IT is always at the leading edge when it comes to innovating and adopting new technologies. But it is difficult to predict which trends will make it in the long run and which ones will fall by the wayside. The way I see it, any trend in IT follows the same cycle:
1. Recognition (Hey, this is cool!)
2. Commercialization (Hey, we can make money out of this!)
3. Overhype (It’ll cure whatever ails ya!)
4. Disillusionment (Hey, it doesn’t work as advertised!)
5. And from here, it will either fall from grace (It doesn’t work—NEXT!) or go into the mainstream (It’s got its value if we use it right).
I believe that this whole cloud thing is hovering between the overhype and disillusionment phases. For every breathless vendor-authored white paper or LinkedIn post saying their cloud solution will have an ROI of 200% and can be implemented within 20 minutes, there will be comments from experienced consultants with real-world experience cautioning of potential pitfalls.
Let’s focus today on the cloud ERP phenomenon. Maybe it is time to take a reality check and see if it will fall from grace (like fidget spinners will do any day now), or become part of the mainstream. While my money is that it will enter the mainstream and in a not-too-far-off future and on-premise ERP will become a bit of an anomaly, keep in mind a few points when you are considering a cloud-based ERP system.
1. Rethink your implementation trade-offs
Business processes are complex beasts, and sometimes it doesn’t matter if you are a $10 million, $100 million, or a $1 billion company; the complexity cannot magically disappear with any system that you put in, regardless of how cloudy it is. Yes, the cloud systems are generally easier to implement and more user-friendly, but with that comes the loss of flexibility and the degree of customization allowed.
This is where you need to take a step back. How much business benefit will you get by putting in something quickly and easily with a cloud solution rather than waiting to design a “big bang,” heavily customized solution using your typical on-premise ERP implementation methods? Instead of spending months or years with an army of consultants at your premises, would it be easier to get up and running quickly on some part of your business, bringing other parts into the cycle as time goes by and reaping the benefits along the way?
When you select your implementation consultant, asking these questions will go a long way towards understanding their mindset and seeing if they are the right people to implement your cloud solution. I have found from personal experience that the cloud is not just a technical construct; it is a mindset. I have had to rewire my own thought processes to understand how this new world works, and you’d want people working on your businesses who truly understand this.
But wait, you say—does this mean I will end up with a hodgepodge of cloud solutions not talking to each other?
Excellent point, and this is a very common pitfall in any cloud ERP project. But fear not, look at my next point.
2. Completeness of solution is still important
Selecting a cloud ERP vendor these days is really like being a kid in a candy store. There will be tons of appealing videos on YouTube where office workers wearing soft pastel colors gaze blissfully at beautifully rendered ERP screens on their PCs or tablets. If you peruse their websites, each one will take you by the hand and show you how mundane tasks such as doing a vendor payment run pretty much feels like the Rapture. But being hardened industry professionals, we know we need to penetrate all this and understand what’s really importants: How can the vendor support our end-to-end business?
It doesn’t really make sense for a cloud ERP software to send your accounting staff to Rapture while still keeping your shop floor team in Hades.
This means we need to look for a vendor that can indeed support our whole business. To my first point above, this does NOT mean that you need to put everything in all at once. It does mean, though, that you should put completeness of portfolio as a high priority.
For example, does the vendor have a clear strategy on how it will support your central finance processes (and for most ERP vendors, this should be absolutely mandatory). How about your HR and payroll? Customer relationships? Projects? Manufacturing? Analytics? How about all this Big Data that you’ve been hearing about?
Oh, yes, and I read in some online paper that we also need to think about something called machine learning, whatever that is. You get the picture.
Any consultant will tell you that one of the more intractable problems in an ERP implementation is integration between systems. And common sense dictates that cross-vendor integration is much more difficult than getting two or more pieces of software made by the same vendor talk to each other. Keep this in mind when you do your vendor selection, and don’t base it just on how blissful the online demos are.
3. Cloud and on premise are not mutually exclusive
Unless we are living in the Matrix, you cannot completely leave the on-premise world behind. (Side note: isn’t the Matrix the ultimate evolution of the cloud?). Why? Because your machines, your customers, and your people are still going to be on premise for the foreseeable future. In fact, the latest trend is about the Internet of Things, and these Things are going to be on-premise, even if you are going to be processing Thing-generated data on the cloud.
To my last point, consider a solution that has a clearly defined strategy around integration with the on-premise components of your business cycle. Sometimes a hybrid solution will be the best. There’s no need to be overzealous in moving everything to the cloud where it does not make sense.
In conclusion, when you consider your cloud ERP journey, consider your options carefully. Look for a vendor that does not just provide a quick fix in one part of your business while leaving other areas in the cold. Do not underestimate the cost and complexity of integrations with your various systems.
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