Enterprise resource planning (ERP) platforms are arguably the most important applications in a company’s data center. The core modules range from financial and order management systems to supply chain planning and human resource management. In short, if the ERP platform goes down, orders can’t be booked, invoices can’t be paid, and business grinds to a halt. This high-risk proposition helps explain why enterprises need a compelling reason and an airtight business case before upgrading their ERP system and incorporating the project in a digital transformation strategy.
The cloud is providing just such a justification by turning an ERP upgrade into a business opportunity. A move to the cloud can fast track digital transformation and unlock business benefits like faster time to market for new products and services and reassigning internal information technology (IT) staff to high-value business initiatives.“The cloud is clearly the right architecture because it helps you disruptIT infrastructure costs,” says a former chief information officer (CIO)of the worldwide supply chain and R&D organizations at a consumer packaged goods (CPG) company. “Saving millions of dollars in IT costs can help fund other transformation projects.” The cloud canal so drive transformation with actionable insights to quickly identify opportunities and new revenue streams. In addition, the cloud offers resources for increasing IT uptime, which results in better customer service and the loyalty of high-value clients.
Given the importance of ERP to business operations, how can CIOs and other C-suite executives transition to the cloud without modernization missteps while quickly reaping business and technology rewards like greater business data insights, agility, and better use of internal IT resources? To help answer that question, HarvardBusiness Review Analytic Services gathered insights and detailed planning guidelines from executives and veterans of transformation projects at global enterprises. One of the first and most fundamental decisions leaders will face is where to run cloud ERP —on premises, in a public cloud, or with a hybrid approach that combines the first two options. The experts interviewed for this study shared the lessons they learned for making long-term cloud-deployment choices without disrupting critical business operations.In addition, veterans of ERP upgrades also pointed the way to finding the best cloud provider to run business critical resources.
The Case for Cloud
Simultaneously moving to the cloud during an ERP upgrade represents a fundamental change to enterprise operations as well as an opportunity to unlock new business value. CIOs have a unique role to play in helping business managers and their IT staff choose innovations that address overarching business goals.
“The cloud can preempt disruption caused by competitors and help companies become disruptors themselves.”
There needs to be a holistic vision that considers the additional business agility, the strategic use of data and analytics, and opportunities for removing a lot of the manual processing that is still part of so many enterprises today.These capabilities can ultimately help companies better defend themselves against competitors and changes in the marketplace.”
Forward-looking executives are showing how a modern ERP platform can unlock business value in three important areas for large enterprises.
- Real-time insights replace canned reports to optimize ROI.
- Optimized inventories reduce costs and improve efficiency.
- Faster innovation can gain a competitive edge.
Key Cloud Elements for Digital Transformation
Innovative executives see significant business and technical value in linking ERP upgrades with moves to the cloud. While the potential is great, ERP modernization has traditionally been complex, time-consuming, and resource-hungry. These projects still require comprehensive planning, but IT and business staff can smooth the way with the right cloud platform.IT leaders say the business benefits of the cloud fall into two distinct categories today—advantages that have been traditionally associated with cloud and newer capabilities that are available from a select group of cloud providers.Enterprises should look for a mix of the two categories to find the right cloud service for their needs.
- STEP 1: PUBLIC OR HYBRID: CHOOSE THE RIGHT CLOUD FOR YOUR ERP.
- STEP 2: BUILD A SOLID BUSINESS CASE FOR MOVING ERP TO THE CLOUD.
- STEP 3: ASSESS IMPLEMENTATION RISKS, AND TAKE STEPS TO MINIMIZE POTENTIAL PROBLEMS.
- SETP 4: EVALUATE PUBLIC CLOUD PROVIDERS AND THEIR CAPABILITIES FOR DIGITAL TRANSFORMATION ANDERP SUPPORT.
- STEP 5: CREATE A CHANGE MANAGEMENT PLAN THAT MINIMIZES DISRUPTION.
Public clouds stand out as long-term choices for ERP because of their traditional and advanced capabilities as well as the pressures on cloud providers to keep innovating so they can compete.
Act While There’s Still Time
As digital disruption touches virtually all business sectors, forward-leaning executives feel new urgency to transform their organizations in order to remain viable in their markets and to gain competitive advantage. For many enterprises, that means modernizing their core ERP platform and moving it to the cloud to achieve better cost management, enhanced agility, and faster access to technology innovations.But such a large-scale move requires a comprehensive planning and implementation strategy that covers a wide range of technical and change management issues. Enterprise leaders can begin to address these issues with the help of best practices emerging from veterans of transformation projects.With competitive pressures mounting, support for legacy ERP applications running out, and a tsunami of demand for technical expertise looming on the horizon, the manufacturing and logistics CIO warns that procrastination comes with consequences. CIOs must act now in order to build a strong foundation that sets them up for success.