Migrating to the Cloud
According to APQC research published in 2016, on-premise ERP systems do not meet the needs of three-quarters of business leaders, who see the growing ERP complexity as an increasingly more significant obstacle to growth. In the light of such statistics, it is not hard to see that the time of on-premise ERP has come to an end.
“The on-premise ERP systems that many companies use today trace their architectural and operational roots back to the last century,” states Oracle. Fortunately, ERP has advanced, and it now can be controlled over the web and using mobile devices while being managed by experienced vendors of sophisticated ERP cloud solutions.
Cloud Based Vs On-Premise ERP:
Most differences between cloud-based and on-premise ERP solutions derive from the basic fact that cloud-based ERP solutions are provided as services (Software-as-a-Service, or SaaS), while on-premise ERP solutions are installed on local hardware and managed by in-house IT staff.
Ownership costs: On-premise ERP systems require costly hardware and on-going maintenance by experienced, and thus expensive, IT staff. This translates into significant monetary, time, workforce, and space requirements, which may be too much for many small and medium-sized businesses and organizations. Cloud-based ERP systems, on the other hand, are paid for through a subscription model without any major up-front investment, making the initial capital expenditure required for their implementation much lower than for traditional systems, as explained by PwC in their ERP in the Cloud report.
Maintenance: On-premise ERP solutions are typically more customizable than their cloud-based counterparts, but the customizability comes at a high cost. Upgrades of on-premise ERP solutions require a lot of time and energy, often resulting in costly downtime or forcing businesses and organizations to run on outdated software. In contrast, cloud-based ERP solutions abandon some degree of customizability in favor of simple product updates and hassle-free maintenance.
Deployment: When it comes to deployment speed, cloud-based ERP systems have a clear advantage. Deploying a cloud-based ERP system across multiple divisions and regions typically takes only 3–6 months compared to the 12 months it approximately takes to implement an on-premise system, states NetSuite.
Ensuring Successful Migration to Cloud:
The main prerequisite for successful migration of an existing ERP system to cloud is deep understanding of what is involved with ERP hosting. Every reputable cloud ERP provider should be able to help clients understand their specific requirements and the scope of moving the ERP system from on-premise servers to the cloud.
Before the migration, every business or organization must determine which existing functionalities make sense to preserve, and which could be upgraded and replaced by some modern alternative. An optimized ERP system provides a better total cost of ownership and support for more business functions without any problematic dependencies on third-party systems and technologies.
Most ERP migrations have the potential to be hugely disruptive unless approached correctly. In her Forbes article, Debasis Chatterjee compares ERP systems to spider webs, “Picture your ERP system as the center of a spider’s web. Now envision all that radiates out from that central point: the peripheral systems the ERP interfaces with, the portals developed for collaborations with external business partners, the customized user interfaces, the reports drawn from the data … everything is connected and interconnected in a delicate framework.” Whatever you do, do not damage the web without already having a working replacement in place, ready and tested.
Finally, find the right partner to help you with your migration and recommend you a reliable cloud service provider. Having a reliable migration partner on your side allows you to keep the bulk of your focus on your core business while the partner does all the heavy lifting. Such partner should know all the leaders on the ERP market, such as Oracle, who has been named a Leader in Gartner’s 2017 “Magic Quadrant for Cloud Core Financial Management Suites for Midsize, Large and Global Enterprises” research report