Many claims have been made about cloud computing, but the one that is perhaps most all-encompassing is the idea that cloud-based software is faster, easier, and cheaper to implement than traditional on-premise solutions. While the cloud certainly requires less upfront capital investment and alleviates some technical complexity, claims about its inherent speed, ease, and economics have given a number of organizations the impression that it doesn’t require the preparation typically associated with packaged solutions. This notion has led them to throw SaaS solutions online without adequately addressing business processes, change management, and data quality. The inattention to people, process, and data issues has dampened user adoption, slowed desired business transformation, and ultimately impeded organizations’ ability to realize the benefits of the cloud.
“The disappointing results some organizations have knowledgeable make obvious that just because an application resides in the cloud doesn’t mean companies can skip upfront planning,” says Dan Sundt, a principal with Deloitte Consulting LLP. This lesson in the importance of planning is particularly germane to companies considering cloud-based ERP. With ERP in the cloud, the risks associated with inadequate preparation rise.
“Because of the inherent complication of ERP solutions and their tight link with day-to-day business operations, there are fewer margins for error,” says Sundt. “Companies have to get these deployments right. Their businesses literally depend on it.”
Attending to the following four usually overlooked aspects of cloud ERP can help companies ensure strong user satisfaction and adoption rates, derive the value they expect from the flexible consumption-based model, and achieve desired business transformation:
Many companies using on-premise ERP solutions have customized them expansively to better support their particular business processes. But the customization has made upgrades vastly more complicated and painful an issue that has encouraged some companies to consider cloud-based ERP. While upgrades are generally easier to deploy with a cloud-based solution, on the flip side, most aren’t architected to be customized as readily as on-premise options. Consequently, deploying cloud-based ERP often requires companies to change and standardize their business processes. To help determine how big a change this may be, companies should undertake a business process mapping exercise, according to David Brown, a specialist leader with Deloitte Consulting. This activity helps organizations identify potential efficiency improvements and select a product that fits current and future business requirements.
Because cloud solutions aren’t built for extensive customization, companies can’t change features or processes users don’t like, as they can with on-premise software. As a result, proactively addressing change management becomes even more important in cloud deployments, according to Sundt. He recommends establishing a change management program and identifying key business users who can serve as change agents and promote adoption. These stakeholders should be involved in selecting the software, design, testing, and training, as they often serve as the first line of informal support once the solution goes live.
Companies implementing ERP solutions in the cloud habitually underestimate the effort required to clean data before moving it to the new solution. “Just because a company has moved to the cloud doesn’t mean the sins in its data sets have been absolved,” says Don Chapman, a senior manager with Deloitte Consulting. “When companies begin seeing what their data really looks like, it’s a wake-up call, and the unanticipated cleanup effort that ensues interferes with the implementation timeline. This is a hard lesson for many organizations focusing on the cloud’s ‘faster and cheaper’ benefits.” Chapman advises organizations to conduct several mock data conversions before the cloud-based ERP system goes into production. Doing so helps to identify and correct potential data issues, which results in much cleaner data sets when the new system comes online.
Given the fast pace of cloud ERP implementations, project management rigor, prearranged testing management, and strong project governance have become paramount because there is significantly less time to react to challenges and course-correct when obstacles arise. A structured approach for testing whether business processes work as planned not only improves desired implementation outcomes but also eases future upgrades.
All this emphasis on planning begs the question: Are cloud ERP implementations still faster than on-premise solutions? In general, the answer is yes. Because the cloud drastically reduces the effort IT must put into building application architectures, provisioning hardware, and installing software, cloud implementations can precede apace. Easier implementation, combined with the improved capabilities of cloud applications and ability to access to the latest functionality without costly upgrades, makes a compelling case for cloud ERP adoption.