How to really realise the benefits of moving to the cloud
Jun 04, 2019
Several thousand organisations have now moved their back-office Enterprise Resource Planning (ERP) system into the Cloud. I've used some real-world examples to identify potential benefits and challenges for enterprises making this strategic move.
Moving ERP to the Cloud presents benefits and challenges for any organisation. I explore why and how to successfully make the switch in order to realise both the strategic and operational benefits of Cloud ERP.
It is rather striking to see the speed at which Cloud ERP is being adopted by major organisations, from public sector, to Banks, to retailers and many other sectors.
This general move to the Cloud for ERP systems is likely to accelerate, as the strategic advantages are too great to ignore, including:
- Standardisation: Ability to leverage best practice processes and systems to drive efficiencies and adherence to process design.
- Continuous update and improvement: In the Cloud, continuous update and improvement are the norm, with no more major upgrades causing significant disruption to the business.
- Leveraging emerging technology: It is easier to implement new concepts, such as with Blockchain, Internet of Things (IoT), Artificial Intelligence (AI)/machine learning, which may even be included in a future routine update.
Cloud ERP adopters, therefore, will never be left behind or left dealing with an inefficient, obsolescent on-premise ERP system.
Moving your ERP system to the Cloud also brings challenges, and we have identified six key areas, each of which we will explore in detail within this blog series.
- Business adoption
- Security and compliance
The best way to understand these is through real-world examples. At this year's Oracle OpenWorld London event, we invited the Cloud Transformation Programme Director of a UK Council to explain the issues and solutions he encountered when implementing an Oracle Cloud ERP project. The audience at Oracle OpenWorld also included other project leaders, who shared their own examples.
The speaker told us that Cloud ERP imposes discipline over planning and governance. Cost advantages are linked to standardisation, so users have to understand what levels of customisation are actually possible. The plan must also be robust and meticulously managed as the rapid schedule does not include natural breaks for second thoughts.
One attendee, who is the Oracle ERP project leader at a global data science organisation, highlighted the need to focus strongly on business adoption, as people and process issues are more important than the baseline technology change. Early engagement from process owners is critical as well as a shift in mindset given the forced standardisation. On this project, visible sponsorship and leadership at Board level was important in gaining buy-in and support.
When a publishing firm carried out its own move to Cloud ERP, it prompted a review of security and controls across the business. This was primarily driven by their internal and external auditors asking questions about how the organisation will ensure that control design and operating effectiveness will not deteriorate with the adoption of new Cloud systems and processes, and still adhere to relevant regulatory requirements. A thorough review of security and controls will prove necessary for any large organisation given the level of process change normally required compared with on-premise solutions.
Cloud also changes the rules for testing. In the Cloud, roll-out can happen at unprecedented speed, with go-live potentially just a couple of weeks after testing new releases. Greater discipline and a stronger focus on testing is therefore a basic requirement.
Issues are likely to arise at integration points, so these need to be tested in greater depth than any other parts of the solution. At the Council there were multiple integration points with other processes, such as HCM, and these required special attention. Integration is no doubt one of the greatest challenges with respect to Cloud implementations, particularly when connecting Cloud-to-Cloud, and is an area that we’ll explore more in this blog series.
One of the final challenges is often data migration, which may prove more complex than some businesses expect, requiring cleansing and enhanced reporting to provide usable insights.
Once implemented, users start to appreciate the greater flexibility on offer. At the Council, for example, administrative rules were changed to improve flexibility and reduce costs, which could be implemented immediately in the Cloud.
Other lessons learned shared from project directors/managers included:
- Training has to be continuous because of likely staff turnover.
- The business case is the key reference point, and monitoring achievement against target will show where you need to fine tune.
- Technologists must have a deep understanding of the business. This is not a one-off implementation but a way of enabling the entire business to become more competitive.
- It is always possible to revert to old ways of working after implementation, with some people reverting to legacy techniques. You need to watch for this constantly and take remedial action quickly.
Finally, let’s remember that an ambitious change of this kind is about people and how they adopt the new ways of working. Regardless of how well the new processes and systems have been implemented, it is the people who will make this a long-term success, long after the technology implementation team has moved on.