By Marie Jackson
If there was ever one IT area of a company today that needs to be reassessed from the top down, it’s ERP technology. ERP is the single most important IT expenditure a company can make because it oversees the vital pieces of an organization, including finance, operations, and manufacturing.
Early ERP systems were designed around the production, distribution, and selling of a physical product. Today, the digital economy is a far cry from traditional physical product companies of the pre-internet era. Yet outdated and inefficient legacy ERP systems are still supporting thousands of companies around the world. Legacy ERP systems remain in place despite the fact that the pace of business has radically changed, and seismic shifts have occurred within business models and communication channels.
Many companies are coming around to the fact that they need to upgrade from legacy ERP systems to cloud-based ERP solutions to compete successfully. A Gartner report titled, Survey Analysis: Adoption of Cloud ERP, 2013 Through 2023, published in 2013 found that 47 percent of organizations were planning to move their ERP systems to the cloud within the next five years.
Unlike the on-premise ERP legacy systems of yesterday, new cloud ERP systems deliver returns and organization improvements faster than their on-premise predecessors. A research note published by Nucleus Research in June 2016 titled Cloud Gets 43 Percent Faster Payback recently found that cloud ERP customers experience 5.5 times lower ongoing personnel costs, 43 percent faster payback, and 42 percent greater return on investment than companies see with on-premise ERP.
Cloud ERP Collaboration
How are companies getting these kinds of yields? Unlike legacy ERP systems, cloud ERP technologies of today are incredibly collaborative. By making ERP collaborative—both internally and externally—companies are able to break down information silos and create more efficient processes.
Collaborative ERP seamlessly connects front and back offices and gives companies the ability to leverage new business intelligence and artificial intelligence technologies across the organization. In addition, Collaborative ERP helps companies leverage digital channels and the digital preferences of their employees, partners, suppliers and customers. Having a 360-degree view of a business can make a company much more efficient and strategic about how they view and use data, which in turn accelerates change and fuels innovation.
Margins are Jumping
Accelerating change and fueling innovation while embracing digital networks across an organization drives remarkable growth and a company’s ability to compete aggressively. Cloud ERP solutions are built for users across the organization and enable everyone in the company to be more informed, nimble, and responsive. Cloud ERP also brings customers closer into the processes that directly affect them.
The benefits of closer customer relationships and increased employee collaboration are already paying off for cloud ERP adopters. According to a report published by Aberdeen Research in 2013 titled, SaaS and Cloud ERP Observations: Enabling Collaboration in Midmarket, profit margins for midmarket cloud ERP users increased by 21 percent compared to a seven percent improvement for companies with on-premise ERP solutions between 2011 to 2013.
Margins for cloud ERP users are increasing for a variety of strategic advantages the technology provides, which are outlined below.
Clicks, Not Code
Most IT professionals in the 90s remember horror stories about costly and slow-moving legacy ERP platforms. Programmers had serious computing restraints at the time and had to crunch big computing tasks into numerous small tasks to get around the computing limits. Therefore, when updates or changes needed to be made, hard coding of each task was required, creating a booming business for software consultants at the time. Fortunately, this archaic type of architecture is nowhere to be found within several new Cloud ERP platforms. Instead of hiring expensive consultants, non-technical business users can now modify business processes and user experiences with just a few clicks—no coding experience needed. Users can easily add fields, change workflows, and rearrange dashboards for complete customization of their ERP without tying up technical resources.
Freedom to Innovate
Whiteboarding sessions often churn out new ideas and fuel new market strategies, but sluggish and siloed on-premise ERP systems often bring brainstorm sessions to a screaming halt. Coming up with an idea is one thing, but making it work across a company with siloed and disconnected information systems is often a costly, time-consuming—and often impossible—project. Centralized agile and nimble cloud ERP systems integrate new processes and changes to software processes company-wide within days versus months.
New Speed of Business
How much time do employees spend tracking orders, invoices, POs, supplies, etc.? Most accounting and sales employees understand the colossal amount of time spent doing this every day—it’s a real pain point that often hurts the sales teams the hardest. Cloud ERP gives employees immediate access through one interface to real-time information within any department of the company.
Daily reports for management often depend on information from other departments. Cloud ERP lets people have real time visibility into anything leadership needs to know immediately, such as how much product was shipped the day before, how many orders were taken that morning, or real-time numbers from the production floor. These are critical pieces of information that should be taken into account when the company is making any decision. But with legacy ERP systems, data is often buried in a variety of hard-to-access software applications, giving management a sense of flying blind when making daily business decisions. According to the previously cited Aberdeen Research report, mid-market companies with cloud ERPs decreased decision making time by 36 percent, well over the 18 percent improvement companies with on-premise solutions achieved.
All of the noted advantages of cloud ERP outlined above have one universal theme in common—business processes are dictated by the company versus the software. ERP technology mapping to business processes instead of the other way around is a massive shift in the way ERP has functioned over the past 20 plus years. Today’s cloud ERP solutions look nothing like the on-premise platforms of yesterday—and for good reason. The time is now to get rid of them.
Marie Amoruso Jackson is the CMO at Kenandy. She brings over 20 years of global marketing leadership and operations experience which drives demand generation metrics, revenue growth, brand awareness and digital expertise to her role. Prior to joining Kenandy, Jackson was CMO for Retail Solutions, a big data analytics company in the retail space specializing in supply chain, sales and digital marketing solutions for many of the consumer products enterprise leaders.
Aug2017, Software Magazine