Title: Why do 95% of establishments move towards cloud ERP systems?
Title: Why do 95% of establishments move towards cloud ERP systems?
discover | Saturday - 03 / 08 / 2024 - 8:28 am
Title: Why do 95% of establishments move towards cloud ERP systems?
At first glance, the above number may seem exaggerated, but it is based on a study conducted by Logic Monitor in 2020 (knowing that 65% of establishments – at that time – were already operating using cloud ERP systems).
Why has transitioning to cloud ERP systems become a priority?
Cloud migration services are increasing because they eliminate the need for significant capital expenditure on hardware infrastructure. By hosting on cloud servers, companies can avoid costs associated with purchasing and maintaining physical servers. Additionally, they save costs related to on-premises hardware installation, including software licensing fees, data backup, IT services, energy costs, and more.
Security is another key factor contributing to increased cloud migration operations. Device protection requires massive firewalls, encryption, and security experts. Cloud ERP systems face at least 60% fewer security breaches compared to internal and on-premises systems.
For online stores, their tremendous growth – while positive – has brought a set of challenges. The pandemic forced many people to shop online, in addition to those who already found online shopping a convenient option. Managing this growth, enhancing the overall and consistent customer experience, and staying updated on industry trends could be a full-time job! However, the burden is alleviated when companies invest in a cloud-based ERP system. By integrating with commerce software, the system connects every aspect of the business, from accounting and sales to inventory and shipping, providing a 360-degree view of the entire organization.
Zooming out, we can see how most industries are facing unprecedented difficulties, including the pandemic, supply chain issues, and expansion efforts. These circumstances require businesses to be agile. Companies that have implemented a cloud-based ERP system enjoy this agility. With one integrated solution and strong inventory management, they can make decisions based on up-to-date and accurate information. Business operations are automated and efficient.
Additional reasons to adopt cloud ERP systems:
At Logix, we are honored to serve over 2500 clients (and counting). With our vast experience across various industries, we are a trusted partner who understands the benefits of transitioning to cloud ERP systems, with our system at the forefront. Here are some of those benefits repeatedly cited by our clients:
Remote Accessibility:
Cloud ERP systems allow your team to access data from anywhere via an internet connection, facilitating work on mobile devices and receiving real-time project updates.
Significant Reduction in Hardware Dependency:
The high cost of IT hardware is well known, but since cloud ERP systems operate entirely online, they do not require high-spec devices (you can manage the system using a simple tablet). Imagine the capital expenditure savings for your organization!
Scalability and Elasticity:
Thanks to a subscription-based pricing model – Software as a Service (SaaS) being an example -, cloud-based ERP systems enable your organization to scale its resources up or down based on current needs, ensuring you only pay for what you use. This flexibility is beneficial whether you’re undergoing expansion plans or experiencing seasonal fluctuations.
Automatic Update Capabilities:
Most cloud-based ERP systems are updated automatically. The distinguishing feature of these updates is that they are scheduled and quick – so they do not interrupt the company’s workflow – and most importantly, the updates are available at no additional cost!
Is this comparable to manual updates? Absolutely not!
The possiblity to know costs in advance:
Logix is distinguished by its annual subscription system, making it a very cost-effective option. This makes it easier for you to budget for migrating your old systems to a reliable cloud-based system.
What are the drawbacks of sticking to an old system?
That’s an excellent question.
The nature of old systems makes companies vulnerable to the effects of limited application. Old systems are rarely covered by vendor support policies, so they miss out on crucial updates, leading to significant cyber security risks.
In addition, old systems hinder a company’s growth due to their reliance on manual input, which translates into higher costs and wasted employee time.
Generally, it’s important to know that if you’re not proactive about adopting cloud-based ERP systems, a system crash or the loss of a key employee could force you to make an unplanned change.
Companies with outdated on-premises systems are less likely to meet deadlines and most don’t have the data they need when it comes to making timely decisions. As a result, companies remain less profitable and may even lose potential revenue!
Questions to Ask Before Adopting Cloud-Based ERP Systems:
Given that the transition from traditional systems to cloud-based ERP systems requires months of preparation and research, it’s crucial to take things one step at a time. To properly prepare your company, we’ve gathered the most important questions for you:
Which cloud-based ERP system should you choose?
With numerous options available, simply deciding to transition to a “cloud ERP system” isn’t straightforward. There are three primary cloud platforms:
– Public Cloud Platforms: These are the most common. You don’t own the infrastructure, and your data is stored in a shared cloud environment. You pay a monthly fee per user and are charged based on the resources you consume. The service provider handles system maintenance and updates.
– Private Cloud Platforms: These also offer application hosting, storage, and resources but are dedicated to a single organization. Users access the system remotely through an application, often with an added layer of security using a Virtual Private Network (VPN).
– Hybrid Cloud Platforms: This combines elements of both public and private clouds, providing flexibility in deploying applications and storing data.
Did you know that Logix operates across all three cloud platforms?
What should I migrate to the cloud?
Migrating to the cloud doesn’t require an all-or-nothing decision. It’s important to consider which devices/ systems you’ll replace or move to the cloud.
If your company has heavily customized operating systems, it might be better to keep them and add cloud applications that can improve company operations.
What is the best time to migrate to the cloud?
It’s not necessary to perform a complete cloud migration all at once. A phased approach (especially for complex systems) is often better. You can start by migrating applications that have the least impact on company operations, and then plan for larger, more integrated software systems to be migrated later in the process.
How to properly say goodbye to your company’s old system:
After a successful transition to an Enterprise Resource Planning (ERP) system, you’ll feel as if you’ve reached a major historical turning point. However, before that, remember that abandoning the old system is not easy (especially if it leaves you with a capability gap in a key area of your business). For this reason, you may find yourself unnecessarily procrastinating the process due to a combination of fear and willful neglect. It’s always easier to stick with a system you’ve relied on for 20 years, isn’t it?
Presenting the argument to your company’s board can depend on your ability to map out critical and non-critical processes and show how they will be shortened or replaced by the new cloud-based system.
Preparing for a Successful Transition to Cloud-Based ERP Systems:
We understand the concerns of clients (those accustomed to older software solutions) about moving to a new enterprise resource planning (ERP) system or even a cloud-based version of their current software. Therefore, we have decided to dedicate this paragraph to discussing the most important and often overlooked part which is data.
Remember: the earlier you start migrating data, the better. However, many project managers underestimate the importance of data migration in the success of the implementation.
Developing a data plan is a vital first step because it:
– Will identify all your potential source systems and which ones contain the “source of truth”.
– Will determine what data needs to be migrated from the old system to the new one.
– Will determine what data can be archived.
Regarding the discussion about data:
Should you transfer all data from the old system to the cloud, or should you discard the data and start anew in the new system?
First and foremost, you need to objectively assess your organization’s current situation to determine if this is the right time to make a change. Sometimes, obstacles can arise that can harm any project, even a nascent one. In these situations, it is best to take a step back and decide that the time for digital transformation has not yet come.
After a thorough review of your organization, your team may realize that the time is right to upgrade to a cloud-based ERP system. At this point, you will have multiple paths to a successful upgrade. Let’s focus on the fact that the ultimate goal is to achieve success during the transition in a way that ensures the company does not have to deal with a project of this magnitude again.
Between the “Big Bang” and “Waterfall” Approaches:
I know you really like our terminology! Now let me explain it to you:
By the “Big Bang” approach, we mean transitioning all at once, working directly with some user testing (or even without it), and making adjustments as you go.
The “Big Bang” approach might be ideal for an organization that is quickly transitioning to a cloud-based ERP system to meet growing demands. However, this approach can lead to problems related to your employees not being ready.
It’s essential to make sure your team is prepared to implement this approach effectively and mitigate the potentially disruptive operational changes that result from transitioning to cloud-based ERP systems.
On the other hand, we have the waterfall approach, where data is transferred sequentially until the full adoption day of the cloud-based (ERP) system. While this approach may seem slow and methodical, as it works with each department and its end-users for training and adapting to the new system, it can pave the way for greater success if key integration processes are restored in time for full adoption.
For us, we always advise our clients to find a middle ground where the company brings in the core data and leaves behind unnecessary data that will only hinder the system.
It’s worth noting that testing the system with your actual data will undoubtedly help verify the setup at various points in the workflow, ensuring that adjustments are made before starting.
Another major concern our clients (especially those accustomed to spreadsheets) often mention is the perceived complexity of cloud-based ERP systems due to the variety of functionalities they offer. While this may be a point of contention, the business world is evolving rapidly, with technology advancing every day. Therefore, an organization’s enterprise resource planning (ERP) system must evolve with the market. Many of these concerns will be alleviated through developing a strong business case for the new ERP and effective end-user training plans.
Be prepared for challenges!
When you’re ready to make the switch to a cloud-based ERP system, you need to consider the challenges that come with adopting the cloud concept itself. These challenges include:
Navigating the Terminology:
When working with an ERP provider, you need to clarify your terms of service before making a choice (so you can get the system that perfectly suits your needs). Consider things beyond standard terms, such as cyber security concerns, liability limits, and the availability of customer support.
Licensing considerations:
You should know how you will use your software and what kind of license you will need to do so. Are you looking for a monthly or annual subscription model, a private/ public/ hybrid platform?
Data protection:
Your data is vital to your operations, and you will need to know how your ERP provider will handle it during the migration process; where is their location? How is it stored and protected? How do they prevent data loss?
Migration strategy:
When migrating data to the cloud, your team needs to be prepared for changes and high risks. Collaborate with your system provider to align your migration and exit strategy with your existing contract.
Time:
One of the biggest challenges of cloud migration is the time it takes to reach the starting point. From planning to testing and training, these processes will occur concurrently with your business operations. Be prepared for a slow process, but it’s worth the time you’ll invest.
Proceed with Caution When Migrating to Cloud-Based ERP Systems:
Migrating to cloud-based ERP systems is a pivotal step for any business. These systems offer new levels of efficiency, transparency, scalability, and comprehensive data management. As we’ve seen, it’s highly recommended to have a comprehensive plan for the pre-migration, implementation, and post-migration phases. This way, your organization can maximize the return on its investment.
Before offering my advice on the best choice, I want to alert you to a detail that no one will tell you: data gravity associated with an ERP system provider.
Based on our statistics, the biggest mistake with migrating to cloud-based ERP systems is taking this step too late. Organizations stick with their old systems for too long and then migrate to the cloud reactively when they realize that their competitors, who migrated long ago, are far ahead.
The problem with this migration is that it’s rushed, without a careful study of cloud-based ERP systems and their “data gravity”.
What is “data gravity”?
Simply put, it’s a measure of how difficult it is to move away from a system provider in the future (if needed). One of the biggest advantages of the cloud is that migrating data to new platforms is often quick and easy. However, a subsequent move to another cloud platform can be very costly.
It’s essential to carefully plan the migration of your ERP system, choose the right provider from the start, and understand the “data gravity” in their system. Please don’t underestimate this step. Ask them about the difficulty of transferring data in the future if your organization decides to do so.
Whether your organization is planning to move to the cloud now or in the near future, adopting Logix cloud-based ERP system will unlock a world of possibilities, positioning you for future growth and success in the digital transformation era.
At Logix, we use a consultative approach to understand your company’s needs and create an implementation strategy that fits your infrastructure. We provide ongoing, long-term support to ensure that your transition process meets your expectations, and our thorough training ensures that your team is ready for operation in record time.
