Considering the Cloud: The Ultimate Pro/Con List for ERP

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For many organizations, now, more than ever, the move to a cloud-based ERP is front and center. Pandemic-based stay at home orders and the rise in remote work has prompted many organizations to reassess their current on-premise ERP systems and consider a cloud-based solution. These decisions require thoughtful discussion to ensure that the system selected is the right one for the organization and industry. Here is a list of some of the top considerations when thinking about the move toward cloud-based ERP.

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Pros:

Predictable costs. Over time, costs associated with a cloud-based ERP can become predictable. Technology costs will shift to operational expenditure rather than traditional capital expenditure. Cost predictability makes planning and budgeting easier.

Guaranteed product development and support. Cloud-based systems are continually updated to provide good user experience and the latest functionality, patches, and support. With support readily available for cloud systems, challenges can be resolved quickly.

Easily scalable. As the business grows, legacy systems often fail to keep up with new requirements, capabilities, and innovations. Cloud ERP allows organizations to expand and contract the system to fit business needs, with considerably less effort than a traditional ERP.

Designed with the end-user in mind. Previously, ERP systems were designed as one-size-fits-all, forcing manufacturers to add customizations, requiring costly additional IT support. Today’s market offers industry-specific ERP, designed with end-users in mind. For example, food and beverage manufacturers can find an ERP system with forecasting and demand planning, tracking and traceability, and recipe and least-cost formulation capabilities.

Security and reliability are stronger.  Cloud ERP can easily handle security for mobile devices, data is continuously and repeatedly backed up, and offers geographically dispersed disaster recovery.

Improved manageability and less maintenance. Organizations can reallocate expensive headcount to be better utilized in other parts of the business. With automatic upgrades rolled out through the vendor, cloud decreases manual testing and patch application and lowers overall maintenance cost.

Lower carbon footprint. Consumers today are growing more health and Earth-conscious. We are seeing a rise in customer loyalties shifting to businesses that are supporting a cleaner, greener future. Organizations that move to a cloud-based system can eliminate many paper systems and are better aligned to an overall green strategy, lowering the organization’s carbon footprint.

Cons:

Planning is required. A new ERP should be seen as a new beginning: a time to clean data, review current processes to see how operations can be improved, and learn the abilities of your new ERP to see where processes can be streamlined or automated. Organizations that take the old-fashioned “lift and shift” approach are likely to get less value from the new system as they could gain.

Cultural shift challenges. Any widespread organizational change requires a culture shift. With the transition to the cloud, many users will need to relearn processes, and for some, their entire job functions. Change can be hard to accept if not communicated properly. A proper change management plan requires additional planning, communication, and commitment, and a willingness to change.

Executive commitment is a must. The new ERP won’t deliver intended value without a clear strategy for adoption. Leadership needs to be the main project champions, committed to the change, and transparent on what changes are coming and when.

Low adoption risk. As mentioned, acceptance of organizational change can be hard – especially for organizations that have operated on the same systems for decades or longer. While there is always bound to be a dip in productivity when change is announced, the ultimate goal is adequately preparing end users for the highest adoption rates and improved project success.

Deciding to make the move from legacy on-premise ERP to the cloud is one that can create unique challenges, but also long-term improvements. When making a decision that affects all parts of the business, be sure to weigh all the considerations before making a selection. By investing in a cloud ERP, there are great benefits, but ensure that there is the necessary openness to adoption and change within the organization to achieve its intended outcomes.

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