Enterprise Resource Planning (ERP) is business management software that streamlines and automates processes, enabling more effective, precise, and efficient operations. This applies not only to large corporations but also to medium-sized and smaller companies. ERP provides full visibility into core business processes. That is precisely why any actions regarding ERP should be well-considered, as the consequences of errors can be severe. The potential migration of an ERP system to the cloud should be treated with the same level of care. It is a challenging task, fraught with certain risks, but one that also offers significant benefits. Read on to learn about the opportunities and dangers of migrating ERP to the cloud, as well as how to plan the entire process to save yourself stress and ensure success. Before we even consider where to start, we must first answer the question:
is it worth it at all. The beginning of migration preparation should therefore be a detailed analysis of potential gains and possible losses, which will clearly indicate the measurable, quantitative, and qualitative benefits we can achieve. These will serve to set specific goals for the entire project. At this stage, it is also good to think about the budget we can allocate to this project.
Migrating an ERP system to the cloud – a checklist
If the analysis is positive and a budget has been determined, you can proceed to select a solution and a partner with whom you will later plan the
migration steps in detail, in a way that minimally disrupts the organization’s normal operations. The migration process itself is relatively simple. If you are migrating from an older version of a system to a newer one, the vendor has certainly provided all the mechanisms to transfer all data quickly and securely. This is the case, for example, with Epicor. From the client’s perspective, it is a simple and transparent process for end-users – one day they simply start using the newer version. In the case of migrating from a different system, we are talking about a new, full implementation. Nevertheless, even in this case, cloud ERP vendors offer tools that accelerate and facilitate the project.
What are the biggest advantages of migrating ERP to the cloud?
Let’s return to the fundamental question: is it worth it? What are the biggest benefits of migrating ERP to the cloud? Cloud ERP systems offer many business advantages, especially for small and medium-sized enterprises, as they allow for reduced total cost of ownership, enable easy and rapid expansion of functionalities, facilitate scaling the solution in line with the organization’s growth, ensure a higher level of security, and reduce the company’s dependence on IT. One of the biggest benefits is also the upgrades performed by the vendor. In the traditional model, a company buys software, installs it, and uses it. However, every so often, usually every 3-4 years, it performs an upgrade to a newer version to access new features. A project of this type is expensive. You need, for example, test environments, but also specialists to conduct the test and upgrade previously made customizations. In the cloud, such upgrades are usually performed by the vendor regularly, every few months, without disrupting system operation, and their costs are already included in the monthly subscription. As a result, the client can use new features faster and without effort. In such a situation, there is practically no risk of technical debt. Meanwhile, there are cases where clients with on-premise installations use a ten-year-old ERP system because they haven’t performed upgrades due to a lack of time.
What are the biggest concerns regarding ERP migration to the cloud?
The benefits are undeniable. Undoubtedly, however, just as there is no rose without thorns, the cloud also carries certain risks. Despite the high costs of ERP systems implemented in the traditional, on-premise way, many companies are hesitant to move ERP to the cloud. Most often, the main reason is the difficult and risky migration process. Some also mention that storing and using important data in the cloud can be potentially dangerous. One should also add issues of reliability and limited possibilities for making changes and integrating with other systems. Over time, more and more barriers that might have discouraged migration until recently are beginning to disappear. For example, corporate IT environments and entire technological ecosystems, on the one hand, and public clouds, on the other, are increasingly better prepared for mutual cooperation. Thanks to this, there is no need to worry about whether services can be integrated with external systems. Today, cloud ERP systems communicate perfectly with other systems, even those operating locally at the client’s site. Changes are also taking place in the psychological aspect. Clients are less and less afraid of losing control over their data. Contracts with cloud providers ensure an appropriate level of security. Moreover, cloud services also meet the requirements set by legal regulations, e.g., GDPR. Practically all large cloud providers can offer services provided from data centers located within the European Union.
How much does it cost to migrate and maintain ERP in the cloud?
Let’s look at the costs of migration and, incidentally, the maintenance of ERP in the cloud. Migration costs to the cloud can vary significantly depending on the existing infrastructure, the ability to integrate applications with the cloud, the extent to which functions are virtualized, and the level of support required throughout the migration process. If the current infrastructure is cloud-compatible, moving it to the cloud will be relatively simple. Conversely, if we are dealing with older technology, migration can be expensive. Ultimately, however, maintaining ERP in the cloud will be cheaper later on. Of course, everything depends on the division of responsibilities between the vendor and the client. The most important thing is to always consider all costs when thinking about the cloud. In many cases, the pricing of cloud services surprises clients. They are surprised that it was supposed to be cheap, but it is expensive. This, however, results from the fact that they compare it, for example, only with the costs of purchasing software and implementation. When we look at all the components of the valuation, it turns out that it is not expensive at all. Firstly, clients rarely take into account the costs of purchasing and, above all, maintaining hardware when calculating on-premise costs versus cloud services. By choosing the cloud, you don’t need to hire administrators, which, in an era of rapidly rising salary expectations for IT specialists, is becoming increasingly important. Few people count the costs of performing backups, as well as electricity – the costs of which are becoming difficult to ignore over a year or several years. Moreover, the costs of potential downtime are not taken into account. Restoring operations after a failure in a local data center requires a lot of work and takes many days. If we calculate the costs of such downtime, it may turn out that they are very high. In the cloud, launching a new server happens instantly.
Security of ERP system migration to the cloud
Regarding the second key issue for many organizations –
security – it must be said that the cloud itself is neither more nor less secure than an on-premise environment. Nevertheless, considering the capabilities and experience of the largest cloud providers, as well as ERP vendors who offer their systems in the cloud, it must be said that practically no small or medium-sized organization, and even most large companies, is able to provide a comparable level of security. For cloud providers, security is a matter of survival, which is why they invest very large funds in this area, which in most cases translates into achieving maximum protection for the system and client data at reasonable costs.
What should guide you when choosing a company to move ERP to the cloud?
Let’s summarize what should ultimately guide you when making the decision to migrate ERP to the cloud. First of all, you should carefully calculate all costs and analyze the benefits that the migration will provide, and choose the target ERP system in the cloud. It is also essential to think about choosing an experienced partner who will help you go through the migration and system launch process. It is worth choosing a company that uses cloud software itself, thanks to which it has knowledge and direct experience. The vast majority of Mindbox’s own systems have been operating in the cloud for many years. Thanks to this, we can share one more benefit that comes from the cloud. When on March 12, 2020, a significant part of companies in Poland experienced a shock in connection with the announcement of the lockdown, we – from an operational point of view – did not notice practically any problem. There was no need to wonder how to ensure the company’s functioning. Employees took their computers home and worked normally using systems operating in the cloud. This shows that cloud solutions are more resistant to unforeseen shocks such as a pandemic. As you can see, ERP in the cloud is a guarantee of greater business continuity and a much lower risk of downtime.
