Modernize Your Business With Cloud ERP
By Mark Davison, VP & CIO, Delek US Holdings, Inc.
Enterprise Resource Planning (ERP) systems and software have routinely been in mainstream use by many organizations seeking to simplify business processes and technical complexity. Since the turn of the century, many IT staffs have been focused on phasing out those legacy systems, which have lingered in the business too long, and are attempting to reduce complexity and irregularities associated with best-of-breed applications that have not interfaced well with the main “system of record” ERP solution. These efforts were (and for some still are) daunting tasks and typically do not gain wide support from the broader organization since many within the business retain the memory of how difficult it was to migrate to the existing ERP system in the first place.
So what is next for business and technology in this area? What is the next logical step in the roadmap of modernization of the ERP landscape? For many, it is further simplification and cost reduction. Cost savings associated with modernization is very difficult to capture unless a focus is placed on quantifying indirect costs as the key driver. Included in the calculation should be attributes like delays in support of the on premise application due to the inability to attract, hire, and retain qualified technical resources. In addition, there may be costly delays in delivering to the business those services necessary to support organizational change, drive business process efficiencies, or avoid missing business development opportunities due. Add on top of these costs and time constraints the regular replacement of server and network hardware and the case for moving the ERP system to the cloud has merit.
For our organization, making the decision to move to the cloud was based on many factors as were previously discussed. The following factors were the main contributors of the decision to move from an on premise solution to the cloud and in our case, a managed service:
Artificial Intelligence (AI), integration of “Internet of Things”, and new advancements in business intelligence tools will be the difference makers for many organizations in the future
1. The ability to have a consistent business continuity plan based on the high availability of services that we did not have to manage.
2. Reduction in the financial disruption caused by peak capital requirements necessary to replace aging hardware and the inherent demand on the technical staff to manage the upgrade process. These costs were converted to a consistent operating budget strategy that was easier to manage.
3. Minimize disruption of the business due to the ability to staff or retain key talent. Talent, as luck would have it, are not typically available at the time when they are needed the most (Murphy’s Law).
4. Reduced reliance on non-ERP technical staff necessary to manage the back office operations including the servers and associated services required.
5. Need to replace aging hardware and timing of an ERP software upgrade.
In our particular case, this led to a very easy decision to move to the cloud and a managed service. But there are several pitfalls that organizations must avoid when making this decision. The first pitfall involves not having a robust Project Manage Process and Change Management Process in place. If your organization suffers from a lack of discipline in making decisions and coordinating efforts, moving to an outsourced arrangement will not automatically solve them. In many cases, it may make it worse as the cloud provider needs consistency and regularity to make their financial offering work to their advantage. Emergency changes as a regular occurrence, as opposed to an exception, will not bode well. Responsiveness to changes to production may take longer if the current organization is used to having the internal staff to manage the change themselves. The second major pitfall is the inability for IT Management to understand how their role has changed from Supervisor to Vendor Manager. The skills and talents required for this new position of responsibility are radically different. Care must be undertaken when selecting the individual who will be challenged with this new opportunity.
The prospect of modernizing ERP to the cloud is here today and should be strongly considered. The “next big thing” has nothing to do with managing the routine tasks associated with hosting and servicing systems and software. Artificial intelligence (AI), integration of “Internet of Things”, and new advancements in business intelligence tools will be the difference makers for many organizations in the future. IT organizations need to focus on the strategic intent of the services they provide and respond accordingly. This will take not only a mindset change for the IT staff but also a willingness to educate the business and commandeer the support required to modernize the infrastructure.