is an ERP system?
The abbreviation ERP stands for Enterprise Resource Planning. Essentially, an ERP is used to control various processes in a company. The core of the system is usually a merchandise management system that can be used to track and manage stock levels. You can track when goods are added to or removed from your warehouse at any time, where they are stored and, if desired, trigger an automatic reorder when stocks are running low.
In addition to merchandise management, an ERP also has other components, including:
Personnel and working time planning
Management of product information (Product Information Management = PIM)
Customer relationship management (CRM)
As an ERP can be used to automate numerous processes from the business areas mentioned above, such a system is indispensable, especially for retailers and manufacturers.
What is an e-commerce system?
An e-commerce system is a software solution that enables companies to sell their products and services online and offline. Commerce systems are primarily used for product data management and presentation. They define various properties and details such as prices, product images and texts. Individual items can also be organised into categories and sub-categories.
Another core function of the e-commerce system is order management. The platform includes shopping basket and checkout functions that enable customers to complete a purchase in your shop. Various payment methods are usually available to the buyer for this purpose, which can be integrated via third-party gateways. Incoming orders can be tracked and managed at any time from the backend of the system. Using a standard template, you create and send an invoice for your customers, while your logistics department simultaneously receives an order confirmation for picking and dispatch. Ideally, invoicing and order processing are fully automated.
Similar to ERPs, commerce systems also support inventory management. However, this inventory management is usually less detailed. Although incoming and outgoing stock can be recorded, there is usually no information on the storage location, which is why it is not possible to optimise space in the warehouse, for example. This is one of the reasons why many companies rely on a combination of ERP and commerce system.
Reading tip: Want to know how you can customise your checkout as a Shopify Plus user? Then we recommend this article.
When it's time to think about switching ERP and e-commerce systems
Changing an ERP and/or commerce system is not a simple intervention in your company's processes. ERP systems often cost a five-figure sum when they are introduced. What's more, your team will have to adapt to the change in technology and learn how to use the systems.
For reasons like these, companies often delay a changeover for as long as possible. However, there are clear signs that you should not ignore under any circumstances and should instead consider a change. You can see the most important signals here.
Your processes are inefficient: If you have high throughput times due to many manual processes, it could be time to modernise your systems. In this way, numerous standard processes can be automated so that your team has more time for your day-to-day business.
You have many isolated solutions: Centralised storage and management of product, inventory and customer data simplifies working with them enormously and reduces sources of error. If your systems prevent the seamless integration of third-party providers, which is essential in day-to-day business, you should consider switching systems.
Your systems are no longer supported: Sooner or later, support for any software is discontinued. ERPs and e-commerce systems are no exception. Platforms that are no longer supported can pose a huge security risk over time and should be replaced.
Your requirements have changed: Perhaps your system combination was just right for your business when it was introduced, but now you've literally outgrown your solution and need features that didn't matter in the past and that your platforms don't cover. If this is the case, you should be looking for solutions that suit your business at this stage (and in the future!).
The customer experience suffers: A successful shopping experience should always be your ultimate goal. If your systems impact the customer experience due to their complexity, this can have a negative impact on your sales.
You save costs: Changing one or more systems involves a large initial outlay. However, if it becomes apparent that you will save money in the long term due to lower licence costs and/or savings in maintenance costs, a switch can also be worthwhile from a financial perspective.
Reading tip: We migrated our customer Coeur De Lion to Shopify Plus and linked the store to the Xentral ERP. You can find the complete case here.
7 reasons why you should change your e-commerce system before your ERP
There is a close connection between the ERP and the online shop system - the shop is usually seamlessly integrated into the ERP and every incoming order is automatically recorded and processed by Enterprise Resource Planning. However, we already mentioned at the beginning that it is very likely advisable to complete the shop system change first. Below we show you 7 reasons why this is the case.
#1 The ROI is increased
In contrast to ERP, the commerce system has a greater impact on the return on investment (ROI). With a modern platform, you benefit from increased sales, more payment options for customers and a higher conversion rate thanks to a modern checkout that causes fewer bounces. As a result, the modernisation of the system pays for itself more quickly and frees up resources for the subsequent ERP change.
#2 The e-commerce system has more influence on the customer relationship
While an ERP tends to influence the processes in the background, your commerce system has a direct impact on your front end - and therefore also on the customer. Visitors are constantly interacting with your shop. If long loading times, crashes, unclear user guidance or other disruptive factors lead to unwanted bounces, the processes in the backend, which primarily affect order processing, are not even touched. It is therefore worth starting with the e-commerce system when changing systems.
Tip: Do you want to know how to increase your customer lifetime value? You'll find the answer in our blog.
#3 A front end ages faster than a back end
Precisely because they are so complex, ERP systems are generally designed for a long service life. Once implemented correctly, most systems continue to perform their service even after a decade or more. This does not necessarily have to be the case with a commerce system: What is considered state of the art in terms of usability and design today may be obsolete in just a few years' time. This is because market requirements, customer wishes and legal regulations regarding product labelling and presentation have a strong influence here. For this reason, headless commerce has also developed, which decouples a front end from its logic in the back end and thus makes the system more flexible.
#4 The complexity decreases
Changing the commerce system is usually easier and less risky than switching to a new ERP. It is therefore advisable to start with the shop system. The knowledge you gain from this phase of the changeover can possibly be used for the move to the ERP, which simplifies the planning and implementation of the ERP project.
#5 Data integration is guaranteed
Modern e-commerce systems enable the integration of numerous systems, including ERPs, with the help of so-called API interfaces. It therefore makes sense to first select the shop system that is best for you. Once it has been implemented, you can integrate the corresponding ERP system.
#6 User acceptance is increased
When a double system change is pending, this means a lot of training for your team. Your employees have to get used to the new technologies and learn how to use them in their daily work processes. If you start with the generally less complex commerce system, you simplify the changeover for your employees and thus increase acceptance of the new tech stack.
#7 You can use middleware
If you initially rely on a modern commerce system, you can link it to your ERP using a middleware solution. This makes it much easier to switch ERP systems at a later date. You then only need to renew the connection between the ERP and the middleware - the shop system remains unaffected.
E-commerce systems: Recommended by Latori
Shopify
Shopify is the shop system from the Canadian software provider of the same name. Shopify founder Tobias Lütke was looking for a software solution for his own snowboard shop. When he couldn't find what he was looking for, he simply programmed the system himself - with unexpected success. Today, Shopify is one of the most widespread commerce systems on the market. According to Store Leads, there are more than 75,000 Shopify shops in Germany alone.
Shopify is completely cloud-based. Shop operators therefore do not need to worry about having their own server landscape. The system owes its success to its simplicity. As a rule, no programming knowledge is required to set up a functional online shop. New functions can usually be added to the shop system with just a few clicks via the app store. For localised sales, retailers have up to ten inventory locations in three markets at their disposal. Local retailers also have access to the in-house Shopify POS Lite.
Shopify is available in three versions:
Basic: 27 EUR/month
Shopify: 79 EUR/month
Advance: 289 EUR/month
Shopify Plus
Shopify Plus is Shopify's enterprise solution and is primarily aimed at international companies with higher transaction volumes. The system offers the same basic requirements as Shopify, but comes with various additional functions. These include the fully integrated POS Pro POS system, extensive functions for B2B commerce and an unlimited number of employee accounts.
When it comes to customising, Shopify Plus also offers more freedom than Shopify. For example, various ERP systems can be connected directly to the e-commerce system, including SAP, Microsoft Dynamics and Acumatia. Numerous processes can be planned and automated with the Shopify Plus-exclusive apps Shopify Flow and Launchpad.
Pricing for Shopify Plus is based on turnover, but amounts to at least $2,300 per month.
Conclusion
Even if a system change entails a high level of cost and effort: If it becomes apparent that legacy systems are jeopardising the growth and competitiveness of your company, you should definitely not stick with these solutions. If both the e-commerce solution and ERP are affected by the changeover, it is worth starting with the commerce system. We can warmly recommend Shopify or Shopify Plus for the changeover.
As Shopify Plus experts, we at Latori are happy to assist you if you want to migrate your shop to Shopify. Get in touch with us.
