For the better part of the last two years, the technology conversation in Australia has been dominated by artificial intelligence. Yet when we examined what organisations are actually doing, rather than what they say they are interested in, a different picture emerged. The most urgent, complex and consequential challenge facing both public and private sector organisations is not AI. It is the overdue renewal of core business systems.
This was the starting point for IBRS’ Fast Tracking Economic Advantage from Core Solution Upgrades study, in partnership with TechnologyOne. Drawing on detailed client engagement data – real-world inquiries, project work and advisory interactions – we identified a clear pattern: a wave of deferred core system upgrades is now colliding with rising costs, changing vendor models and increasingly complex delivery environments.
Perfect storm of delay and inevitability
Core systems – ERP platforms underpinning finance, HR and operations – typically operate on long refresh cycles of 10 to 15 years. Many Australian organisations entered the COVID period with upgrade programs already planned. Those programs were paused as priorities shifted to immediate operational continuity, remote work, device provisioning and digital access.
The consequence is a multi-year deferral. Systems that were already approaching end-of-life are now well beyond their intended refresh horizon. At the same time, vendors have accelerated the transition away from on-premise models toward SaaS-based delivery.
The result is a perfect storm: ageing systems, diminishing vendor support, rising security risk and, critically, a lack of choice. Organisations are no longer asking if they should upgrade, but how quickly they can do so.
The hidden cost crisis
A second, less discussed dynamic is cost. For much of the period between 2018 and 2024, enterprise software pricing was relatively stable. That stability has now broken.
Organisations are facing escalating SaaS subscription costs, rising licensing fees and the introduction of new pricing layers associated with advanced capabilities, including AI. What was once framed as a cost-saving shift to cloud is increasingly being experienced as a cost management problem.
This is reshaping executive priorities. The most common inquiry we now see is not about capability, but financial optimisation – how to control spend while still delivering necessary system renewal.
Why projects fail: it’s not the tech
One of the most consistent findings from the research is that core system upgrades rarely fail because of technology. They fail because of implementation – specifically, because organisations apply legacy thinking to modern platforms.
Traditional ERP projects were built on large, waterfall-style methodologies. These have long planning cycles, extensive customisation and broad transformation ambitions. Those approaches are fundamentally misaligned with SaaS-based systems, which are designed for consumption, iteration and standardisation.
Organisations that attempt to leverage old methodologies in a new environment encounter predictable outcomes, such as budget overruns, time delays and limited realised value. Worse, benefits realisation efforts fail because too much effort is spent ‘going over old ground.’
The ‘time to value’ imperative
What ultimately matters is not the completion of a system migration, but the time to value – i.e. the point at which measurable benefits begin to emerge.
Here, the research revealed a stark divide. Many organisations invest significant capital in new platforms only to replicate existing processes. That’s the ‘old ground’. They effectively achieve a ‘like-for-like’ replacement, delivering minimal incremental value despite substantial cost.
By contrast, high-performing organisations take a different approach. They identify specific areas where measurable improvements can be achieved, such as invoice processing, asset management and customer service workflows.
They focus their transformation efforts on new areas and new opportunities for operational and service improvement. Importantly, they define clear target benefits with metrics and track them rigorously. They are laser-focused on reaping new benefits from what others see as just a legacy ERP technology uplift.
The shift from ERP as a technology uplift project to a program for targeted, measurable improvement is critical. Vague objectives such as ‘improved productivity’ or ‘reduced operating costs’ are not actionable. Specific, operational metrics are.
The mindset problem
At the heart of this issue is a fundamental misunderstanding. Organisations conflate legacy technology with legacy operations.
In reality, these two issues are distinct. Legacy technology presents both security and resilience risks and lost opportunities taken on new innovations. In contrast, legacy operational processes remain valid and effective. You do not need to reinvent the general ledger!
Attempting to redesign everything introduces unnecessary complexity and slows delivery. The organisations that succeed are those that distinguish between:
- Processes that should remain unchanged, because they are already fit for purpose; and
- Processes that offer genuine opportunities for improvement, and therefore justify investment.
This selective approach enables focus. It reduces scope, accelerates delivery and increases the likelihood of achieving measurable outcomes.
The consulting paradox
The role of consulting partners is another area where the data challenges conventional wisdom.
Large, global consulting firms are often positioned as essential to ‘digital transformation’ However, when analysed critically, these tier 1 consultancies are associated with greater cost and time overruns.
This is not a reflection of capability, but of misalignment. Their methodologies and frameworks are typically designed for large-scale, complex transformations and can be disproportionate to the needs of mid-tier organisations.
Equally, outsourcing too much responsibility, particularly strategy and planning, proved problematic regardless of provider tier. The evidence is clear: organisations that retained ownership of strategy, planning and project management consistently delivered better outcomes.
These are not functions that can be delegated. They require deep organisational context and accountability that external parties cannot fully replicate.
A different delivery model
Where external partners do add value is in targeted areas:
- Specialist providers (Tier 2) are highly effective in technical domains such as data migration and configuration.
- Vendors can accelerate deployment, particularly in transitions within their own ecosystems.
However, even in these cases, success depends on clarity of instruction. Without a well-defined understanding of which processes to retain, modify or discard, organisations risk simply reproducing legacy systems in a new environment. Our research’s economic modelling shows clearly that clarity cannot be outsourced.
From project to program
Perhaps the most important shift is conceptual. Many organisations treat core system upgrades as finite projects: once the system is live, the work is considered complete.
This is a mistake.
Modern SaaS platforms operate on continuous release cycles. New features, regulatory updates and performance improvements are delivered regularly. To capture value, organisations must adopt a program mindset – one of ongoing change, continuous optimisation and active engagement with vendor roadmaps.
Those that do this effectively break their transformation into stages, delivering incremental improvements over time. They measure outcomes, adjust priorities and maintain momentum.
Those that do not risk stagnation, having invested heavily in new systems but failing to realise their potential.
The bottom line
The current wave of core system upgrades is unavoidable. The question is not whether organisations will undertake them, but how effectively they will do so.
The evidence suggests that success depends less on technology choice and more on organisational behaviour:
- retaining ownership of strategy and planning;
- focusing on measurable, operational outcomes;
- adopting iterative, program-based delivery; and
- aligning implementation approaches with the realities of SaaS platforms.
In short, the challenge is not technological. It is managerial.
And for many organisations, that may be the harder problem to solve.
Dr Joseph Sweeney is an advisor at IBRS specialising in enterprise systems and the economics of ICT, with a focus on cloud and AI. He is known for providing evidence-based insights on technology strategy, has led national studies on software and digital platforms, and is the author of Mastering Microsoft Licensing.
This article was produced by InnovationAus.com in partnership with TechnologyOne.
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