Adopting a Cloud ERP
The main challenges to implementing a Cloud ERP solution differ depending on whether the implementation is from scratch or a migration from an existing on-premises solution to a cloud version. However, the core set of challenges is common to both approaches.
Every business is different, but the key challenges are present for all, in differing degrees:
1. Identifying the optimum architectural and licensing models
For many companies this is a time to pause and consider whether to change ERP horses. Questions to ask include: Is our current on-premise system available in the Cloud? If yes, is the functionality of the Cloud version equivalent (or better)? What variant of Cloud ERP architecture and licensing model would suit us best? Is this a good opportunity to re-visit our main business processes (this could be mandatory with some Cloud ERP systems)?
2. Hybrid Requirements
A typical example of this is with manufacturers and deployment of shop floor systems (e.g. production control) to the Cloud. Important questions to ask include:
How will the company integrate shop-floor data gathering and production control systems into the ‘new’ ERP? Is it feasible even if it is affordable?
As Gartner (2014) phrases it:
‘…organizations will need to plan for a hybrid ERP environment where the core on-premises functionality will be augmented by a number of specialist applications targeted at specific, user-centric processes that do not fall within the boundary of the core ERP system, many of which will be deployed in the cloud’.
Compared with other industries, fewer cloud ERP options are available for manufacturing organisations that support deep and wide industry-specific manufacturing capabilities. There are many well-established ERP solutions with good industry functionality for midsize and large organizations. Many of these vendors either already offer, or will soon offer, cloud-based delivery of their solutions.
How will your existing customizations be moved to the new deployment? What happens to them in a change to a SaaS platform – will they have to be dropped or will business processes have to be changed to fit the ‘standard software’ corset? Is such a change really feasible?
3. Change Management
The implementation of ERP in the Cloud requires real investment in change management. The cultural change impact (not least that of a potential downsizing of the IT department) must not be underestimated.
4. User Onboarding and Training
Delivering effective training is always an issue, but especially so in this case. Underinvestment in this activity is a fatal mistake, but many companies make it. Companies see training as money lost when employees leave. How can employers square this circle?
Note: Even if the key challenges of Architecture/Licensing, Hybridization and Customization are manageable, the issue of User Onboarding (within the overall context of Change Management) remains the final key to success. We look at this in more detail in the next section.
5. Data Security in Cloud ERP – a Concern but not a Challenge
This is a major concern for all enterprises, and the Cloud conjures up a vision of even higher risk levels. This perception of a higher risk level is, in general, off the mark. In fact, there is credible evidence that putting your data on one of the leading Cloud platforms (such as Amazon Web Services) offers a higher degree of data security than you could enable in-house. After all, governments use commercial Cloud services. Therefore, we do not classify it as a challenge though it is certainly a concern.
So – What Should We Do In Light of the Challenges Listed Above?
A company must first carry out a feasibility study and establish a range of acceptable solution options bearing in mind the issue of hybridization. Then move to the RFP process which should include a customizations list with potential suppliers responding to each functional requirement in turn.
Prepare the troops well in advance, starting even before the ERP migration/procurement process. Make a senior manager responsible for Change Management and identify Change Champions. Develop clear messages to engage users. Don’t forget to make sure that budgets for user onboarding are adequate and protected.
Finally, invest in durable on-boarding and training toolsets – this will ensure that training capital is preserved and carried in a system repository and not in heads of the staff.
(Image Source: Shutterstock)
By Boaz Amidor