When ERP vendors make a software end-of-life announcement, companies running that software on-premise must decide whether to stay on their current system and eventually lose support or upgrade to the latest version. Often, the software that is sunsetting is an on-premise ERP system, and the system the vendor is replacing it with is a cloud ERP system.

Today, this is actually one of the more common “upgrade” paths that vendors recommend (we put “upgrade” in quotations because so-called upgrades are actually costly and time-consuming re-implementations, more often than not).

If you’ve decided to stay with your current vendor, how do you go about transitioning to the cloud? Today, we’re sharing a few tips that can help make the transition as seamless as possible. 

5 Tips for Moving from On-premise to Cloud ERP

When moving from an on-premise ERP system to a cloud-based one, it’s important to take a strategic approach. Rushing into the process is bound to leave critical steps missed, which can result in high costs, delayed timelines and frustrated users. 

Let’s take a look at some of the ways you can help facilitate this upgrade with ease:

1. Form a Project Team

Before you do anything else, develop a project team tasked with overseeing this ERP transition. This way, you’ll be prepared with the right resources as your vendors rolls out its new offering. 

Take Microsoft’s legacy, on-premise ERP solutions, for example: Great Plains (GP) and Solomon (SL). Although the software giant hasn’t announced an official sunset of these platforms, they haven’t issued meaningful product updates, either. Instead, the roadmap (at least for GP) has been to update the software as required to include client-requested features. 

More recently, Microsoft has taken steps to push on-premise users to the cloud by making the upgrade seem easy and attractive via product discounts and helpful mitigation tools.

Easy as it may seem, it’s still important to build a project team to manage this upgrade. We recommend looking for employees across multiple departments, giving priority to subject matter experts. These employees can help you gather ERP requirements and determine if the necessary functionality is available in the cloud.

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2. Ensure Executive Buy-in

Your ERP upgrade can’t get off the ground without the support of your C-suite. That said, it’s critical to clearly communicate the benefits that transitioning from an on-premise ERP system to a cloud-based model can provide:

  • Reduced hardware, software, and licensing costs
  • Lower up-front investment
  • Improved mobile accessibility (ideal for remote work)
  • Vendor control of data security
  • Advanced capabilities, such as IoT

Executives will want to know how these benefits align with the existing enterprise strategy. To answer this question, you should develop a benefits realization plan that outlines specific benefits as well as key performance indicators (KPIs). 

3. Establish a Data Migration Strategy

One of the most important (and laborious) parts of your upgrade will be migrating data from your on-premise ERP system to your cloud-based model. The key to doing so successfully is to establish clear and consistent ERP data migration processes, as well as a data reconciliation approach.

You also should designate data owners for each functional area. These data owners can ensure that any non-systematic data moved from one storage location to the next is clean – meaning it’s free of inaccuracies or duplicates. Essentially, when it’s time to migrate the new data, there should be steps in place to ensure it is complete, accurate and valid.

critical success factors in erp upgrade projects

4. Prioritize Change Management

As you iron out the technical details of your ERP upgrade, remember to focus on the human aspect of the project, too. 

Your workforce has likely grown accustomed to using the on-premise ERP system, so introducing an entirely new platform can lead to change resistance. This is especially the case when older software versions become unsupported. 

For instance, consider the recent example of the SAP Business One (B1) update – the latest version of B1 became generally available in June 2020. About half of the more than 60,000 organizations running B1 are on an older version that became unsupported at the end of June.

If these organizations decide to upgrade to the new version, it will be complex and time-consuming. There will inevitably be pushback from employees. 

This is where organizational change management comes in. Developing a comprehensive change management plan ensures that employees are informed of the specific changes to come and know how the changes will affect them.

Setting clear expectations from the beginning minimizes change resistance and makes ERP training more effective. While some aspects of the new platform may be somewhat familiar since you’re staying with the same vendor, there will likely be many differences – not just to the user interface but to the specific buttons users must click to complete and process, for example.

5. Streamline Business Processes

As you prepare for your ERP upgrade, this is an ideal time to improve your processes. While you may not need to conduct business process reengineering prior to the upgrade, you should map your current state, identify pain points and make improvements.

Mapping your high-level processes allows you to find areas you can streamline or simplify to improve efficiency. We say “high-level” because it’s important to focus more on the “what” than the “how.” This will minimize the amount of ERP customization you need.

While some degree of customization can be necessary, keep in mind that it requires a significant investment of time and resources. Fortunately (or unfortunately depending on how you look at it), cloud ERP software is less flexible than on-premise software, so customization options are limited.

A New Digital Strategy

Moving from on premise to cloud ERP represents a major shift in your digital strategy, so it requires careful thought and planning. If you’ve decided this is the right path for your organization, our ERP implementation consultants can help you prepare your people and processes for an upgrade that will alter more than just the user interface. Request a free consultation below to learn about our change management services and digital strategy services.

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