Define the business case for moving ERP to the cloud
The following is a guest article from Sal Laher, global chief operating officer of S/4HANA Cloud, SAP.
Today, every organization needs to reimagine their business model. Customers expect business to meet them anywhere, any time, on any device. Processes across the enterprise are changing by demanding real-time data for maximum capabilities.
To make this speed of innovation and service possible, businesses need to adopt cloud systems. Cloud is the direction of the digital age. Some businesses still see cloud ERP as the future, but it’s not coming, it’s here.
Worldwide spending on public cloud services and infrastructure is projected to reach $122.5 billion in 2017 — some 25% over 2016 — with over 20% compound annual growth rate annually through 2020. Businesses that don’t adopt it won’t just be at a disadvantage — they will become cautionary case studies of business history.
What forces are driving the business case? All the evidence points toward three advantages of intelligent cloud ERP: instant use, intelligent software and innovative capabilities.
The business case for intelligent cloud ERP is not about reduced total cost of ownership (TCO) but about the simplicity of user experience that drives productivity. It’s about changing every business into a digital business, which is an existential issue for established companies. There is no time to waste.
Take implementation as one measure of speed. Unlike traditional deployment — where CIO’s are responsible for tremendous overhead in provisioning, application management, middleware and maintaining IT support systems, not to mention ongoing security — for cloud, customers need only two things: a browser and the company’s data. No servers, no front-end rollout, no monolithic change management. The vendor provides it all.
This new model speeds time to value. While on-site implementations often take the better part of a year, an intelligent cloud ERP should be available for use in a fraction of the time. With the right system, it can be reasonable to expect implementations in the 12-16 week timeframe.
Following the speed of implementation is the speed of updates. One of the biggest advantages is the pace at which intelligent cloud ERP can deploy the latest technology in scheduled updates. Customers should expect a regular schedule of updates to continuously expand their capabilities, especially as new tools using machine learning reach the enterprise.
Instant use doesn’t only mean the speed of deployment in the enterprise but also the rate of adoption and use among people across the company. Cloud ERP can drive further gains in productivity through a superior user experience.
With browser-based systems that take the best aspects of consumer design and usability, an intelligent cloud ERP solution gives every person in the organization a user interface tailored to their role and engaging to use. This means people should have unprecedented access to the status of important information, live and in context, plus new abilities to drill down on information anywhere in the system.
The future of software is in applications that learn from the business, provide information in context and offer real-time analytics on streaming data at scale. For enterprise software, these capabilities are already starting to be powered by machine learning and artificial intelligence.
Machine learning and AI are relatively new to the enterprise but hold tremendous potential. Think about the benefit of software that learns from the people who use it and can predict what information they need in a given context. With this capability, an ERP system is less of a reactive platform that users direct and instead a living system that interacts with and anticipates the needs of every user.
Because machine learning and AI are changing so fast, it will be difficult for on-premises deployments to compete in this space for quite a while. It’s not unusual for on-prem users to be on a release from two cycles prior, last implemented several years ago – which means the core technology in the system is even older.
The capabilities of machine learning and real-time analytics could power everything from transaction fraud detection to assessing applicant CVs against requirements to helping companies procure smarter through contextual analytics on suppliers. Even in these early days, the potential is incredibly compelling.
With its fast update cycle, intelligent cloud ERP is the perfect platform to deploy machine learning and AI into the hands of enterprise users in a timely fashion. Releases that used to take years to build and deploy can now be done multiple times per year, ensuring that customers have access to the latest technology.
There are two kinds of innovation: those that simplify and those that extend.
It’s a feature — not a limitation — because it provides companies with best practices for common business functions, streamlining processes and removing unnecessary complexity. This frees users to spend more time on innovation and truly differentiating capabilities rather than tinkering with practices common to their sector.
Simplification also means integration with the market-leading applications customers rely on to provide speed and agility. Intelligent cloud ERP can integrate beyond the core features already built in, so users can implement other systems for functions such as HR, expense management and procurement.
The other side of innovation is in extending business capabilities. For areas where a business truly is unique, intelligent cloud ERP provides more freedom for extensibility than traditional on-premises systems. What used to be time-consuming customization can instead be streamlined into industry-specific extensions.
Open APIs enable third parties to build to the platform and because users’ deployment is standardized, every user should have the capability to add extensions and the freedom to choose individual vendors while staying confident that they can expect complete integration.
Embracing the business case
Not every business is ready to go all-in on the cloud. But cloud ERP is ideally suited to the two-tier ERP approach. Users don’t need do a complete migration all at once but instead start where they need to add business capabilities the most. This could be an individual line of business or a regional office or an acquired company during M&A.
The ability to start small and see the rapid time to value is one reason intelligent cloud ERP is becoming a platform of choice and demonstrating real business value for those who embrace it.
All the benefits are here today – and the cloud model is only getting more compelling. Customers select the service, bring their users and data and vendors provide the rest. Cloud is here and it’s in every company’s best interest to start harnessing the benefits.