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Expert Advice for Medium and Midsize Businesses

7 Reasons to Take a First Step Toward an ERP Cloud Solution

Rudy Lukez
Director, ERP Product Marketing, Oracle

For medium and midsize businesses, retiring their on-premise systems and moving entirely to the cloud all at once isn’t possible—or at the very least, it’s not something they’re comfortable doing for a variety of reasons. Meanwhile, staying the course and ignoring all the advantages of enterprise resource planning (ERP) as a cloud solution is no longer an ideal path, either.

One way to approach this problem is to consider a hybrid deployment. This model uses one or more cloud applications in conjunction with existing legacy ERP. With this smaller, yet important, step toward the cloud any business can quickly gain key benefits of a cloud solution even when it is not able to make a clean break from its legacy on-premise ERP modules.

This hybrid model approach allows businesses access to the benefits of cloud solutions. It also lets them gradually become familiar and comfortable with cloud solutions—albeit the “cloud lifestyle”—rather than experiencing a major shift all at once.

Why should you consider using cloud applications to replace or augment your on-premise legacy system? Consider these seven benefits:

1. Readily adopt new and evolving technologies

Next-generation technologies, like artificial intelligence (AI), help cloud-based systems rapidly improve their capabilities with no need for periodic updates unlike an on-premise system.

Consider one example from my own experience: At Oracle, our expense reporting application now parses information from our corporate credit card. Now, when I check out of a hotel, for instance, the system categorizes the expense, determines how many days I stayed, and how to categorize related expenses from the entire trip. I did not initiate this change; it just happened and was a significant improvement from my last expense report experience.

Now, with no additional or new input from me, expense reporting is significantly easier, and Oracle has better information on employee travel costs. These kinds of improvements are continual in a cloud system.

2. Attract in-demand talent

The next generation of young workers have grown up with seamless technology that is mobile, easy to use, and always-on. No company that continues to rely purely on last century, on-premise technology will be able to recruit top talent, regardless of age.

This is particularly urgent for the manufacturing and public sectors, which need to make themselves as appealing as possible to attract people with the right skills: Manufacturing is expected to have 2.4 million jobs unfilled between 2018 and 2028, according to Deloitte. Additionally, a graying public sector highlights the recruitment challenges for government organizations—just 17 percent of federal workers are under 35 years old, compared to 40 percent in the private sector.

3. Extend the value of your existing applications

If it is difficult to switch, for whatever reason, from an on-premise to a cloud system, augmenting and integrating legacy software with cloud applications can complement, enhance, and supplement a myriad of important tasks including those that are incomplete, behind, or manual with existing systems. This approach can breathe new life into legacy ERP. It also gives businesses a great opportunity to start adapting cloud capabilities, and the associated change in operational SaaS lifestyle, while winding down their legacy software.

4. Access better tools

Finding cloud applications that complement your legacy ERP software modules lets you immediately take advantage of rapidly advancing new technologies and improving user paradigms. For example, you might not be prepared to move your core financial processes and data to the cloud, but your enterprise probably needs improved reporting and analytics around common business activities like procurement. This makes a great case to use a standalone cloud application, such as Oracle Procurement Cloud, or Oracle Enterprise Performance Management (EPM) Cloud. These provide complementary systems that deliver immediate business capabilities and value without a fundamental change in your operations.

5. Reduce third-party dependencies

Reporting and analytics for legacy on-premise systems typically requires involvement from a third-party vendor to access your data and generate operational business intelligence. Using cloud applications from your legacy ERP vendor often produces the same or better intelligence without needing an additional vendor relationship. By moving this critical capability of your operation to the cloud, you improve your operation without adding the complexity of a new vendor relationship.

6. Evolve your systems

On-premise software for enterprises has its roots in the 1960s with main-frame based MRP. Those legacy systems were never meant to be reporting engines with modern and colorful graphical outputs simply because the technology didn’t exist. Outside of printing on green bar paper with big-impact line printers, there was no practical way to produce sophisticated business intelligence that was both real time and easy to understand

Today’s options are vast, with graphical outputs that are worlds away from the era that birthed on-premise ERP software. Cloud-based technology was born in the last decade and developed, as a core principle, with an entirely different mindset and understanding of not only what was possible but what was needed to be successful.

7. More robust security resources

I often ask legacy ERP consumers: “How many people work at your company 24x7 full time on security?” In most cases, it’s a very small number, and sometimes it is zero. Cloud solution service providers have large, full-time teams that are exclusively dedicated to proactively monitoring and staying current with cloud security issues and threats, 24 hours a day. Moving operations to the cloud gives your company an almost unimaginable layer of security firepower not possible for typical legacy on-premise systems.

Test Driving the Cloud

It is both wise and part of human nature to try something before you’re willing to make a significant purchase. It is why people test drive cars before they buy a new vehicle. Incorporating a few cloud applications is one way to do that for any legacy ERP system. For example, businesses may feel a need to improve their data reporting, but believe moving to an entirely new system is too much work or requires too much organizational change. Yet, since every company at some point buys things or service, trying a procurement solution can demonstrate how the cloud works and simultaneously build organization confidence. A one-cloud solution project is an easy way to test the waters associated with a modern cloud lifestyle.

Once people start using the cloud, they start to understand the benefits and get a clearer picture with practical experience of what moving from on-premise ERP software is like. It’s a way to prove the concept and get excited about the experience, without the anxiety of a big all-at-once change.

But be forewarned. The results will be positively infectious across your company. Once your enterprise experiences that first taste of the cloud, get ready for an accelerated push to move all your legacy ERP software to the cloud sooner rather than later.

Because, as a society we never use a reverse gear with any technology. The only direction is forward. And the only question rapidly becomes: “How fast can we move forward and adopt important new technology?”

For more insight on the expectations midsize and medium companies should place on modern ERP systems, download our newest Aberdeen report.

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