Regardless of how ERP is modernized, CIOs should take a hard look at the benefits of a cloud architecture that can deliver agility right away as well as protection against future obsolescence and market disruptions. Cloud-native solutions also provide other significant advantages like scalability, having all users on a single version, and up-to-date security.
“Look for a cloud-based platform that can truly use the power of the cloud to manage large volumes and a high velocity of data,” says Boada.
The common data core of a cloud-based ERP helps drive continuous planning, execution, and analysis. And, the use of common and completely configurable frameworks enables the business to adapt to continuous business and compliance changes.
With a modern cloud platform, leadership teams will find they can innovate in new ways, such as extending core applications to develop specialized functionalities for things like quoting prices, streamlining payables/receivables, improving collections, automating tax compliance, and improving workflows.
A modern solution built on a true cloud platform helps organizations to easily integrate, extend, and leverage APIs and other capabilities to add value without customizing the core applications. Furthermore, all of these changes are durable and upgradable and don’t lead to calcified dead ends that keep an organization locked into a particular version of technology.
While staying with a current solution and vendor may seem like the easiest approach, such a strategy limits the scope of what’s possible and the value that a modern ERP platform can deliver.
“As the market and technology are always evolving, the leadership team should look at options with fresh eyes,” Boada says. The ability for a solution to interoperate several best-in-class clouds, as well as to integrate, extend, and connect with an industry ecosystem, are critical considerations.
Overcoming Risk Reservations
The ongoing shift of enterprise infrastructure to the cloud is undeniable. Foundry’s 2022 Cloud Computing study found that the percentage of companies with most or all IT infrastructure in the cloud will grow by more than half—from 41% today to 63% at the end of 2023. Most companies are at least partially in the cloud, having been led by sales and marketing organizations that have already adopted software-as-a-service solutions.
CIOs may worry that because they have a proven ERP platform that works, the cost of change won’t be justified by the returns. However, that mindset ignores the cost to the business of not moving to a solution that is more adaptable for the long term.
Progressive CIOs are taking advantage of the catalyst effect that cloud platforms provide. A shift to a modern ERP is just one aspect of the transformation that the cloud enables, Boada says. “There are also opportunities to transform processes, the way you use data for decision-making, using innovations such as machine learning, and the fundamental architecture of a cloud solution to deliver adaptability and insight,” he explains.
For business users, a modern ERP system can provide better access to data visualization, reporting, and analytics dashboards that help them make more informed decisions. A unified data model enables organizations to enrich data and make projections based on business conditions. A modern cloud ERP can automate much of the drudge work of administering computers and networks. There’s also the opportunity to apply machine learning and other artificial intelligence capabilities to improve forecasting, detect anomalies, and prevent errors.
The prospect of transforming a complex business-critical system such as ERP is enough to scare off some CIOs from tackling core modernization efforts. But maintaining the status quo presents an even greater risk to the business. By beginning with the end in mind, IT and business leaders can work together to understand the future they want to see—and the best path forward to get there.
In the next article in this series, posting August 22, we’ll examine the importance of relationships for a successful ERP modernization. To learn more about how CIOs are tackling core modernization efforts, check out CIO.com for additional resources.