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Advice and Information for Finance Professionals

It's Not Brain Surgery: Moving from On-Premises to ERP in the Cloud

Lynne Sampson
Managing Editor

For most enterprises, a move to the cloud is imminent, but there are still lingering questions on how to structure that process. We spoke with Martin Hendrix, Oracle Managing Consultant - Solution Director, DXC, to discuss why large organizations are moving to the cloud and how they are taking on these projects without disrupting day-to-day business operations. Martin highlights a real-world example, sharing how an EMEA-based teaching hospital successfully migrated to Oracle Cloud from a legacy on-premises application.

Q:  Sampson (Oracle) — Explain some of the key reasons why enterprise organizations are moving to the cloud.

A:  Hendrix (DXC) — There are many reasons for moving to cloud technologies. Companies can modernize outdated, legacy applications with more streamlined, standardized applications that are built on best practices in a given functional area, like finance or budgeting.  They can also consolidate their applications and data sources.  Many large companies have numerous applications and multiple databases that are often siloed.  This means employees usually deal with manual processes to go between the separate applications and data sources.  Cloud technologies, like Oracle ERP Cloud and Oracle EPM Cloud, are already integrated, so it’s easier to access all the data in an end-to-end solution.  If necessary, you can also integrate cloud-based applications with on-premises workloads.  Companies can streamline IT management and leave the upgrades and patches to the cloud vendor.  And of course, there’s the cost savings that comes with a subscription-based model versus the capital expenditures that come with deploying and managing expensive hardware and software.

Q:  Sampson — You shared a real-world example of a large teaching hospital in EMEA.  Can you describe what their key business drivers were for moving to a cloud solution?

A:  Hendrix — Cost was a key factor for them.  The hospital had been using an on-premises instance of Oracle E-Business Suite (EBS) for many years.  A third-party outsourcing vendor managed the EBS environment and the underlying infrastructure.  The outsourcing model was costing about $1 million per year for the infrastructure, applications, and reporting capabilities.  When we outlined the cost comparison of the Oracle ERP Cloud subscription model, the hospital’s decision-makers were really surprised and impressed by the cost savings.  The forecasted savings would be in the millions of dollars over the course of the subscription contract term. 

Q:  Sampson — Were there additional reasons the customer decided to move to the cloud or was cost the main focus?

A:  Hendrix — Yes, there were other reasons besides cost.  System upgrades had become quite tedious for the hospital, and data updates had really become a critical issue.  The third-party vendor followed a 24-hour data transfer schedule.  The hospital couldn’t change this data cycle, and business users needed more frequent access to data.  For example, the finance and purchasing teams needed to see expenses and revenue in real-time so they could make informed decisions about additional purchases.  The 24-hour data transfer cycle just wasn’t working for the speed of their business anymore.

Q:  Sampson — Let’s dig a little deeper into the tedious system upgrades.  What about a cloud solution was appealing to them versus managing an on-premises application?

A:  Hendrix — Upgrading the on-premises legacy application had become a huge, painful ordeal for their IT team.  Once their technical team understood that the Oracle Cloud solution would be completely managed externally—upgrades, patches, and functionality enhancements—as part of their subscription fee, they were on-board.  The hospital quickly realized that by eliminating the typical burdens from their IT staff — upgrades, regression testing, and all of the application management tasks — moving to Oracle Cloud was completely worth it.

Q:  Sampson — Now, let’s focus on the 24-hour data transfer issue and the customer’s need for real-time data access and reporting.  Tell me more about how those issues factored into their decision move to the cloud.

A:  Hendrix — The hospital had a staff of 50 finance employees using the existing, legacy, on-premises system.  And, there were an additional 400 business-reporting users who relied on the system data to perform their jobs.  These people had always created and tracked budgets and also made important purchasing and financial decisions using Excel, worksheets, and formulas.  The hospital leadership knew that if they could give real-time data to their finance team and business users, these people could spend a lot more time doing financial analysis instead of managing spreadsheets.  This benefit alone—access to real-time data and reporting—would up-scale the function of their accountants to do much more proactive, strategic work.

Q:  Sampson — You mentioned early on that one of the reasons organizations move to the cloud is to modernize or streamline processes.  Can you share how this customer has evolved with cloud?

A:  Hendrix — We helped them realize that if processes were to be streamlined or improved, the best time to make those improvements was during a cloud implementation — so they weren’t just moving old, manual processes or business structures to the cloud.  We encourage our clients to approach cloud projects as a way to make overall business enhancements.

In the case of our large hospital client, they implemented E-Business Suite 10 years ago.  As you can imagine, their business had evolved and become more complex.  Their finance department had been using the same chart of accounts for the last 10 years, and over that time, they also added several new business entities.  We worked with them to redesign their chart of accounts and recommended that they use this new CoA for planning, budgeting, and procurement.  During the implementation, the customer decided to expand the scope of the project and also deploy Oracle EPM Cloud at the same time they were deploying Oracle ERP Cloud.

Quite often, customers start a cloud project with one application in mind, like improving financial management with Oracle ERP Cloud in this hospital example.  And as customers really begin to see the benefit of cloud applications, their scope expands to include more and more related functionality, like enhancing planning and budgeting processes with Oracle EPM Cloud.  So, the original application becomes the “tip of the spear” or the “gateway” to multiple applications across the Oracle Cloud suite.

Thanks very much to Martin Hendrix for discussing why many large organizations are moving to the cloud. 

DXC Technology is an Oracle Platinum partner with a long-standing Oracle partnership and successful track record for delivering high value to clients.  DXC's deep industry, systems integration and managed services expertise, coupled with Oracle Cloud technology, ensures organizations continue to compete in the digital world.  

Cloud Delivers 3.2x ROI over On-Premises: Get the Report from Nucleus Research

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