A successful cloud ERP implementation depends on many factors, and going live is only one step in the journey....
It's important to stay focused on the business outcomes that were defined at the outset of the project, whether that's faster billing cycles, improved cash collections or increased services utilization, said Andrea Lagan, chief customer officer at FinancialForce, a cloud ERP service.
Successful enterprises adopt a variety of practices in their cloud ERP implementations, including assessing their current business processes, keeping customizations to a minimum, assessing data management capabilities and evaluating security.
1. Start with business processes
A good starting point in a successful cloud ERP implementation is to document and pay attention to your company's business processes. Michael J. White, director of IT at ACG Materials, a mining and mineral producer, said: "The better an organization understands the processes and requirements it generates, the better it can guide the design and implementation of its ERP instance and thus ensure success."
This preparation also enables management to make strategic decisions about where processes will be changed to use default system behavior and fully understand the ramifications of those decisions. White found that NetSuite's SuiteSuccess helped ACG with these decisions using preconfigured instances of processes that follow best practices.
There can be important differences in how workflows are supposed to execute and what departments actually do. White recommended that IT managers work with subject matter experts and process owners to ensure that key stakeholder perspectives are considered. "Do not assume that you know all of the intricacies of daily business operations," White said.
2. Measure shadow processes
One way of assessing the success of a cloud ERP implementation is to measure the use of shadow processes being used before and after deployment. These can include the use of spreadsheets, paper and cloud services that have not been vetted by IT.
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"There are certainly some portions of processes for which an ERP adds no value, but where double entry is occurring, inefficiency and error will follow," White said. "A successful implementation minimizes the need for shadow systems and doesn't ask users to perform the same work multiple times." He found that NetSuite's ease of customization and integration made it able to meet any requirements that would lead to this unwanted behavior.
3. Be open to new business processes
An ERP implementation can be a great catalyst for transforming a business by revisiting processes and incorporating new standards and best practices. Some of the biggest challenges with ERP implementations come from wanting to replicate complex, legacy processes into new, agile solutions. FinancialForce's Lagan said: "The most successful firms are those that rapidly adopt industry best practices versus trying to customize an ERP system in every way possible to match the way they've historically done business. What worked yesterday may no longer work today because digital transformation demands a more agile environment."
4. Watch out for customizations
Robin WishartDirector of corporate support, city of Port Coquitlam
The city of Port Coquitlam in B.C. migrated to cloud ERP to reduce the technical overhead of running, maintaining and upgrading its aging ERP infrastructure. Robin Wishart, director of corporate support for the city, settled on a cloud ERP service from Unit4, in part because it required no customization to work with existing business processes.
"Customization traps you in the pain cycle where you just go in a huge circle of regression testing, fixing issues, finding incompatible underlying software structures and repeating the entire process," Wishart said. As a result, organizations might spend years staying on major software versions and then having to spend huge amounts to upgrade their systems.
Wishart said: "If you need to customize, then you should either change your business practices to align with the standard ERP -- the preferred approach -- or host the customization components outside the ERP." For SaaS cloud offerings to work effectively, they need to be standardized.
"This does not mean you have to have cookie-cutter versions of the software, but that you need to work with the level of configuration the software provides," Wishart said. This really shows its value during upgrades, since the cost of ensuring all components work together in a consistent and error-free manner is largely borne by the SaaS provider.
The city still does its acceptance testing and runs through basic business activities, but any problems are handed off to the cloud provider for correction. This process is far less work and cost to the city.
"As ERP products transition from big-bang upgrades to smaller organic upgrades, I expect the savings to be even larger, as small organic changes are much less disruptive, easier to test and often require minimal to no training," Wishart said.
5. Practice data repatriation
All cloud ERP systems offer some ability to back up and move data to other systems. But there can be hiccups in getting this to work smoothly. Enterprises should experiment with bringing this data on premises or to other systems to identify these problems early, in case they decide to change their ERP provider.
Wishart referred to this process as repatriation, which means the ability to get your data back and then either move it to another cloud provider or even on premises. "I am a big proponent of cloud solutions, but it is critical that there are options available without getting boxed in with just one solution."
6. Audit and plan cloud security
Compliance and security should be top goals for a successful cloud ERP implementation since cloud transfers some control away from an organizations IT department to the cloud ERP provider. "Security and compliance can be enhanced when leveraging reputable cloud solutions that focus on dedicating significant resources to protecting their customers' data," said Kevin Tam, managing principal of payments, cloud and tech at Coalfire, a cybersecurity service.
Successful cloud ERP implementations have worked with reputable cloud providers that have demonstrated their security through third-party audits and compliance across various industry frameworks and standards. "While these audits cannot ensure complete security, they do demonstrate that security and compliance are a top priority and concern and that resources are dedicated toward achieving and maintaining compliance," Tam said.
Another key success factor is a clear understanding of roles and responsibilities when it comes to security. A successful cloud ERP implementation requires an understanding of the security controls that are the vendor's responsibility and an understanding of the client's responsibilities.
"Once those are well-understood, the client must be able to have the right processes in place to properly perform those controls to ensure security," Tam said. Periodic access reviews can help identify any security issues after a cloud ERP deployment. IT managers need to be diligent in their security planning efforts before and after implementation, not only from a technical perspective, but from business and operations perspectives as well.
7. Plan extracts and postings
Cloud ERP implementations include tools for extracting and posting data, but this is not always easy to scale or customize, said Sashi Narahari, CEO at HighRadius, an accounts receivable software provider. He has seen many enterprises run into problems with data transaction performance for large cloud ERP implementations. Narahari believes that most cloud ERP services are more suited for a niche industry or domain rather than global implementation.
Therefore, it is important for IT managers to make sure they are either equipped to build and configure a system to generate ERP extracts or file consumption programs in-house. If not, they need to reach out to the cloud ERP provider to figure out how to make this work smoothly. "In a few projects, we have seen external IT partners being used to build this functionality, which typically drags the whole implementation process down," Narahari said.
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