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Advice and Information for Finance Professionals

10 Signs It’s Time to Move Your ERP to the Cloud

Guest Author

Guest post by Rudy Lukez 

When three quarters of business leaders say their current on-premise ERP system isn’t meeting their needs, it makes you wonder why they’re not doing anything to upgrade. For many of them, the answer is often, “Been there, done that.” And they weren’t happy with the results or the costs.

The on-premise ERP systems that many companies use today trace their architectural and operational roots back to the last century. Sure, these systems can be upgraded to mimic modern capabilities. But by the time upgrades are completed—usually at great cost both in dollars and effort—the ERP system is capable of meeting only those requirements identified when the project was initiated, and not much of what has changed since then.

Newly upgraded on-premise system are often several years out-of-date when they go live, and soon the next upgrade cycle has to begin. It is an endless treadmill that makes companies tired and only enriches consultants.

For any business leader who’s been stuck on the go-nowhere-slow treadmill of upgrading a legacy on-premise ERP system, it’s easy to understand why many of them wonder, “Why can’t I just get by with what I’ve got?”

Maybe some companies can make do with the solutions they have. But for companies with bigger plans for their businesses, there are a number of situations that make transitioning from an on-premise ERP system to a modern, cloud-based solution a great idea.

Here are 10 of them:

  1. The expiration date of your legacy ERP has passed. Updating an on-premise system that is past due for an upgrade can be an expensive, time-consuming project that results only in short-lived benefits. If the underlying infrastructure for database and other software have aged past support dates, the system may have limited capabilities to support near-term requirements, let alone future requirements.
  2. Your ERP users—not just the millennials—are grumbling. Employee complaints—okay, mostly from millennials—about the usability and mobility (think smartphones) of your legacy ERP system is a good indication that it may be time for a change. Their comments may reflect more than a preference for modern tools; they could indicate that your on-premise ERP system is underperforming in key areas.
  3. Reporting is getting tougher. Management reporting, especially for publicly traded companies, is becoming more rigorous. When reports are too cumbersome to generate and manage because of legacy ERP limitations, it’s time to upgrade.
  4. There’s rust on your hardware. Replacing aging ERP infrastructure to support a legacy ERP system can be a costly proposition. While the hardware may have more robust capabilities, overall performance of the system may not improve significantly.
  5. Maintenance costs are through the roof. Few IT organizations report that their budgets are increasing. If fees and service charges for your on-premise ERP system are increasing annually, your potential investments in other business-building capabilities will be limited.
  6. So much data, too many "answers." Legacy on-premise ERP systems often include a number of siloed tools and data repositories. This makes having a single source of truth nearly impossible and often results in conflicting answers to critical business questions.
  7. You’re too big for your ERP britches. International expansion and growth through acquisition—especially outside your core markets—are not readily supported with legacy on-premise ERP systems. This  adds excessive costs to business-building activities and restricts your growth opportunities.
  8. The rule book is getting bigger. Financial and regulatory compliance requirements are increasing, and they’re especially challenging for global companies. Legacy on-premise ERP systems may not have the ability to meet new regulations, or those of the new markets you’d like to enter.
  9. Everybody wants something. Most organizations find it challenging to keep up with current business demands. Whether they are expanding operations or addressing new customer requirements, companies need robust ERP capabilities that on-premise systems cannot efficiently scale to support.
  10. So you want to go public . . .  Getting ready for an IPO complicates financial reporting dramatically. A legacy on-premise ERP solution may not support the complicated financial data collection and controls that are required by law.

Making the Change to ERP in the Cloud

Easy scalability coupled with regular, off-premise software upgrades of cloud-based ERP solutions address the common concerns listed above. It offers even the most skittish business leaders a less worrisome way to keep their business applications robust, current and modern.

And cloud-based solutions immediately divorce companies from many of the past problems and costs with ERP since organizations avoid having to maintain hardware, databases and staff to support them.

Companies are also freed from the shackles that limit their flexibility, enabling management to focus on running the business using the plethora of information ERP systems collect and process across their entire enterprise.

“We were in the process of doing an upgrade of our current [on-premise] system and it was a good time to make a move to a longer-term, more sustainable model, moving away from maintenance projects to more rapid upgrade which will reduce costs.”—Stacy Pearson, Vice President, Finance and Administration, Boise State University

But most importantly—considering the less-than-satisfying experiences many executives have had updating legacy on-premise systems—cloud-based ERP systems give businesses great flexibility to implement solutions rapidly at their own pace.

And since the cloud is a flexible platform that lets companies take these incremental steps, they can ensure they’re going down a path that meets their business needs. Companies can initially target specific problems or opportunities, or work around the edges of the business to first prove the capabilities of cloud-based solutions. As implementations begin to prove themselves, business leaders can confidently proceed with more far-reaching projects.

The broad offering of Oracle ERP Cloud is helping companies transition away from legacy on-premise software. Offering everything from financials and procurement to supply chain, manufacturing and project portfolio solutions, Oracle helps different departments or divisions within a company spearhead cloud-migration initiatives. Based on those experiences, other groups can then choose to optimize their own ERP process with a transition to the cloud.

Accommodating Subsidiaries

We’ve also seen some of our larger customers test the waters with their subsidiaries. Trying to operate a number of subsidiaries on a single on-premise model often results in a long list of nightmares, including licensing, customizations, and the lengthy delays associated with deployment. With cloud-based solutions, companies bite off projects in manageable pieces, monitor their success, and then roll them out cost-effectively to other operational units.

Built-in modern best practices permit standardization, which further lowers cost and increases productivity. Even when a cloud transition is incremental, access to a complete suite of integrated best-practice business processes means customizations are completely avoided.

All companies need to ensure they have the tools in place—or can add on to them quickly and efficiently—to maintain their competitive edge. Cloud-based ERP systems empower companies with all of the capabilities they need today and quickly scale as business requirements grow.

In my next post, I'll talk about what makes an ERP system "modern" by today's standards. If you'd like to learn more, I encourage you to download our latest handbook, "Your Complete Guide to Modern ERP," or check out the infographic below.

Click to view the infographic full-sized

 

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Comments ( 2 )
  • Markus Stoinis Thursday, July 7, 2016
    Yeah as mentioned in the blog upgrade is on roll and its very important for any business to be up-to-date with their erp system this points are really helpful in analyzing and
    knowing the facts about erp what are the benefits in moving to cloud this tips and infographics are so helpful to understand and make a change.
  • John Smith Monday, April 3, 2017
    All the content you shared is helpful and informative. I found the relevant content on the following link.
    https://www.erp.gold/why-switch-to-cloud-based-erp/
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