Practical steps to follow when running cloud-based ERP systems

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Take it slow when planning a move to cloud-based ERP software

Cloud ERP can be running in a fraction of the time of on-premises ERP, which makes it tempting to skip the careful early planning that can make business processes more efficient.

Everyone is doing it, or at least thinking about doing it -- migrating to cloud-based ERP software, that is. According to preliminary survey results from market research firm Mint Jutras, 67% of respondents from manufacturing, distribution and service companies of all sizes said they would consider cloud software-as-a-service ERP as an option for a new deployment. And more than half -- 51% -- said SaaS ERP was their first choice. 

But moving your enterprise applications to the cloud doesn't automatically simplify ERP, especially in the case of a hybrid cloud and on-premises architecture, which is an increasingly common setup. Simplicity can be deceptive.

Cindy Jutras, president of Mint Jutras, based in Windham, N.H., recently heard a manufacturer lament a whirlwind six-week implementation of cloud-based ERP software that ended with problems. "He said, 'We did it too fast. We didn't understand all that we were doing.' You can't just jump in blindly," Jutras cautioned.

The cloud equivalent of "slamming in" a system, such ultra-fast migrations don't allow time to evaluate business processes to see what could be done better under the new system. A shortened time frame also does not leave time for other critical project steps, including gathering requirements and ensuring user buy-in.

Migration by any other name

The truth is, preparing for a migration to cloud-based ERP software is very much like preparing for an on-premises ERP implementation. As much as some people may not want to hear it, the prep work is very much the same, according to Frank Scavo, president of Strativa Inc., a management consulting firm based in Irvine, Calif.

"You don't have to size and buy hardware. Otherwise, the steps for implementation are the same," Scavo said. The most important preparatory step, he added, is to map business processes via storyboarding or some other visual tool to identify where improvements are needed and can be implemented in the cloud system.

"It is likely that your current business processes were constrained by the [on-premises] system you use now," he said. "Cloud is more flexible and enables more advanced ways of doing things." Making sure you understand all the advanced capabilities of the new system is an important step.

Mint Jutras cloud ERP survey chart
Mint Jutras found a strong preference for software-as-a-service ERP over hosted and on-premises ERP.

Most companies need to do significant process improvement before, during and after implementing cloud-based ERP software, just as they would with any ERP rollout, he added. Business process re-engineering can be painful and time-consuming, but if you skip it, you'll lose out on the biggest benefits of the cloud application. Many companies move to the cloud without understanding what the new system makes possible.  

Even at the early planning stages, you'll need to keep an eye on the future, Jutras said. You want to make sure you implement cloud capabilities that provide maximum flexibility. Ideally, the cloud platform will enable easy integration with add-in capabilities from third parties, should you need them. Work with the cloud provider to identify possible integration points.

"Agility is very important," Jutras said. "All you know about tomorrow is that it will be different: [It] could be a little different, could be a lot different." Your products, services, clients, industry and even business model all may change down the road. You want to ensure you are not casting your processes in concrete.

Shoring up data quality and defining relevant terminology across data systems -- master data management -- are two activities that should always precede a move to cloud-based ERP software. Here, too, many organizations might prefer not to give them their full attention. "If you don't do them, your implementation will fail," Scavo said. 

When it comes to selecting which processes and data to move first, a good rule of thumb, Jutras said, is to pick areas that would experience quick improvement -- the proverbial low-hanging fruit. For example, if operations are suffering due to a bad warehouse management system or manual warehouse processes, that would be a likely place to begin.

"Look for where you can get the most value with the least disruption to your business," Jutras said. The temptation is to address longstanding pain points, but those tend to be complex. A modular approach can work well, she added, using your business objectives to guide the order of functions to move to the cloud.

Next Steps

Decide if you're ready for SaaS ERP

Read an SAP Business ByDesign case study

Understand the features of Microsoft Dynamics AX

Dig Deeper on Cloud-based ERP systems