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Del Monte Foods Inc. has moved its SAP ERP to Amazon Web Services, putting it into a small category of firms that have completely moved to the cloud, analysts said. But Del Monte had some good reasons for the ERP migration, according to Chad Anderson, its vice president and CIO.
Due to an acquisition, Del Monte Foods ran physical servers on premises and had virtual servers in a hosted environment. But the physical servers needed upgrading, and the virtual servers didn't give the company the flexibility it wanted, Anderson said.
The Walnut Creek, Calif., company, which sells fruit, vegetables, tomatoes and broth products, had a clear goal: It wanted to upgrade its ERP infrastructure without "any kind of user disruption or business disruption," Anderson said. "The ultimate goal is that nothing happened."
From SAP to AWS
Del Monte implemented SAP ERP Central Component in 2015, following a divestiture. The firm is still depreciating it. A shift to SAP's cloud may have meant an upgrade to S/4HANA, Anderson said, but it also may have raised the project costs considerably.
An ERP migration to AWS, on the other hand, had appeal. It would allow Del Monte to consolidate its IT systems, including ERP, onto one platform. Plus, the company had some experience with AWS, which it used to replace a data center and provide computing resources needed on demand. The move did not require any changes in its business processes, which meant no expensive and time-consuming change management, and the platform shift was invisible to users.
Del Monte's IT team set one weekend to make the platform switch and then executed the change, Anderson said.
Del Monte outsources its ERP management to Accenture, which completed a migration of hundreds of applications in about four months.
The ERP migration to AWS has reduced the cost of IT for Del Monte by about 35%, according to Anderson. The migration finished last year and came to light when Accenture recently cited the Del Monte project.
Vendor push, user reluctance
ERP vendors want customers to move on-premises systems to their cloud platforms. But industry data showed users are reluctant to move core systems to any cloud. The percentage of firms that have moved ERP platforms in total to the cloud is small.
"Del Monte is a bit ahead of the curve here when it comes to cloud adoption," said David Wagner, vice president of research at Computer Economics, based in Irvine, Calif.
ERP vendors "have been touting their clouds as simply faster and more efficient, because their clouds have been built with their apps in mind," Wagner said. An advantage of Amazon or Microsoft Azure is the cloud administration and management tools "are generally better" than what ERP vendors are offering, he said.
In a 2019 survey, the research firm found the majority of users, 61%, are still on premises. Of the balance, 19% are hosted by a vendor or partner, and 20% are hosted in the cloud.
David WagnerVice president of research, Computer Economics
Anderson said AWS was the logical choice, because the company already had experience running some applications on it. AWS could also handle almost all of its IT applications.
Del Monte's ERP migration happened in stages. First, it moved the testing and quality assurance. This helped Anderson and his team understand the sequence of events needed for the migration, he said. The systems had to run as if they were in a data center or next to each other.
"Architecturally things don't change that much," he said.
Keeping system proximity on AWS meant keeping the systems in the same AWS availability zone, Anderson said. The latency between machines today "is practically nothing," he said.
In the three months before the platform shift, Del Monte put a freeze on all its other IT work to focus on the migration. Del Monte's SAP ERP applications include supply chain, warehousing, distribution, core accounting and purchasing. Its human capital management system is ADP Vantage.
Anderson said one ERP migration lesson it learned is the importance of ensuring a good asset inventory. Everything has to be compatible with AWS, and the company did find a few systems that required upgrades before they could move, he said.
SAP users are facing a 2025 support deadline for migration to S/4HANA, and that migration will be a concern for Del Monte because of the work involved in making the shift, Anderson said. AWS also supports S/4HANA.
Charles King, an analyst at Pund-IT, said cloud service providers such as AWS, Google, Microsoft and IBM "have significantly enhanced the performance, capacity, quality and variety of the services their clouds support."
"As that evolution continues, we're likely to see larger and larger organizations take fuller advantage of those clouds," King said.
Meanwhile, ERP vendors will continue to encourage their customers to move to their cloud platforms and adopt SaaS ERP services. Many are already using cloud-based SaaS offerings, but more as a hybrid, rather than a total public cloud model. Moves like Del Monte's involve migrating existing ERP software to public cloud infrastructure, not switching to an entirely new ERP system.
In general, moving to an ERP vendor's SaaS cloud will result in additional cost in workflow redesign and user training if business processes need to be changed, said Frank Scavo, president of Computer Economics. This could add anywhere from 5% to 20% to the cost of migration, particularly in organizational change management.
"It's also a matter of risk," Scavo said. "What should be just a platform migration now becomes a business process transition that affects how workers do their jobs."