Core enterprise applications such as ERP are not as readily moved off-site as other applications – but they’re propelling a new wave of cloud adoption. Andres Richter explains why organizations should consider making the switch.
Modern enterprise management software has come a long way from its industrial routes in providing procurement and manufacturing functionalities. Responding to changes in the technology landscape such as mobility, big data analytics and cloud computing, the software has had no choice but to evolve. Employees now require instant information at their fingertips, wherever they are, from any device. Unsurprisingly, core business functions of modern enterprise resource planning (ERP) such as financials, operations, HR and analytics require the same, consumerized flexibility offered by a plethora of non-business critical cloud-based applications. But it’s only the CIOs committed to future proofing their IT who have spotted this opportunity and have made the move from on-premise to a cloud-only or an integrated approach.
While vendors look at ways to disrupt the market, the challenge of convincing ‘stick in the mud’ IT decision makers that business continuity can be maintained during the transition to cloud ERP and beyond remains: but we are seeing an increase. Panorama Consulting’s ERP Report 2016 sees 27 percent of businesses adopting cloud ERP, a rise from 11 percent in the previous year. In our experience, more than 20 percent of current customers at Priority Software are already in the cloud. The take-up is particularly high in industries such as digital media, professional services and business services.
So what is causing some CIOs to stick with on-premise ERP solutions? More often than not there are hesitations around change due to memories of a lengthy deployment of the incumbent legacy system and extensive downtime: running over budget and over time. When coupled with a general lack of knowledge about the benefits of cloud and the recent advancements in speedy migration options, it’s quite common for CIOs to knock it down the list of priorities.
Whether companies are new to cloud ERP or wish to upgrade their existing system, transitioning the operational core of the business can be done with maximum efficiency. Once in place, enterprises can enjoy core application scalability, as well as the reduction in hardware costs. This is important for companies who are looking for fairly priced alternatives to the up-front cost of upgrading on-premise servers. Additionally, the flexibility afforded by ‘pay-as-you-go’ business management means time and money aren’t spent on the IT team managing hardware, software, and upgrades: all of which have a detrimental effect on uptime.
On the cloud-sceptic side of things, many people don’t realise that any perceived disadvantages of cloud computing are problems which already exist in on-premise software. The key difference is the way in which cloud allows these problems to be mitigated, resolved, and avoided in future. It’s important to find a vendor that can make the transition quickly and smoothly and provide professional implementation and data migration services with the highest levels of security and performance instead of the company being left to do it themselves. Training at the customer’s site must cater to all skillsets. Ongoing help tools must be readily available to enable all employees to get up and running faster, minimising downtime. It’s also important that this assistance continues throughout the year.
When developing a security strategy for transferring operations data to the cloud in an efficient manner, businesses must demand 100 percent transparency on the quality of data processing within cloud-based ERP, including industry recognised compliance standards. What’s clear is that many vendors’ level of security normally exceeds what an on-premises solution could provide.
For companies who are tired of dealing with an aging, legacy ERP system, dispelling the myths around migration to the cloud shows that there is an alternative. In the age of mobility, there is a growing requirement for businesses to engage more effectively with customers, suppliers and employees. This should continue to move companies towards the next generation of ERP. As with any IT move, organizational adjustments are almost always a part of the transition to the cloud and the organization needs to be ready and willing to make the changes.
As companies journey towards cloud-based ERP, one objective needs to reign supreme: increased ROI and reduced TCO. Moving to the cloud will generate immediate added value for companies and give individual users added functionality and capabilities. By freeing up IT and other budgets, cloud ERP reduces operational costs across the board from the get go.
While it’s advisable to research the options for cloud ERP which not only minimise but reduce downtime in the long term, businesses should undertake a proper evaluation of their goals and the current processes in place. The business needs to drive the project and the IT team has a role to play in highlighting the benefits. Connecting business objectives to your ERP strategy is the only way to ensure value is realised. A smooth transition to the cloud is virtually guaranteed, as long as you remain smart about your current options and the level of flexibility needed to make adjustments later on.
