Widely adopted in larger organisations, Enterprise Resource Planning (ERP) systems enable senior management teams to have improved visibility across individual departmental functions and help to unify reporting across the business. Traditionally an organisation’s ERP system would sit on-premise, however, as trust in the Cloud continues to grow, organisations are becoming more comfortable with moving their business critical solutions, such as their ERP system to the Cloud. Organisations are under more pressure than ever before to streamline their businesses and manage costs, while at the same time embracing new technologies and more agile ways of working. Can ERP in the Cloud help organisations meet these challenging business objectives?
CAPEX to OPEX
For any CFO looking at ERP in the Cloud one of the key considerations will be around cost. Cloud offers the ability to avoid fixed upfront capital investments and represents a move from a Capital Expenditure finance model to an Operating Expenditure model. While the resource allocation flexibility that comes with avoiding large initial investments will be beneficial to many businesses, in the long-term Cloud may be the more expensive option as it becomes an ongoing operating cost.
Accessibility, agility and scalability
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One of the main benefits of moving ERP to the Cloud will be easier access to information and increased business agility and scalability. This means that businesses can respond much more quickly to any changes in the market or to threats from competitors. For organisations who are considering overseas expansion, ERP in the Cloud enables businesses to set up new offices quickly and easily as the need to implement expensive new hardware is removed. Organisations also have the freedom to go office-less with ERP in the Cloud, strategically placing offices only where it makes sense to do so.
Outsource IT support
Moving ERP to the Cloud will reduce the need to have a large in-house IT support team and reduce the cost of running your own data centres. Outsourcing IT support to a reliable supplier can take away a significant amount of stress from your organisation and you will have access to the latest updates and software capabilities ensuring that your business is always running on the latest technologies.
For large global organisations improving collaboration may also be a driver for moving ERP to the Cloud, as it becomes much easier to collaborate with staff internally, across geographies, as well as with partners and clients externally.
The journey to Cloud
The challenges and complexities of moving an organisations ERP systems to the Cloud should not be underestimated. Careful consideration of the journey from its existing ERP solution to its future state needs to be given not just to the technology change, but also to the impact on employees and processes within the business. Data migration is the single biggest task associated with any ERP implementation and organisations will still need to go through this whether on-premise or Cloud-based. Equally the time-consuming and challenging process of integrating the new ERP system with existing technology may still be necessary. Implementation partners will be able to help you plan for these changes, whichever stage you are at on your journey to Cloud.
Is ERP in the Cloud right for your business?
While moving to the Cloud may be the right step for some, every organisation is different, has its own unique business objectives and is at different stages in its life cycle. For relatively young and fast growing companies which do not already have an existing ERP system, ERP in the Cloud is likely to be a no brainer. For other organisations it may not be appropriate to move ERP to the Cloud.
The Cloud makes testing different ERP scenarios, customisations and prototyping easier and can help organisations decide whether or not moving ERP to the Cloud is right for them. Organisations can see how ERP in the Cloud would work for them by using preconfigured industry templates and testing them on their own business.
Moving an enterprise wide, business critical system such as ERP, to the Cloud should be well considered, thoroughly explored and tested out on your own business processes. The right implementation partner will work with you to understand the ambitions for your business, help you make the right decision and help deliver a project roadmap which considers the impact on your organisation and employees.
Tim Rowe, Director, Hitachi Solutions Europe