Over the last several years, an increasing number of organizations are turning to cloud ERP systems to replace their on-premise solutions. In fact, our 2014 ERP Report shows that roughly one-in-four organizations is leveraging cloud-based ERP software for their preferred enterprise software solution – a number that has increased significantly in recent years.
Despite this increasing level of cloud adoption, many organizations get stuck in their quest to migrate from their on-premise solutions. Our study of hundreds of CIOs across the globe reveals that potential security breaches and perceived lack of control are the top two obstacles to adoption of cloud-based solutions. For those that can work past these concerns, the issue still remains: when does it make sense to transition, and how can we best manage that transition?
When considering a potential plan to move from your on-premise legacy system to a cloud ERP system, there are a number of considerations to help you craft a strategy that makes sense for your organization:
Consider total cost of ownership. When assessing on-premise ERP options, organizations often make decisions based on incomplete or inaccurate information regarding cost. It is important to consider your entire total cost of ownership, including software licenses, maintenance, infrastructure costs and potential hidden “add-on” costs. It’s this last one that comes back to bite many CIOs. Too often, they don’t consider the costs of adding additional users, storage and/or transactions, which can make cloud solutions quite costly. We find that that the average organization typically spends more on their cloud solutions in the long-term, but they typically come out ahead in the first 5 to 7 years. Each organization is different, so it is important to assess and quantify the entire cost scenario for each option, which can be difficult to do without complete information.
Evaluate multiple cloud options. Many people interchange cloud and SaaS solutions. The reality is that not all cloud solutions are SaaS-based. Instead, there are other, single-tenant hosting options that combine the benefits of “owning” software licenses with the benefit of having someone else deal with the headache of managing your infrastructure. ERP vendors offer such managed cloud solutions, but third-party hosting providers offer them as well – and often in a more cost-effective fashion. When considering your cloud options, it is important to evaluate your full spectrum of options, including SaaS, vendor-provided hosting options for on-premise solutions and hybrid third-party hosted cloud options. Many organizations don’t realize that they can purchase and customize ERP software licenses while having a third-party manage the associated infrastructure.
Develop a unique implementation strategy for different deployment options. Strategies and project plans for cloud versus on-premise ERP implementation initiatives look different, and migrating from one to the other looks even more different. It is important to address the key issues unique to your chosen type of deployment and build them into your plan accordingly. For example, how will data be transferred? How will integration and system architecture be handled, especially if integrating the cloud with on-premise bolt-ons? What are your options for migrating back to on-premise if you decide to do so in the future? These are just a few of the questions that should be answered in the implementation planning stage of your ERP project.
Implementing a new ERP system is never easy, but migrating from on-premise to the cloud (or vice versa) can be even more complex and challenging. By taking these three considerations into account early in your ERP initiative, you will be better equipped to navigate the challenges.
Learn more by registering for our upcoming webinar, What the Emergence of SaaS and Cloud ERP Technology Really Means for Your Organization . . . and Your Job.