Migrating ERP Systems to the Cloud Migrating

Migrating ERP Systems to the Cloud

Migrating Standardized ERP Systems to the Cloud

The compelling economics of cloud computing are leading enterprises to question their long-held assumptions that the annual maintenance fees they are paying for on-premise editions of their ERP are justified. In addition, these same economics of cloud computing are making it possible for entire divisions of an enterprise to be up and running within weeks instead of months or years, on cloud-based ERP platforms (Banerjea, 2011). The economics of cloud computing are also re-ordering the financial landscape of enterprise software, putting line-of-business leaders in a more direct and influential role relative to the purchase of enterprise software (Gill, 2011). All of these factors taken together form the catalyst of how migrating to standardized ERP systems delivered via cloud computing are changing how enterprises evaluate, implement and value software.

Migrating Standardized ERP Systems To A Cloud Computing Environment

At the most fundamental architectural level of migrating standardized ERP systems to a cloud computing environment are the evaluation, planning and implementation of process and system integration throughout a company. For a standardized ERP system to be effective in a cloud computing environment, there must be integration in place to legacy databases, potentially secondary ERP systems already implemented and in use, in addition to pricing, Customer Relationship Management (CRM) and Supply Chain Management (SCM) systems as well (Yoo, 2011). All of these systems need to be orchestrated with the cloud-based ERP system to ensure this new system can immediately deliver valuable information, insightful analysis and useful data based on the company's activities (Armbrust, Fox, Griffith, Joseph, et.al., 2010).

Once this foundation ahs been created that provides for the cloud-based ERP system to be effectively used across the enterprise due to its integration, the most critical manufacturing, supply chain, and customer management processes need to be defined and then integrated to the new system. The most common areas where a standardized ERP system will typically be used is in streamlining the supply chain management, pricing and distributed order management functions of a business (Symonds, 2012). These three functions are essential for the successful operation of a manufacturing-centric business, which is where the majority of cloud-based ERP systems are being delivered today (Creeger, 2009).

These three core areas of supply chain management, distributed order management and pricing also form the foundation of advanced financial reporting systems, which provide enterprises choosing to deploy these systems with greater visibility into their transaction workflows and their relative efficiency (Gill, 2011).

Cloud-based ERP systems used for standardized processes need to also be aligned to the specific process and strategy needs of an enterprise to be successful. There is often considerable debate between software vendors and customers as to just how much customization should be undertaken or not, with many enterprise buyers choosing to minimize customization to keep costs down and also to mitigate the need for custom support over the long-term of the applications' use (Armbrust, Fox, Griffith, Joseph, et.al., 2010).

The key success factors of introducing a new ERP system into an enterprise where migration to the new system is based on standardization of workflows, processes and features are discussed here. For a standardized ERP system that is cloud-based to succeed, it must first be defined from a scope and functionality standpoint in the context of a decision framework. This first best practice of an effective standardized ERP system on a cloud platform requires organizations to take into account the specific strategic requirements and needs of their business, and then create a unified framework for evaluating the functionality and performance of the cloud-based ERP system (Arinze, Anandarajan, 2010). Realizing that no two ERP implementations are identical, standardization of ERP system features on cloud-based systems must be balanced between incremental costs relative to long-term gain (Banerjea, 2011). The decision framework puts these factors into context and aligns them to the strategic plan of the enterprise, so decision makers can see just what aspects of their strategic plan will and won't be supported by the standardized ERP system.