While early adopters of Cloud initially focused on migrating HCM applications, those in the process, or with plans to move, had their sights set higher; on transitioning their ERP systems to Cloud.
This reveals that many businesses do have a long term strategy to move their more complex back-office systems to the Cloud; often following on from the successful implementations of other systems. Having embarked on a journey to the Cloud with some of their Oracle solutions (or watching others’ make that move) they were now ready to consider bringing their bigger, heavier systems to the Cloud.
This got me thinking about what actual benefits these Cloud users are seeing: What is the competitive advantage that these early adopters are enjoying that is making that move to Cloud so appealing to other businesses?
Having successfully implemented two ERP Cloud projects to date – I wanted to further investigate the benefits these organisations have realised.
For organisations looking to change their ERP strategy, the promise of cost savings is often a primary driving force. In 2014 it was proved that moving ERP to the Cloud could save an organisation money. I implemented Cloud ERP for Reading Borough Council and the organisation was able to save in excess of 30% of their annual IT spend. That in itself is a compelling reason for any organisation to evaluate whether it should consider moving system(s) to the Cloud.
In my experience, many organisations are unaware of the size of the significant savings that can be made with a move to Cloud.
Our recent Claremont Cloud survey revealed that 41% of organisations, who have not yet moved to Cloud, considered the financial cost of switching to be a considerable barrier. Of course, making changes in any business often involves initial costs – both in time and money. However, the financial benefits are there to be reaped further down the line. Moving your systems to the Cloud is a fundamental change to how/where you run your business and is much more than a nod to playing the long game. It’s about making year on year savings versus the increased costs of maintaining expensive and often aging on-premise systems.
Again, the same Claremont survey states 75% of organisations who have migrated their ERP to Cloud reported that a reduction in operating costs had proved to be a major advantage. There may be some inevitable up-front costs associated with making the move, but the long term financial savings to be made more than offset that initial expenditure.
Critically, one of the most obvious areas of saving, when moving ERP to Cloud, comes from the ability to divest any on-going IT investment and turn it from a Capex to an OpEx spend as you move to a SaaS model. In essence, it’s like renting the systems from Oracle rather than buying the tin and doing it all yourself. So you can avoid the purchase of the latest kit as well as the team of people who are necessary to maintain not just that kit but all of the systems that reside there.
My colleague, Adrian Biddulph has further elaborated on this and you can read his musings herebut it’s more than just a change in how you pay for something; crucially it’s about maximising your return on that rather significant IT investment.
Regular updates to the system
In times gone by, upgrading your ERP system meant:
- Expensive projects with associated downtime
- The running up of project teams to undertake and manage what is a complex exercise
- The associated removal of those key individuals from the business for periods of time
For many organisations this was a truth; albeit an unpalatable one. The resulting behaviours were that upgrades and patching was often postponed until a more convenient time, which never really happened. Rather, a compelling event such as a hardware upgrade, a regulatory update or a bug fix left companies playing catch-up when time was of the essence and /or production systems were down.
A bi-product of this “leave it until it breaks approach” is that staff are frequently left using Oracle technology at an older release or patch-set. This means you’re not extracting maximum value from your and Oracle’s investments in its own products. Often a cottage industry of temporary work-arounds is created as issues are encountered; we all know there are few things as permanent as a temporary work-around….. irrespective of any good intention at the time.
Paying full price for a product but running sub-optimally using half of its functionality.
My experience is that most organisations only ever upgrade their systems when they have little choice due to other external factors. It’s that compelling event only when something is no longer supported or problems are experienced where they start to think about grasping that prickly thorn of improvement and updating.
Moving to the Cloud has changed this. By hosting Oracle ERP in the Cloud and having this exercise undertaken by Oracle, all Cloud customers receive automatic updates every month. These updates include the introduction new features and bug fixes to support the optimisation of your business processes.
In addition, twice a year, customers receive an upgrade to the next release of the Cloud products. Usually this comes with the introduction of new features as well as significant improvements to the existing functionality. This perpetual updating and upgrading ensures that companies are always running the latest (and greatest) technology, and, put simply, improves operational efficiency and performance. No longer do you need to resource project teams and/or pay contractors to undertake that exercise; the upgrades are undertaken by Oracle and Oracle do this for thousands of customers. Some of these customers are small to medium enterprises (SME’s), some are MUCH larger and household names.
Of course with continual improvement, it’s important to work with an experienced partner to ensure that your ERP updates and upgrades in the Cloud are implemented seamlessly, tested efficiently and that any new functionality introduced is implemented effectively. After all, your ERP system is the beating heart of your organisation and its vital that it functions optimally.
The Oracle ERP landscape is changing
These are the primary benefits I’ve seen so far on both my Cloud ERP implementations but organisations do see other benefits, including: improved security, performance enhancements and greater scalability. They are renting their Oracle real estate from Oracle who are expert in the running of that estate and can provide extra real estate as and when required; it’s just an elastic supply model.
It’s clear to me that the Oracle ERP landscape is changing. More and more organisations are waking up to the benefits of the Cloud.
For some this comes from reaping the rewards of having moved other systems to the Cloud. For others, they’ve simply seen their peers and competitors benefit from Cloud and want to do the same.
They see things like the frequency of those Cloud ERP releases and the continuing improvement in functionality and want the ability to run Oracle’s most up-to-date tech for their business. They understand that this will add real value. The cost benefits, which Reading BC and the respondents to our survey have illustrated, is just one such area of benefit.
Moving to the Cloud doesn’t mean you are giving up control of your IT landscape; rather you are taking that control back!
As a Managing Consultant and Capability Lead, Patrick is primarily responsible for the provision of Cloud ERP solutions to our clients. Patrick was the Financials Lead on the first UK Cloud ERP and SCM implementation (R7), which culminated in a successful go live in 2014.