A solid strategy and key performance indicators (KPIs) are essential for a company to move from on-premise to the cloud successfully. They also need excellent enterprise resource planning software, such as SAP, for small businesses. Even after the migration, it's essential to continue support to keep everything connected.
Enterprise Resource Planning vendors announce the end of support for their software. Companies with this software must choose whether to keep it or upgrade to the most recent version. The software that is being retired is often an on-premise ERP system. However, the vendor will replace it with a cloud ERP system.
This is a typical path vendor recommended for "upgrades" today. We put the word "upgrade" in quotation marks because upgrades can be expensive and time-consuming.
How do you transition to the cloud if you have decided to remain with your vendor? We're sharing some tips today to make the transition as smooth as possible.
What is Cloud ERP?
Cloud ERP Software is a type of enterprise resource planning system that is accessible via the Internet. Cloud ERP software is the IT backbone of an organization and provides advanced functionality for core processes.
Cloud ERP is typically delivered "as a service" on a provider's cloud computing platform (software-as-a-service or SaaS ERP). Customers do not own the software; instead, they lease it annually or monthly. There are no initial hardware costs. The vendor handles maintenance, updates, innovations, storage, security, and data storage.
What is On-Premise ERP?
On-premise ERP software allows you to run enterprise resource planning software at your location or in your cool places. ERP on-premise cannot be accessed via the Internet. It can only be used in a physical workplace, but it can be used on other mobile and handheld devices. On-premise solutions offer security and control by using your IT infrastructure to connect people, processes, systems, and data.
Cloud ERP vs. On-Premise ERP
Cloud ERP or SaaS ERP is hosted on the cloud platform of your provider and is managed by their IT department. On-premise ERP is installed on your hardware and servers and managed by your IT team or a third party.
Businesses are increasingly turning to cloud ERP deployment options. A recent survey found that 63% preferred cloud ERP software to on-premise ERP.
Why Choose a Cloud-Based ERP System?
Thanks to its flexibility and advanced features, cloud ERP is a crucial ingredient to success in the digital age. ERP systems have been a valuable tool for organizations, helping increase productivity and gain insight. The world and competition have shifted as a result of digitalization. ERP systems on-premise cannot keep up. They are hard to adapt to constant change. The majority of legacy ERP systems were built for simpler environments. They needed more flexibility, speed, and insight companies required to be more agile.
Customers anticipate faster delivery, continuous product and service improvement, increased reliability, lower costs, and faster delivery. To provide the best customer experience, businesses often have to look beyond their walls. They work virtually with a wide range of partners, including those involved in product distribution, sales management, and customer service. They need software that can not only help them manage increasingly complex internal processes but also allows them to manage global business networks. With cloud ERP, this is possible.
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The Importance Of Cloud ERP for Midmarket Companies
ERP is essential to any midsize business. A cloud ERP system that is intelligent and automated will provide insight using AI, and machine learning, as well as help companies innovate business models.
These are just a few reasons many midsize businesses are switching to cloud-based ERP.
Improved Agility: Agility can be a significant asset for mid-sized companies with potential growth. These businesses frequently specialize in specific industries and work in verticals such as professional services. These companies have strong customer relationships. They must seize opportunities to increase - add new locations, introduce new products and services or respond to competitor failures.
A system that is not flexible or expandable can limit growth by not providing the information needed to make decisions quickly enough. It's hard for departments to work together and share information if they rely on separate reporting systems, many of which use Excel spreadsheets to overcome the lack of integration.
Cash Flow Into Visibility: Midsize businesses have very cost-conscious top management. Cash flow is the lifeblood of small businesses. Increasing profit margins is often a top priority. To build balance sheet reserves and fuel growth, you must be careful about working capital, operating costs, and investments. All of this cannot be done in isolation. Cloud ERP integrates accounting processes and business operations to account for everything.
Although the majority of midsize businesses have an accounting system, not all systems can provide immediate cash flow or vital profitability information. They often need help to meet current business needs or integrate with other systems.
Ease of Application Integration: Integration is easy for midsize businesses. They need to be faster to implement new solutions to their backbone ERP but quick to adopt specific operational tools such as field service or call center software. Because they are not linked to the ERP system, these "add-on" solutions can be costly and complicated. Modern cloud ERP is changing everything. This is causing growing businesses to reconsider their ERP selections. Companies increasingly opt for cloud ERP because of its ease of use, scalability, and agility.
What's Cloud Migration?
Understanding the cloud is the first step in migrating to it. Cloud computing is a network that consists of remote servers that can store, manage and process data. Cloud computing refers to providing computing services over the Internet ("the Internet"), including servers, storage, databases, and software analytics. It allows for faster innovation, flexible resources, and economies of scale.
The process of migrating operational processes from your existing infrastructure to a cloud provider is called cloud migration. This means that applications, servers, and data are all hosted in the cloud.
Here are some examples of business processes you can move from on-premise to the cloud:
- Backup and storage
- Database management
- Collaboration and messaging
- Applications for Financial and Human Resources (HR).
- Applications for Customer Relationship Management (CRM).
- Management of disasters
Depending on the business, a large-scale cloud ERP system can handle almost everything. It is essential to create a plan for cloud migration from the beginning.
Before you move on to how that plan should look, it is worth explaining why moving to cloud storage is a good idea.
Why Migrate From On-Premise ERP Software To Cloud Software?
Cloud ERPs have many advantages over traditional on-premise ERPs. Your cloud ERP can be accessed from any internet-connected computer because it is a flexible online solution. A secure infrastructure protects your information. At the same time, support teams are available to keep you running smoothly around the clock.
On-premise ERPs are limited to your office's space and the hardware you purchased with company revenue. Cloud ERPs are cost-effective and can scale your business. Cloud migration is not without risk but can lead to positive results.
Read More: A Complete and Accurate Guide to Understanding Cloud ERP
The Benefits of Migrating To Cloud
Here are some of the benefits of cloud migration
More Scalability with Cloud Resources
The cloud provides unlimited resources that allow businesses to grow. You can increase or decrease storage and memory to meet changing demand and supply.
Cloud-based infrastructure and applications can be rapidly provisioned and de-provisioned according to user needs. An example is an e-commerce website that experiences a spike in traffic during the holiday season. It can quickly provide additional servers and storage to meet the increased demand.
Cloud Maintenance Prices Are Lower
Hardware, electricity, and IT staff are required to maintain data centers on-premise. You have the option to reduce your costs by moving to the cloud. Although starting a data migration service can be time-consuming, the long-term benefits are well worth it.
Cloud solutions are also scalable, which can reduce costs. Cloud solutions allow you to pay for storage, servers, or other resources per use. This gives you greater fiscal flexibility. Cloud providers offer discounts on long-term contracts which can help lower your costs.
Migrate to Improve Performance in The Cloud
Cloud access is available anywhere and anytime. The cloud improves business performance because people who require access to your tools can do so anytime. With the right provider, it's also supported by a global network of cutting-edge tech that keeps network latency low while effectively protecting data.
Even though you may only get a small slice of the cake, cloud computing allows you to access a more robust infrastructure than most businesses can afford to build on-premise. This is one of the most overlooked aspects of migrating your business to the cloud. The time savings and efficiency gains from the increased performance are distributed and often become evident over long periods.
Migration for Better Security in Cloud
Cloud service providers are often more concerned with security and compliance than others. You can rest assured that your data will not be lost, stolen, or misplaced because they keep abreast of the latest trends and laws.
Cloud Service Providers can be financially devastated by security breaches. Major cloud ERP providers such as SAP invest Billions each year in security research and development.
Types Of ERP Cloud Migrations
Six categories can be broadly divided into cloud migrations. However, only three of these strategies apply to ERP cloud migrations.
Your circumstances and goals will determine the strategy that you choose. It will affect your use of resources, impact the capital requirements for your migration, and select the timing of your migration.
Shift Cloud Migration
The lift and shift is the simplest type of data migration. It takes everything, servers, applications, and data, and moves it to the cloud. This method has the advantage that it is simple and quick. It doesn't provide any optimization and can be costly. It needs to take advantage of cloud migration's features fully.
Application Refactoring with ERP
Refactoring is the most challenging way to migrate cloud data. It's also different from the method we recommend for SME owners. This means that you adapt your ERP software to use cloud-hosted features.
Repurchasing in ERP Cloud Migration
Repurchasing cloud migration strategies is usually the best option, especially if your company is not too invested in an ERP system. Repurchasing is replacing an on-premise ERP system with a cloud-native one. Because there is no need to integrate legacy systems into modern cloud-native software, it leaves little to chance.
Some organizations still rely on outdated techniques, so repurchasing is the only fiscally responsible option. Any other approach would require more resources and restructuring old features with more efficient and modern alternatives.
One of these strategies will eventually suit your needs, with few exceptions. It can be challenging to choose the right one, but it is something you cannot afford to overlook.
Five Tips to Move from On-Premise to Cloud ERP
It is essential to have a strategic approach when moving from an ERP system on-premise to a cloud-based ERP system. Rushing through the process can lead to missed critical steps, which can cause high costs, delays, and frustrated users.
Form a Project Team
Before you do anything else, create a project team to oversee this ERP transition. You'll have the resources to assist your vendors in their new offerings. Many vendors make it easy for customers to move to the cloud through product discounts or mitigation tools.
Although it might seem simple, creating a team to oversee this upgrade is essential. It is a good idea to look for employees from multiple departments and give priority to subject-matter experts. These employees will help determine if the required functionality is available in the cloud.
Executive Buy-In
With the support of your C-suite, an ERP upgrade will be able to take root. It's essential to communicate the benefits of moving from an on-premise ERP system into a cloud-based one.
- Lower hardware, software, and licensing costs
- Lower up-front investment
- Mobile accessibility is ideal for remote work.
- Data security is under the control of vendors
- IoT is an example of advanced capabilities
These benefits will be of great value to executives. This question can be answered by creating a benefits realization plan. It should outline specific benefits and key performance indicators (KPIs).
Create a Data Migration Strategy
Migrating data from your ERP system on-premise to your cloud-based model will be one of your upgrade's most crucial (and tedious) aspects. It is essential to have transparent ERP data migration processes and a data reconciliation strategy to make this happen.
Each functional area should also have data owners. This will ensure that all non-systematic data is moved to the correct storage location. When it comes time to transfer the data, it's essential to have steps in place to ensure it is accurate, complete, and valid.
Prioritize Change Management
While focusing on the technical aspects of your ERP upgrade, remember to consider the human side of the project. Your workforce is likely familiar with the on-premise ERP system. Therefore, introducing a new platform could cause resistance. This is especially true if older software becomes unsupported.
It will take time and complexity for an organization to upgrade to the latest version of its software. Employees will likely push back. Organizational change management is crucial. A comprehensive change management plan will ensure that employees are aware of all changes coming and how they will affect them.
Clear expectations at the outset reduce resistance to change and improve ERP training effectiveness. Although some features of the new platform will be familiar to you because you are still using the vendor's product, there will be many differences in the user interface and the buttons that users need to click to complete the process.
Streamline Business Processes
This is a great time to improve your business processes as you prepare for an ERP upgrade. Although you won't need to do business process reengineering before the upgrade, it is good to map your current state and identify any problems.
You can map your high-level processes to identify areas you can simplify or streamline to increase efficiency because it is essential to focus more on the "what" rather than the "how." This will reduce the need for ERP customization.
Although some customization is possible, it can also be costly. Cloud ERP software is more flexible than on-premise software. This means customization options are limited.
The Challenges of ERP Cloud Migration
Companies can move their ERP applications and data to the cloud according to their schedules and preferences. It can be simple and painless if you have the right partner.
Cloud migration can be complex because it requires significant resources and can result in substantial costs. It requires a lot of planning, organizational changes, and business process transformations, which can be very time-consuming.
We see gaps in the implementation strategy as a common problem in failed migrations. These gaps are usually caused by trying too many things at a time rather than using a phased approach.
A disagreement over who should lead the migration is another speed bump. The ideal situation is one in which everyone is on board and willingly contributes to making the transition smooth. However, this is only sometimes the case.
Organizations should aim to involve critical leaders in the process. C-level executives must make it a point to present the migration as a vital business process. They also need to ensure that all employees are aware of their support.
Wrap up
Cloud hosting allows distributors and manufacturers to manage their software platforms and provides enhanced data security. Cloud-based ERP Software will not be going away. That is one thing for sure.
ArionERP, a cloud solution with robust security features, is designed to run at maximum performance.
We are equipped to handle all your ERP requirements. We can help you implement, manage, or improve your cloud ERP. Our consultants will optimize your software investments to ensure you realize your full potential.
