For many businesses planning to upgrade from existing legacy ERP systems, the thought of migrating to the cloud before the impending new EPR implementation makes little sense. But when looking at changing technology we must adopt a cloud first strategy.
- We’ll just do it all at one time.
- Why should we disrupt our processes … twice?
- We don’t need our data in the cloud before we decommission our legacy applications.
- Our approach is ERP first, cloud second – the big project is the ERP implementation.
- We’ll get to the cloud, when we get to the cloud.
- Cloud is always a money game, let’s put it off.
- Cloud is less secure than on-prem capabilities – it’s not for us.
Unfortunately, the above thinking is problematic. While taking the leap to move forward with the expense and commitment of implementing an ERP upgrade does require fortitude and resolve, it does not negate the requirement to migrate data to the cloud for maximum operational efficiency. In fact, if your operation is already cloud friendly, the odds of leveraging your new ERP system to its highest levels of performance are far greater. Implementing a new ERP system – whether a first-time ERP implementation or the replacement of an existing legacy ERP platform – the adoption of a new ERP system requires intensive planning and strategy. Everything from data retention and storage protocols to software testing and configuration and, of course, upfront costs must be scrutinized before a company, for example, migrates data between legacy systems and a new ERP system.
When it comes to ERP upgrades and implementation, many companies tend to focus on software testing and configuration and put off dealing with data migration until late in the implementation process. An attribute of successful ERP implementations is that data migration is put into the project plan as early as possible. A company’s data is one of its primary assets and issues with migrating data between legacy systems and a new ERP system can have a sizeable negative impact on business operations, especially those that are exposed late in the process. In fact, today, more and more businesses are evaluating the viability of moving their ERP systems to the cloud. Cloud ERP is one approach to enterprise resource planning that makes use of the cloud to provide an organization with more scalable and agile business process functionality.
Cloud First Strategy
Today’s market leaders want better business intelligence, with real-time analytics, especially in industries such as manufacturing, where more efficient use of vast amounts of data help operations function with greater efficiency. The cloud is a vital business tool. It is estimated that over 90 percent of enterprise organizations now use cloud technologies both directly and indirectly in some form. The use of public cloud computing environments continues to increase and expand significantly. Gartner estimates that the worldwide public cloud service market in 2017 was valued at over 46 billion.
What’s more, 28 percent of spending within key enterprise IT markets will shift to the cloud by 2022, up from 19 percent during 2018, according to Gartner.
- Growth in enterprise IT spending on cloud-based offerings will be faster than growth in traditional, non-cloud IT offerings.
- Despite this growth, traditional offerings will still constitute 72 percent of the addressable revenue for enterprise IT markets in 2022, according to Gartner forecasts – with a shift of enterprise IT spending to new, cloud-based alternatives continuing at a relentless pace.
- Gartner also predicts that, during 2018, 60 percent of enterprises that implement appropriate cloud visibility and control tools will experience one-third fewer security failures. By avoiding the cloud, businesses are missing out on the full benefits of modern ERP performance.
By adopting a cloud-enabled ERP approach and instituting a cloud first strategy to ERP upgrades, organizations shift their businesses from legacy ERP to digitally transformed enterprises. For example, with the expiration of a legacy ERP on the horizon, a company may consider the cost savings of cloud ERP from an infrastructure and capabilities standpoint. Legacy ERP systems often face challenges when it comes to organizing, analyzing and extracting critical data, as well as issues related to system limitations. Maintenance costs alone to support legacy ERP systems can be substantial – the cloud would eliminate that from your bottom line fast. Plus, replacing an aging ERP infrastructure to support and maintain a legacy ERP solution is just too costly.
There are key fundamental reasons the cloud works – before your ERP upgrade moves forward.
Advanced Data Management: Over time, legacy ERP systems encounter difficulties in organizing and extracting critical data, including financials. Cloud-based ERP provides advanced levels of business intelligence allowing companies to pivot in new directions based on data-driven decisions. Migrating to the cloud before introducing a new ERP system allows for better-driven data from the jump, attributing to high-performance business intelligence capable of competing in an increasingly mobile world.
Smart Growth Scaling: Modern, cloud-based ERP systems can scale to keep pace with your company’s growth. This is great news for companies looking to continue a fast growth trajectory or enter new markets quickly. Today’s increasingly global market demands operations equipped to make fast decisions. The right cloud ERP environment facilitates this by including localizations for a broad range of countries—considering regulations and data residency requirements while sharing everything from accounts payable, accounts receivable, and general ledger to cash management, collections, and fixed assets seamlessly across operations, business units, and more.
During the past decade, cloud computing matured on several fronts. Today, as the pressure to move to cloud services increases, more organizations are realizing a cloud first strategy is the most efficient, cost-effective approach to upgrading or replacing legacy ERP systems. For organizations looking to scale for growth in the coming year, a cloud first strategy is essential.