In the UK, legacy systems remain a widespread issue for businesses. For example, a recent study reported by the Financial Conduct Authority (FCA) showed that 92% of the UK’s financial services companies still relied on legacy technology, while 78% of their data sat in on-premise infrastructure.

Legacy systems can cause data inaccuracies and may become underutilised. When these older systems become redundant, companies and their employees will likely suffer from reduced productivity and communication. With the risks of an incoming recession in 2025, businesses must have the most effective systems to maximise productivity and profitability.

While businesses may be cautious of the initial start-up costs of modern cloud solutions, such as Microsoft Dynamics 365, the efficiency benefits outweigh the initial startup costs. In this blog, we’ll demonstrate the hidden costs of not implementing Microsoft Dynamics 365.  

Ineffective stock control

Legacy systems prevent businesses from accurately managing stock levels, as actual stock levels may be much higher, leading to overspending and manual time spent searching for the displaced items.  

There is also an issue of inaccurately reporting stock values as manually inputting data into a legacy system is likely to have errors. This can then lead to inflated or deflated reporting values, impacting an organisation's profits. On the other hand, Microsoft Dynamics 365 Finance and Supply Chain’s intelligent reports can highlight any variations in stock values to improve accuracy. 

For systems with ineffective stock control, employees will use manual workarounds (outside system) for stock control processes, which increases effort and time spent. These manual interventions may not be accurate, leading to lengthy stock takes and taking staff time away from working on more profitable activities. 

On the other hand, Microsoft Dynamics 365 implementation provides superior visibility across different departments to keep track of stock issues and levels. Businesses could use a Microsoft Dynamics 365 ERP system to prevent bottlenecks in stock takes and reduce time spent manually searching for lost stock.

Microsoft Dynamics 365 Supply Chain Management offers a range of inventory management solutions, including:

• Arrival overview page - Look at this page as a workbench that shows expected incoming deliveries along with estimated details of items. It offers a centralised place for employees to mark down the order type, expected receipt date, and delivery destination for all products due in the warehouse. 
• Inventory operations - Microsoft Dynamic 365 helps to give an overview to the warehouse receiver of expected inbound deliveries for a specific day and allows the business to track any delays or lost deliveries. The software has a number of journals that assist the organisation in controlling items in the inventory and allow users to track inventory based on the information they have inputted to save time manually searching for products.
  • Movement and Adjustment journals, which will each automatically adjust costs in the general ledger, will make the costs accurate. 
  • Transfer journals can be used to move items between different locations in the warehouse. 
  • Counting journals can be used to correct current on-hand inventory and make immediate adjustments that will help reconcile differences.
• Warehouse Management – The Microsoft Dynamics warehouse management module has features that will help support the warehouse facility to work at its best at any time. It is fully integrated with many other business processes like manufacturing and quality control so that it gives real-time visibility into stock levels, order fulfilment, and shipments, helping businesses optimise storage and maintain a clear process flow for deliveries.
• Demand Forecasting – Microsoft Dynamics can offer an app that will use forecast algorithms and models that will provide a user with intelligent reports and analytics that can ultimately be measured in improved revenues and fewer stock outs. Using AI to predict inventory needs based on past sales and trends or explorations of forecast data, Dynamics can provide insights into shifts in trends or anomalies in the data, ensuring businesses minimise stock issues and provide relevant information for decision-making.

It is worth noting that a successful cloud-based stock management system requires Microsoft Dynamics 365 training to ensure employees are confident using it. At Essenkay, we can offer ongoing support to answer queries and advise on the best tools for your business. 

Information displacement 

From experience, we have seen that one of the biggest roadblocks to understanding data effectively is the ever-increasing volume of data being held by companies. Without an ERP system in place, businesses often struggle with information displacement, where information is stored in multiple places and does not provide one concise version of the truth.

Having uncontrollable amounts of data slowly impacts the speed and responsiveness of a legacy system, increasing users' frustrations. In addition, if not managed, vast amounts of data can cause catastrophic downtime to the business, such as the inability to fulfil customer orders.

When businesses invest in a Microsoft Dynamics 365 implementation, they gain greater control and visibility over their internal and customer data, which can then power internal processes and communication. 

For example, financial services businesses may use the Cash Forecasting tool within Microsoft Dynamics 365 Finance to provide real-time insights into cash flow and utilise. Manufacturers who are using Microsoft Dynamics 365 Project Operations can integrate with the Advanced Warehouse Management Module in D365 Supply chain to easily organise and access data about stock levels, factory output and supplier information. 

Cybersecurity dangers

Many industries use legacy systems, which are not built to protect against cyberattacks, especially since 50% of businesses report some form of attack each year. 

Some examples of inefficient security systems in different industries include:

• Manufacturing businesses using outdated Industrial IoT Devices - which may use weak encryption, making them susceptible to attack
• Logistics companies using legacy RFID or barcode systems - these can be manipulated to falsify inventory records
• Finance or professional services businesses may use outdated banking systems which do not support modern cyber security protection or GDPR regulations

On the other hand, Microsoft Dynamics 365 works within the natural security set-up of Azure (Microsoft entraID) and utilises multifactor authentication. Microsoft Dynamics 365 software within the cloud utilises the same log-on requests, creating no additional work for staff to log on or monitor. 

Additionally, a Microsoft cloud solution does not require a self-secure RDP (remote desktop) or a VPN (virtual private network) to access companies via on-premise solutions. This creates fewer endpoints for security teams to manage and review and fewer vulnerabilities. 

Working with a digital transformation expert for your Microsoft Dynamics 365 implementation can ensure systems are updated with the latest security and that a business stays within regulations. Microsoft has adopted an evergreen solution, which is updated frequently throughout the year and brings possibilities for new cybersecurity features in the future. 

At Essenkay, we introduce these new security features to the existing business technology and assess its success. Where appropriate, we’ll deploy newer elements of the technology whilst maintaining Microsoft Dynamics 365 training to ensure a smooth transition and reduce the risk of employee confusion. 

Missed opportunities

With ineffective legacy systems, we have discussed the dangers of misinformation, miscommunication, ineffective stock control and cybersecurity dangers. 

Overall, without a centralised data point, businesses miss out on key growth opportunities as they cannot analyse input correctly. For example, the actual financial costs may be greater than projected due to delayed information and loss of profit impacts where sales should be increased. 

Microsoft Dynamics 365 can not only keep track of all business data, but can aid analysis for smart business decisions. For example, a manufacturing company may use Microsoft Dynamics 365 Supply Chain Management to monitor real-time inventory levels, predict demand fluctuations using AI-driven insights, and optimise production scheduling to reduce waste and costs.

In particular, newer elements of Microsoft Dynamics 365 can be worked into business workflows, like Microsoft Copilot. A logistics business may use Copilot in Dynamics 365 Finance to automate invoice processing, detect anomalies in financial transactions, and generate predictive cash flow forecasts, improving financial accuracy and efficiency.

Crucially, businesses risk missing opportunities to use advanced analytics, which can provide deeper insights into customer behaviour, financial trends, and operational performance and ultimately help them become more competitive. 

How Essenkay can help with Microsoft Dynamics 365 implementation

We hope this read has shown how changing from legacy systems to an integrated ERP system like Microsoft Dynamics can help your business to grow using data-driven insights. We started by saying that recession could be an imminent possibility and that in itself could affect investment decisions. 

A large-scale data transformation system is a costly investment. During the Napoleonic wars, Nathan Rothschild, a 19th-century financier, is credited with saying that “the time to buy is when there’s blood in the streets," which became the credo for contrarian investors. Hopefully, the economy may not become this bad. Still, it does illustrate that maybe being brave now and investing in change before the recession will put an organisation on the front foot and ahead of the competition when the economic climate changes.

The team at Essenkay bring decades of experience in Microsoft Dynamics 365 and supports businesses to get the most out of their new cloud computing investments. In addition, Essenkay is a Microsoft Partner, which means the team gets access to more support networks and technology to support a technology transformation. 

We can also provide ERP project recovery and ongoing training and support. Get in touch today to discuss your legacy system frustrations or to learn more about how Microsoft ERP could improve efficiency and profitability.