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On-premises ERP has been the backbone of many large and mid-size organizations for years. But cloud options are increasingly tempting companies away from their tried-and-true on-premises systems due to their many benefits.
These include potential cost savings and easier maintenance, but deploying SaaS ERP comes with real risks -- and the potential for failure. That's why project teams need to understand what some of those risks are.
Here are eight potential causes of cloud ERP migration failure.
Overlooking data dependency
Data migration is a critical aspect of a successful ERP implementation -- even a SaaS ERP implementation. And since organizational data from various IT systems is interdependent, overlooking data dependency issues and integration can easily cause implementation failure.
A disrupted data migration process can lead to problems with data dependency issues and cascading failures, said Mike Leone, senior analyst at Enterprise Strategy Group.
"This is especially true with complex workflows across several modules where most if not all of the data must be migrated at once," he said.
Not addressing change resistance
Resistance to change -- that people express in a myriad of ways, such as by creating new-system workarounds -- is a common cause of cloud ERP implementation failure.
People feel comfortable with familiar systems, even if those systems aren't serving them, Leone said. Many are unwilling to lose what they know.
"With costs being increasingly scrutinized, accepting the fact that you may no longer have access to a feature you're used to using … can be a tough pill to swallow," Leone said.
Having IT own the project
One of the biggest reasons for ERP cloud migration failures is treating a migration as if it is only a technical project and overlooking business process reengineering components.
"[A cloud ERP implementation] really needs to be led by the business, with the IT group playing a facilitation role," said Frank Scavo, a partner at Avasant, a consulting firm in El Segundo, Calif.
Failing to plan
Another potential cause of failure is thinking that a cloud ERP deployment is low-hanging fruit so there is no need to plan. That's a mistake.
"Plan, plan, plan, and then plan some more," said Ed Featherston, distinguished technologist at Cloud Technology Partners, a Boston-based consultancy.
Every technology project needs good project design and planning, and that includes SaaS ERP, Featherston said. ERP systems are complex, with lots of moving parts that need juggling.
"You need to make sure you have planned out all the necessary tasks and processes that need to be in place," Featherston said.
Opting for too many features, too soon
Shiny object syndrome is a danger when moving to cloud ERP, just as it is in other technology arenas. Teams need to exercise restraint when choosing initial features.
"Attempting to boil the ocean is another potential source of problems," Featherston said.
Project teams must resist the temptation to replace existing systems that are working with all the shiny new features in the SaaS ERP, Featherston said. Adding complexity to an already complex migration process does not usually end well.
"It doesn't mean you might not take advantage of more features at some point, but get your baseline working first, then do proper analysis and planning on the next steps," he said.
Thinking SaaS ERP means ignoring security
Hackers are increasingly targeting cloud infrastructures, so just because an organization is moving to SaaS doesn't mean IT and infosecurity teams can rest easy.
Security is always a risk in an ERP project, even with cloud ERP, Featherston said. Understanding the shared responsibility model of the cloud is key. Ultimately, security is still the responsibility of the organization.
"There is the security of the ERP implementation itself, which is basically on the vendor, but you control who has access to the data [which] can inadvertently provide an entry point," he said.
"Those are attack surfaces that need to be protected and monitored, and a response plan must be in place in case a breach occurs," he said.
Ed FeatherstonDistinguished technologist, Cloud Technology Partners
Not planning for support processes
The support processes internal IT has developed and the ones the SaaS ERP provider will offer aren't always aligned. For example, moving to the cloud is meant to lighten the need for internal ERP helpdesk support. However, organizations will need to create processes that spell out exactly what the shared responsibility model requires. Are all the on-premises system support functions going to be replicated in the cloud or will there need to be some individual or individuals to handle the exceptions?
"I have seen many an organization not take into account how the help desk will work when the ERP migrates to the cloud," Featherston said.
The exact processes are especially important to understand so everyone knows what to do and which party is responsible if, or when, interruptions occur.
One common area: How often does the SaaS vendor back up data or take snapshots compared to what the internal IT has been doing with an on-premises system? Unaligned expectations could be a disaster, for example, if people are expecting a fine-grained recovery point objective that captures changes in data every three minutes to five minutes, while the cloud vendor assumes once an hour or twice a day is enough.
"From a recovery perspective, many an organization ends up with DR [disaster recovery] and BC [business continuity] processes that don't necessarily align with the ERP cloud vendor," Featherston said. "Organizations need to ensure their processes and SLAs are in alignment with what the vendor is providing."
This ensures that some stakeholder -- vendor, internal IT, internal infosecurity or another named stakeholder -- does not leave anything unprotected.
Overlooking connectivity is a fast track to cloud ERP failure.
Buying teams and IT can sometimes forget a cloud system means an organization is much more reliant on having a reliable network connection, Scavo said.
"If the network goes down, the system goes down, so be sure to spend some time evaluating your network reliability," Scavo said.
In some cases, organizations will want to establish a secondary or backup network option.
Understanding bandwidth needs is critical, Featherston said.
"How much data is going in and out, and are the pipes big enough?" he said.
Last, but not least, IT teams should double-check that the cloud ERP is getting all the data it needs.
"Some connections may not have been considered or thought about and won't be until needed information is no longer showing up in a report," Featherston said.