Avoid extended timelines and unplanned costs as you put cloud ERP in place — and down the line.
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A cloud ERP system supports the increasing complexities of business requirements
Cloud-based ERP is not the same as traditional enterprise resource planning (ERP). Cloud ERP is a solution in which the vendor takes charge of managing the technology and infrastructure using a single code line, along with a distinct user interface and data model.
With traditional (on-premise) ERP, the customer is accountable for keeping the system up to date with patches and fixes. With cloud ERP, the vendor is accountable. As a result, all customers using the vendor's ERP suite operate on the most up-to-date version of the tool.
It’s critical to anticipate and incorporate regular vendor updates and patches into the project life cycle to avoid unnecessary costs and delays and maximize value.
Two key success factors for Cloud ERP implementation
Adopting cloud ERP means moving to a dynamic environment with changes mandated at the pace of the vendor. It’s critical to prepare for continuous improvement and implement clear decision controls.
Engaging with your cloud ERP implementation partner
Before beginning the ERP implementation journey, consider the vendor’s solution update approach, including:
1. Update frequency
How frequently is the solution being updated? Are there different “update window” categories?
2. Update category
Not all updates have the same impact in the same functional area. Understanding the attributes assigned to any given update is essential to correctly evaluating and determining the level of attention needed.
3. Update activation method
Are all updates activated in the same way?
4. Update monitoring options
What is the vendor’s update notification method, and how can the application leader keep an overview of “to come” and “released”?
5. Update roadmap
Which confirmed changes will the solution undergo, from project kickoff until go-live? Are there any updates relevant to your business’s mission-critical process flows?
Implementing cloud ERP for success
Although continuous updates through cloud-based ERP provide timely access to the latest enhancements and innovations, it can be difficult for organizations to adopt updates in a controlled way. To guard against this:
1. Set up a low customization strategy.
Organizations should have as few customizations as possible to mitigate risk during updates.
2. Evaluate future functionalities.
During the blueprint design, evaluate how future functionalities will impact the implementation journey. Perform a risk assessment and create an alternative plan, as these functionalities cannot be validated and tested until they are released.
3. Include the vendor’s release schedule in the project plan.
- Conduct release impact assessments to identify any necessary adjustments to the solution design.
- Evaluate if new releases can address existing business challenges or remove customizations.
- Follow up after each maintenance window to retest and close any identified project gaps, and establish blueprint review phases to incorporate critical enhancements or technical changes resulting from updates.
- Allocate extra time in collaboration with the implementation partner to accommodate potential trade-off outcomes.
4. Set up a permanent steering committee.
Continuous evaluation of vendor updates to a cloud ERP system is crucial to ensure that these changes not only enhance business outcomes but also do not pose any risks or compromises. Steering committees should meet regularly to help tackle complex issues surrounding lack of sponsorship, budget constraints, enterprise risks and how to handle exceptions to vendor updates.
5. Secure executive ownership.
In a recent Gartner survey of CIOs and IT and business leaders, more than half of respondents reported that their executives’ mindset hinders the achievement of digital technology objectives. Combat this by including executives in your steering committee.
Cloud ERP FAQs
What is cloud ERP?
Gartner defines cloud ERP as a solution where a vendor manages the technology and infrastructure based on a single code line with a unique UI (user interface) and data model. The vendor controls the pace of updates; most provide at least two significant releases each year and frequent patches, which can come monthly or even weekly.
How does cloud ERP differ from traditional ERP?
Traditional enterprise resource planning (ERP) often relied on a “one and done” approach to updates, whereas with cloud ERP, all customers of a vendor’s ERP suite receive regular updates and operate on the current version at any given time.
As organizations move ERP applications to the cloud, business units take on more involvement in supporting ERP, ensuring its success and getting executive buy-in on current and future ERP initiatives.
What are common risks in implementing cloud ERP?
There is risk when transitioning from on-premises ERP to a cloud-based solution. Cloud migration may result in delays, additional costs and security risks, such as public exposure of data, weak access credentials, weak security of APIs, cloud-based denial of service attacks and malicious cloud service provider intent.
A cloud ERP system requires a strong focus on process reengineering with active business involvement. These solutions are business-centric and not technology-centric, which can require organizational shifts.
Because updates are likely to occur multiple times during implementation, cloud ERP functionalities at the start of the initiative and at go-live may not be the same.
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