Research shows that on-premises ERP systems were not designed for usability and insight. More than three quarters of business leaders say their current ERP system doesn’t meet their present requirements, let alone future plans. These systems lack modern best-practice capabilities you need to compete and grow. To enable today’s data-driven organization, the very foundation from which you’re operating needs to be re-built—it needs to be modernized.
Oracle’s goal is to help you navigate your own journey to modernization by sharing the knowledge we’ve gained working with many thousands of customers who use both legacy and modern ERP systems. To that end, we’ve written this handbook outlining the fundamental characteristics that define modern ERP.
How has the global pandemic impacted on-premises ERP to cloud ERP migration plans?
Hasten migration plans No change in plans Slowed migration plansSource: “Customer Migration Plans to Oracle Cloud ERP.” IDC research of Oracle on-premises customers (E-Business Suite, PeopleSoft and JD Edwards). N=1,600 in 14 countries. September 2021.
The rapid evolution of the cloud has dramatically altered the ERP landscape for companies of all sizes. Coupled with mobile platforms, our work anywhere and anytime culture requires modern cloud-based ERP systems not tied to yesterday’s back-office, on-premises environments. This next generation of ERP—cloud ERP—builds on the formidable history of on-premises ERP, but eliminates the need for multiyear projects and heavy customization.
Modern ERP delivers solutions rapidly through the cloud so organizations can respond quickly to volatile markets and industry disruption while supporting next-generation employees with security, insight, and agility.
Business-critical collaboration and decision-making depends on both enterprise data access and analysis, and on modern ERP systems that deliver the infrastructure and tools required to get done what you need.
The world is far more complex and competitive than when on-premises ERP first arrived on in-house mainframes. Finance and technology are inexorably linked, as growing volumes of data drive not just operations and reporting, but critical business decisions. Aligning cloud ERP with a company’s people and products delivers digitally enabled business agility, which translates into greater operational and sales success.
Read this guide to learn how to find the right cloud ERP partner, gain productivity and flexibility, have a consistent view across your business, and get next-gen technology and enhancements.
Cloud solutions appear for salesforce automation, travel & expense, recruiting. Customized, costly and complex on-premises ERP harder to upgrade
Comprehensive cloud solutions unify finance, SCM, HCM, CRM and other business capabilities across data structures
Advanced Cloud ERPWith next-gen technologies (e.g., AI, ML, blockchain), driving leap in automation and decision speed. Higher performing and more secure infrastructure with deeper industry functionality
Cognitive ERPCognitive technology advances significantly with many ERP transactions and processes ambient – the business runs itself. Worker focus shifts to strategy and growth
Cloud solutions appear for salesforce automation, travel & expense, recruiting. Customized, costly and complex on-premises ERP harder to upgrade
Comprehensive cloud solutions unify finance, SCM, HCM, CRM and other business capabilities across data structures
With next-gen technologies (e.g., AI, ML, blockchain), driving leap in automation and decision speed. Higher performing and more secure infrastructure with deeper industry functionality
Cognitive technology advances significantly with many ERP transactions and processes ambient – the business runs itself. Worker focus shifts to strategy and growth
There’s no argument that legacy on-premises ERP systems deliver significant horsepower to run your organization, enable external interactions, and directly impact how you fare against competitors. However, you need to consider the technological and generational changes taking place in your business and how your current on-premises environment could be holding you back. Regardless of business size, there are three key inflection points where the need to modernize becomes apparent. Most organizations are experiencing at least one of these today.
Does your current ERP system support your operational goals? Consider if you’ve acquired a company using a different ERP system, your legacy system is in need of an upgrade, you’re launching a subsidiary, or you’re moving to a shared-services model. If you’re faced with any of these scenarios, achieving operational efficiency has become a priority. Therefore, ERP modernization needs to be part of the conversation.
Today’s users demand a level of collaboration and ease not previously expected from on-premises solutions. In addition, their expectations for ERP systems reflect the ubiquity of digital technology in their lives. They also require a single source of truth that cascades all operational functions, real-time analytics with configurable role-based dashboards, mobile access for applications, and social collaboration tools—all with easy and rapid regular updates.
There is no return to the way things were a few years ago. The value of time has skyrocketed. Work requires purpose. Dignity and inclusion matter. People want their grandchildren to inherit a healthy planet. The stakes have never been higher for your business with new opportunities, partners, and challenges, along with new competitors, stakeholders, and risks. Yesterday’s best practices aren’t enough and are probably holding you back.
Whichever inflection point describes your organization, you need a modernization strategy that fits your needs, culture, budget, and timeline. Acknowledging where your current system does not support your business objectives is the first step in your ERP modernization journey.
Your on-premises system requires an expensive upgrade as it ages past support dates and your competitors deploy cloud solutions
2 Usability dissatisfaction increasesDigital native employees complain about usability and ask why their ERP system isn’t like smartphone apps
3 Reporting challenges increase Management reporting is too cumbersome because of on-premises ERP limitations 4 Requires new hardware Physical on-premises ERP infrastructure is past due for an expensive capital replacement 5 Maintenance costs increasing ERP system fees and services costs increase annually 6 Unintegrated systems provide disparate data Growth in disconnected systems and enterprise data give conflicting answers to key questions 7 Rapid and global company growthInternational expansion, mergers and acquisitions, and core market growth are hampered by your on-premises ERP system
8 New compliance requirements Increasing financial and compliance requirements impact your enterprise 9 Business demands increase Your business cannot keep up with increasing demands 10 Preparing for an IPO You are ready for a public offering which mandates stringent financial information and controlsNo matter which inflection point represents your organization, there are key components of a modern ERP system that should address the top concerns most companies have when considering a move to the cloud. There are seven components that fall into two categories—modern platform parameters and modern business application design. Together, these seven components define the standards of a modern ERP system. To establish a foundation for agility and growth, these platform components should be considered.
In addition, modern cloud applications should scale with your business and support the latest digital technologies to meet your organization’s needs. These apps should have the following design components:
These are the top five reasons for moving from on-premises ERP to cloud ERP
Improved enterpriseSource: “Customer Migration Plans to Oracle Cloud ERP.” IDC research of Oracle on-premises customers (E-Business Suite, PeopleSoft and JD Edwards). N=1,600 in 14 countries. September 2021.
As you plan your modern ERP strategy, you should pull together a deployment team that includes potential implementation partners as well as cloud providers. Consider the following elements of a modernization strategy, which apply regardless of technology and market size.
With your strategy and roadmap in place, solution choices made, and a partner who supports your vision, you’re ready to execute. Now it is time to plan a party…really. Moving your organization to a cloud ERP platform, even using small, incremental steps, will fundamentally change the way your people work. Celebrate the launch to nurture everyone’s commitment and celebrate again when milestones are reached.
Source: “Customer Migration Plans to Oracle Cloud ERP.” IDC research of Oracle on-premises customers (E-Business Suite, PeopleSoft and JD Edwards). N=1,600 in 14 countries. September 2021.
Capital expenses for on-premises ERP systems divert funds from important business growth needs and often incur taxes
On-premises software requires up-front purchase and taxes; cloud ERP leverages operational expenses month to month
On-premises ERP requires annual maintenance fees to be current with security fixes, critical patches, and updates
On-premises ERP requires additional capital expenses; hardware typically needs physical upgrade every 3 to 5 years
On-premises ERP hardware often requires annual maintenance fees or contracts, high-cost space, utilities, and staff
On-premises ERP systems need an on-premises database, which often requires staff and contractors to deploy it
On-premises ERP requires annual maintenance fees and staff to keep the ERP database secure, current, and optimized
On-premises ERP hardware and software system upgrades can cost from $100K to more than $1M per project every 3 to 5 years
On-premises ERP systems have additional costs for security and monitoring software, with staff needed to monitor and maintain
All on-premises ERP systems have large costs for disaster and recovery plans, infrastructure, services, staff, and redundancy
Required for customizations, integrations, reporting, maintenance, upgrades, and partners/subcontractors
When you’re finished crafting a strategic and comprehensive ERP modernization strategy, with carefully documented KPIs, you’ll have the baseline for assessing your results—you simply need to look back in order to look ahead.
When establishing KPIs, be realistic about how you’ll measure value. Document your status quo metrics before you kick off the implementation and set reasonable intervals at which to assess results. Based on those assessments, you can configure features to adjust to your business goals and needs—something that’s much easier to do with cloud applications.
In addition, it’s important to establish baselines for priorities using a maturity model mapped to your organization by assessing and quantifying project goals. For example, a goal to reduce accounts receivables through rapid, automated invoicing with faster close and reporting processes as well as reduced IT costs. But a comprehensive assessment is not just about technology. People, governance, process, and strategy are also key factors for success.
For meaningful results, incorporate holistic measures related to these factors into your KPIs that connect back to your original business case. Whatever your path, it’s important to craft a business case to justify your approach. Leverage resources that help you understand cloud technologies, the positive impact they can deliver, and the financial advantages of modern cloud ERP 2.0.
Four factors aside from technology directly influence the success of every cloud ERP project.
