Companies are suffering quite a hangover from their enterprise resource planning customizations, especially when it comes time to update the software. In fact, the headache of re-implementing those customizations is so painful that many opt to just stick with their old software.
Of course, companies whose processes run on software dating to a predigital age are at a big competitive disadvantage. That’s why so many are considering moving their ERP to the cloud.
So how can companies make sure an ERP cloud will give them the benefits they need, and how can they make the transition successful?
At a packed Oracle OpenWorld 2015 session last week, two presenters addressed those questions and provided lessons from a range of successful Oracle ERP Cloud implementations.
Varied Reasons and Approaches
Alternative models to on-premises licenses now account for more than half of new software, according to Gartner. Those cloud implementers run the gamut, including companies looking to break the update/stagnation cycle, companies that have outgrown the simple tools that once met their needs, and startups that are launching in the cloud.
Why make the move? Many companies have had enough of maintaining and updating their ERP software and underlying hardware and decided that their IT teams can add more value elsewhere. Meantime, the business acquires modern tools to support modern processes.
Some companies are considering a cloud alternative as they look to consolidate multiple ERP systems—often inherited from acquisitions—on one platform, said session co-presenter Mike Brown, a principal at Deloitte Consulting.
The other presenter, Annette Melatti, senior director of product marketing for Oracle ERP Cloud, noted that some companies move just a single ERP process to the cloud, such as planning and budgeting, or an end-to-end process, such as procure-to-pay.
Other companies are looking to move an entire software category to the cloud, such as ERP or HCM (human capital management). In each of these scenarios, Melatti advised, companies must be clear on their business goals.
“What are the functions you’re going to get business benefit out of? Analytics capabilities? Improving the close process? Leveraging digital tools to be more efficient?” she said. “Identify how to drive the project to gain that business value, and that will guide your decisions throughout the process.”
Lessons Learned
Melatti and Brown offered the following guidance to companies considering moving all or part of their ERP functions to the cloud:
- Implement ERP cloud in a subsidiary, using it as a poster child for the rest of the organization. Doing so lets companies pilot new business processes and areas such as the global chart of accounts, as well as clean up and standardize data. They can then roll the ERP service out to the entire company once it’s successful in the subsidiary.
- Understand that most companies will live in a hybrid cloud/on premises state for a while. “The good news is that 75% of end users say that their IT processes are less complex after migration to the hybrid model,” Brown said.
- An ERP cloud doesn’t exist in a vacuum; it has to work with other systems. It’s important to standardize master data and establish a data governance policy across the systems.
- In a hybrid ERP environment, don’t break your business processes. For example, you don’t want your order-to-cash process supported partly by on-premises software and partly in the cloud. That tends to get complex.
- Make sure you’re bringing in a complete set of information, consolidated in a way that aligns with the ERP cloud service, so that financial reports are accurate and you gain the advantage of better analytics.
- Your business processes will need to align with the cloud software capabilities, and they’ll need to change. So bring business users into the prototyping early on, so that they understand how and why the processes will change.
For organizations looking to transition from Oracle on-premises software, Melatti pointed to the company’s Customer 2 Cloud program. She said numerous Oracle E-Business Suite, JD Edwards, and PeopleSoft customers have taken advantage of this program in moving their ERP systems to the cloud.
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