Enterprise resource planning (ERP) systems — the business management tools that allow businesses to collect, manage and interpret their data — are struggling to keep up with the speed of change. Traditional, on-premise ERPs are difficult and costly to upgrade and often lack the user interfaces, mobile access and analytics of modern business systems.
As the ERP market evolves rapidly, many businesses are looking to make changes. Sixty-eight percent of participants in a recent ISG survey have or are planning to combine their ERP and human capital management (HCM) systems into a single-vendor platform, and 37 percent are in the process of selecting a new cloud ERP system or will start within two years.
Enterprises have many good reasons for moving to a cloud-based ERP system. Expected benefits include more accurate, timely and meaningful data analytics, a reduced total cost of ownership and improved integration across business units, such as finance, supply chain, human resources and sales.
Tips for success when moving to a cloud-based ERP system:
- Get on the same page: A first step toward an ERP upgrade is ensuring the enterprise has executive commitment for the change. Top executives need to agree on the direction of the ERP systems, on why a change is needed, and on when the timing is right. As enterprises look to the future, they should consider the expectations of their internal and external customers. They should ask why a change is needed. Is it because the enterprise needs to increase the speed of its innovations? Is it because of cost pressures? Or a talent shortage?
- Choose wisely: Enterprises also need to do their homework before rolling out a new ERP system. They should have a long-term focus, ideally 10 to 15 years. They should focus on their unique and critical requirements. And they should take the time to find the right deployment partner, looking for significant experience with similar organizations and focusing on the team that will ultimately support them. A poor implementation of a great platform ends up in disappointment.
- Luck favors the prepared: The most successful organizations engage in significant pre-work before deployment. They design for their desired future state by redesigning, for example, charts of accounts or job structures, before the deployment starts. Preparation also includes mastery of the data. Data cleansing, conversion vs. archive decisions and data mapping often take longer than expected. Finally, businesses should embrace process transformation as part of the preparation work. They should streamline and standardize process workflows as much as possible.
- Stay the course: Once the ERP upgrade process starts, focus on keeping to the schedule and budget. Organizations should commit their best resources to the project, with experts dedicated as functional leads, as well as to reporting, security and testing. Organizations should also establish a program management office for the deployment. Strong program governance across all workstreams is critical, and a systems integrator will not manage all of the client-side responsibilities. Enterprises shouldn’t skimp on testing during the deployment. Robust, end-to-end testing plans are necessary and should focus on unique populations, workflow, security roles, data conversion and downstream systems, among other things.
- Plan for change: After deployment of any new business process or system, there is some inevitable drop in performance based on resistance, inertia and lack of experience with the new processes. Businesses can minimize the performance drop by anticipating the change, planning for it and proactively communicating and managing it. Expect lower morale, increased help desk calls, higher transaction errors and operational hiccups for a period of stabilization. A successful deployment of a new ERP system anticipates those issues and plans for ways to deal with them.
Deploying a new ERP system is a major effort, but it doesn’t need to be one that turns into a major headache, with the right planning and the right processes in place.
ISG experts help organizations make the successful transition to a cloud ERP system from strategy and planning through selection and deployment. Have questions about your cloud ERP journey? Contact us to find out how we can help.