A featured contribution from Leadership Perspectives: a curated forum reserved for leaders nominated by our subscribers and vetted by the Construction Tech Review Advisory Board.
Appirio
Benefits of ERP
Among the many benefits of cloud ERP are better organizational agility and worker productivity. Cloud-based solutions are by their nature (assuming they are true multitenant, public cloud solutions) easier to own and live with in terms of keeping functionality and user experiences current on multiple platforms. Put another way, the customer experience provided by cloud vendors is simply better relative to what is possible from an on premise ERP solution in terms of SI capabilities, cost of ownership, and suitability of the solution for end user needs over time, quality of ongoing innovation, uptime, and more.
Vendors of cloud ERP solutions are even getting to the point now, using Workday as an example, where downtime is so minimal it’s almost like a Gmail level of reliability. Not quite, but it’s a far cry from legacy ERP solutions where you have to staff large teams to maintain patches, functional enhancements, etc., and you never seem to be able to keep current.
We embrace this in two ways -
1) we only run cloud ERP solutions for our own business - we own zero servers and never have.
2) we only deploy multitenant, public cloud based solutions for our clients. Our entire strategy practice is oriented towards helping organizations adapt Finance, HR, IT, Sales, Marketing and other functions from legacy behaviors and operating models to the cloud.
What are the challenges firm faces when deploying big data analytics in their ERP
The technology that is available is compelling and I think a lot of vendors are getting increasingly adept at selling these solutions. I do not however think all organizations are equally adept at buying these kinds of solutions. They often lack a clear business case or the foundational data to make the solution really work. This is slowly changing as companies continue to build lots of transactional and other data in cloud-based solutions like Workday and Salesforce.
The role has moved from one where technical expertise is the primary characteristic of the executive, to one where consultative business skills are paramount. CIOs that are savvy have adapted to the cloud in a proactive way by changing the types of roles they recruit for, adjusting their team skillsets to a more customer service-oriented business consulting model that has real line of business expertise, and are no longer interested in turf wars over one system or another. It’s about the organizational capability and the best way to deliver it - even if it upends vendor relationships and IT career paths that have been a decade in the making. It’s a tough executive role but an even more interesting one than it was even 5 years ago. Nobody makes their mark as a CIO by successfully babysitting Exchange servers anymore.
Vendors of cloud ERP solutions are even getting to the point now, using Workday as an example, where downtime is so minimal it’s almost like a Gmail level of reliability
How can technology be used to mitigate rising ERP costs
I do not believe that technology can be used to mitigate rising ERP costs if the ERP solution in question is a legacy, on premise solution. Licensing costs for legacy ERP are usually fairly low as many of these solutions are almost in a maintenance mode and are not being heavily enhanced with new capabilities that are easy for users to consume. The cost savings in such platforms is in moving support offshore and minimizing customizations.
Moving to cloud ERP on the other hand is a way of lowering cost of ownership for like functionality. You can leverage vendor updates much more easily in a cloud environment because you don’t have to do the heavy lifting to install patches, regression test, etc. You can even bring some capabilities in-house by using cloud ERP solutions like HR and Helpdesk applications, that you might be paying 3rd party service providers for today. The delta is in the ease of use and lack of maintenance work in the cloud ERP environment that allows you to save money while bringing some business processes back inside your own back office.
Driving more value out of your ERP
We like to look at redundancies in clients’ system landscapes and look for opportunities to consolidate technology wherever possible. If you have an ERP environment in place whether on premise or cloud, it’s likely to be highly integrated to a lot of different systems inside and outside your firewall. Even if you aren’t ready to do a major cloud migration, you can drive more value out of your ERP by making it the best ERP it can be - consolidating duplicative data stores into it, for example. Forcing IT and business to agree to shut down duplicative systems that add cost to the system landscape and make master data management more challenging are excellent ways to make your ERP system a better system of record and a better domain for analytics. Some of the clients I’ve worked with who had the most advanced insights into their business had just used incredible discipline to force as many processes as possible, globally, into a single ERP instance with a consistent data model. The value they got from this approach was twofold: 1) they got tremendous value for their spend on the initial platform in terms of predictable performance and capability, even when those capabilities were limited, and 2) they built up over time a great data store for analysis and porting to the future cloud environment. Moving to cloud ERP is a lot easier when you’ve built years of consistent transactional data into your legacy ERP. Clients who ran their on premise ERP with disciplined governance tend to have great results when deploying cloud ERP solutions.
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