Over the last number of years, the ‘cloud’ has become a destination of choice for all manner of technology, and certainly ERP vendors have been quick to promote this as an option to their customers. However, as with any ‘hot destination’ unless you take the time to understand the potential traps, your journey to the cloud could be filled with disappointment.
Leaving the ‘vacation’ metaphor behind (Has any ERP implementation ever been described as a vacation?), there are some critical factors to assess when considering whether or not a cloud-based ERP makes sense for your organization. On the surface, there are certainly cost benefits to be realized by moving away from an ‘on prem’ architecture. The savings on hardware alone could be enormous, especially if you no longer need to maintain a Disaster Recovery (DR) environment, or worry about the technical demands associated with ‘High Availability’. And for under-staffed IT departments, passing on the responsibility for managing an ERP system can allow for the re-allocation of valuable resources.
These potential advantages may, however, be off-set by the loss of flexibility that an organization can experience when moving to the cloud. You need to consider the vendor’s ability to manage any uniqueness that currently exists in your system and you need to clearly understand the vendor’s process (and timeline) for providing new functionality. Simply put, you need to realize that by moving to the cloud, you are no longer ‘master of your domain’. (And if you decide that you are OK with this, are your internal customers also OK?)
So, how do you know if moving your ERP system to the cloud is right for you? As outlined above, there are many factors to consider when making this decision, not the least of which is ‘we don’t know what we don’t know’. This ‘fear of the unknown’ is certainly understandable, given the costs associated with a bad decision. Therefore, in order to reduce potential risks, and to give yourself the opporunity to collect valuable data points, you may want to consider a more tempered approach – one in which you ‘dip your toe in the water’ before plunging in headlong.
This is the path suggested by Michael Bathon of Rimini Street in his August 22, 2019 article “5 Ways to Leverage ERP in the Cloud Without Throwing Away Millions” (see below):
“Everyone is moving to the cloud, no doubt about it. How to take advantage of the cloud is the multi-million dollar question. Get stampeded into making the wrong decision, and you could wind up throwing away millions. Do it right, and the payoff can be immense.
Not everything in the cloud is automatically better and cheaper and more innovative. While great efficiencies are possible, it’s also easy to overprovision unneeded capacity or allow unmonitored services to balloon out of control because you’ve configured them to scale up automatically. You can subscribe to Software as a Service applications that lock you into using that vendor forever after, or that make it very difficult to switch.
Even for cloud products that have positive-sounding words like ‘autonomous’ or ‘elastic’ baked into their names, success is not automatic. You must make sure these services aren’t stretching you in a direction you don’t want to go.
Understanding the full range of cloud deployment options is particularly important in the context of ERP, where vendors have been playing up SaaS incarnations of their platforms as the quick-and-easy option. Before you follow the path of least resistance, consider your alternatives.
1. Use SaaS where it makes sense
I’ve already suggested there may be drawbacks to SaaS. ERPs take a lot of blood, sweat, and tears to implement and perfect, ultimately becoming the ‘heart and brain’ of the organization. Moving to a SaaS ERP, even from the same vendor, means potentially throwing away years of work on customizations and integrations that may not meet the vendor’s, our your, definition of ‘best practices’.
Worse, you may also find that some of your most business-critical ERP applications, such as shop floor automation and supply chain management, do not have equally capable SaaS equivalents.
Nevertheless, you may decide that the benefits outweigh the drawbacks in specific, high-impact functions. Even if you won’t move the whole company, SaaS ERP might make sense for a division, a newly acquired company, or your distributed salesforce.
2. Lift and shift trusted applications
Many of our clients are more satisfied than not with their current ERP and would rather invest their time and talent in other, revenue-producing applications.
Those who don’t think their organization needs a heart transplant still may conclude it needs to build new muscles. They can begin running their existing ERPs (customizations and all) on cloud infrastructure and gradually weave in other cloud services.
I disagree with those who disparage this ‘lift and shift’ strategy for moving an existing ERP to cloud hosting – even if the application itself remains more or less unchanged. For example, one of our clients achieved better performance with cloud hosting its Oracle EBS system, partly because the cloud provider set them up on its latest and greatest server hardware. Now they no longer worry about replacing and refreshing hardware, and achieving high availability. In addition, disaster recovery (a capability they never had before) is just a matter of taking advantage of the cloud provider’s distributed architecture.
3. Take advantage of world-class infrastructure
Unless you work for a Fortune 100 company that has made considerable investments in building cloud-like data centers, and they focused their new investment where it will drive competitive advantage and growth, you can’t hope to match the economies of scale and DevOps expertise that exist within companies such as Amazon Web Services or Microsoft Azure. Between them, they have spent many billions creating over 200 data centers across over 100+ countries and regions.
These are resources you could never hope to field on your own.
4. Access leading-edge cloud resources
When I was leading IT at a previous company, one of the benefits we got from moving applications to the cloud is that we could begin to apply machine learning techniques to analyzing the activities of field services technicians so we could deploy them more effectively. That’s not something we would have tackled without access to cloud tools that made it relatively easy to get started without a huge investment. But neither did it require a wholesale migration.
Strategic use of the cloud allows you to begin asking questions and creating solutions that otherwise would have lingered forever out of reach because of cost and technical barriers. Datamation makes the same point in its report, Cloud Computing 2019: Using the Cloud for Competitive Advantage.
Taking advantage of advanced cloud services becomes much more practical when your applications and data are already there. That means getting your applications not just into ‘the cloud’ but into the right cloud. Microsoft, Amazon and Google are investing billions in creating next generation data management tools – and you can take advantage of them for pennies on the dollar. No longer limited by the need to order, install and configure servers, you can deploy cutting edge data services in minutes.
5. Earn your cloud cred
Certainly, there has been a pivot in the corporate world. A few years ago, you could express doubt about embracing the cloud, and company leaders would nod approvingly at your caution. Today, IT leaders who are not prepared to go all-in on the cloud as your modernization strategy must often be prepared to explain themselves because “everybody knows” the cloud is the future.
You may indeed score points with company leaders by showing you are embracing that future, but it won’t last if the moves you make do more harm than good for the business.
You do not have to move everything to the cloud, and you should not rush anything. Pick your spots and start taking advantage of the cloud technologies with the potential to make the greatest positive business impact. It’s about taking a ‘business first’ not a ‘cloud first’ approach.”
