Business transformation is a battle fought on many fronts, and one of the most important is the modernization of core business processes. By optimizing
enterprise resource planning (ERP) systems, for example, enterprises can unlock new insights from business data for better decision making and to identify new market
opportunities. Large and mid-size organizations can also better manage finances and inventories, HR operations, supply chains, and other essential areas. With these benefits in sight, forward-thinking companies are upgrading to the latest ERP platforms and moving them to a public cloud service to reduce capital expenditures while increasing agility, innovation, and competitiveness in quickly changing markets.
The need for nimbleness became particularly apparent as the Covid-19pandemic upended companies throughout the world. Traditional, on-premisesERP systems aren’t designed for agility—for example, they can’t quickly support large numbers of people who suddenly must work from home. Organizations that had already migrated ERP systems to a public cloud were able to make on-the-fly changes to financial and supply-chain operations to maintain high levels of customer service, optimize their internal operations, reduce costs by scaling back service levels, and create resilient supply chains that adjust quickly to changing demands.Important as hyper-agility may be during a global pandemic, or perhaps to capitalize on the next large-scale business opportunity, migrating essential ERP systems to the cloud offers other equally important possibilities. These moves are enabling some organizations to expand their business transformation goals by mining data for real-time and predictive insights that drive better business outcomes. The new insights also help companies reimagine their long-term go-to-market and customer-service strategies and can ultimately improve cost savings and drive innovation.
Companies that had migrated enterprise resource planning(ERP) systems to a public cloud prior to Covid-19 were able to make on-the-fly adjustments to maintain high levels of customer service and quickly react to changing customer demands.
How Cloud ERP Impacts Organizations
The combination of ERP applications and cloud services comes in a variety of forms, the two most common being software as-a-service (SaaS) and hosted ERP, also known as cloudERP. The SaaS model provides a single, cloud-based software environment that multiple customers share. While each client’s data is securely segmented from other subscribers’—one customer can’t access another’s financial records, for example—SaaS’s multi-tenant model has drawbacks for enterprises, including a limited ability to customize the application for unique business requirements and, depending on the SaaS product, the absence of some key modules that may be found in enterprise-class applications, such as supply-chain management and predictive analytics.
An alternative is to run a comprehensive ERP application hosted in a public cloud, referred to here as cloud ERP. This option uses a leading public cloud service to run an ERP platform that an enterprise may have been managing in its data center for years. This cloud-ERP pairing is attractive to organizations because it not only offers the features noted above that SaaS ERP may lack, but also lets users quickly capitalize on digital innovations like advanced analytics, such as artificial intelligence (AI), machine learning, and the internet of things (IoT), that cloud providers integrate into the ERP stack.
Phase One Benefits of CloudERP Migrations
The first phase focuses on the fundamental step of migrating an on-premises ERP platform to a public cloud service. IT leaders often use this opportunity to upgrade their existing ERP suite to the latest version to tap into new features and performance improvements. Moving to the cloud also relieves the internal IT staff of having to maintain all the servers, storage arrays, and other assets needed to support enterprise applications. Phase one’s other benefit is that it creates a foundation for reaping more advanced capabilities in phase two. Even so, the first step can deliver a variety of relatively quick, high-value returns for enterprises, including:
- Increased systems uptime and availability.
- Increased agility from on-demand provisioning of IT services.
- Enhanced security and compliance.
Phase Two Benefits of CloudERP Migrations
Once enterprises make the initial move to the cloud, they’re positioned to extend their ERP applications beyond what was possible with on-premises implementations. Phase two involves integrating their ERP platforms with new capabilities that leading cloud providers deliver to support higher levels of agility and innovation. For example, some cloud companies offer extensive data management and analytics services, as well as support for IoT initiatives. These cloud services work closely with the core ERP platform to help organizations gain abetter understanding of their markets, develop new business models, and respond to new challenges. Other benefits include:
- More detailed insights from data and analytics.
- More complete analyses by integrating data from within and outside the ERP platform.
- Faster access to emerging technologies.
- IT staffs shift from managing on-premises data centers to focusing more on business transformation.
A Blueprint for Overcoming CloudERP Challenges
There is a wide range of potential benefits from moving ERP to the cloud, but IT executives and industry analysts say careful up-front planning and attention to possible roadblocks are needed to reduce the chance that migrations won’t live up to expectations.
- Begin with a gradual move to the cloud.
- Update and refine business processes.
- Capitalize on new resources for data and analytics.
- Prepare workforces for working with ERPin new ways.
Expanding the Art of the Possible
The potential benefits of updating and then moving ERP platforms to the cloud span a variety of near-term and longer range returns. In the first phase of these migrations, executives report increased agility in responding to unexpected events, like the global Covid-19 crisis. Company leaders are also seeing higher uptime rates, stronger cybersecurity, more effective and economical use of IT resources, deeper and more valuable insights from data, and automations that improve product quality.
In the second phase, veterans of these projects say the move can expand their goals for ongoing digital transformation strategies.The key is not only devising a two-phase strategy, but also capitalizing on new opportunities for streamlining and optimizing ERP workflows in the new cloud infrastructure. Enterprises should also prepare for some common migration challenges, including cultural change management. IT leaders say these foundational steps pay dividends once the migration is complete.“Being in the cloud is like opening a door and seeing new things you didn’t know were inside,” says Hassen. “Once you take the step, you see opportunities for using these services to expand the art of the possible. It makes strategizing and innovating that much easier.”
“Once you take the step, you see opportunities for using these services to expand the art of the possible. It makes strategizing and innovating that much easier.”