As more technology leaders consider new ERP systems in the quest for agility, learning what systems can actually do is critical.
CIOs, CTOs and other technology leaders face myriad ERP choices and must cut through cloud hype and confusing sales messages to decide what's best for their organizations. Understanding which resources can help guide good ERP decision-making is critical.
If you're considering a new system, take note of this expert advice from Eric Kimberling, CEO and founder of Third Stage Consulting Group, before researching ERP vendors. He shares advice to power your ERP buying research, including how to research ERP systems more effectively, the ways in which vendors may be overselling cloud ERP maturity and how to get more from software demos.
Cloud ERP maturity
What is some important information about the ERP market that CIOs and technology leaders should understand?
Eric Kimberling: Movement to the cloud is nothing new, but vendors are really doubling down and really pushing hard in that direction. You have some vendors like SAP and Microsoft, for example, creating deadlines for people to get off the old legacy on-premises systems and move to one of the newer flagship products.
What people need to be aware of is that -- as a broad generalization -- cloud ERP is not fully mature. Cloud will get there eventually. But right now, when you look at moving to cloud ERP, you're taking a step back if you've been using one of their legacy on-premises solutions.
Although some vendors have always been SaaS -- NetSuite, for example -- other vendors, like SAP and Microsoft, have had difficulty making the shift to cloud. In many cases cloud is a complete rewrite to the software, even for private cloud solutions.
The exception would be is if I go buy an on-premises system, and then have the vendor or a third party like AWS or Azure host it in the cloud. Yes, you're hosting in the cloud, but you still have your instance that you can do wherever you want to.
When I say cloud, I'm talking more about systems like Infor Cloud or Dynamics 365. Generally, you're going to have the rewrite of the software.
Is lift and shift real?
Do you think IT leaders have the same concerns you've expressed or are other issues at play, such as digital transformation excitement or pressure from other leaders to move to the cloud?
Kimberling: Some of them have the same concerns or reservations, and then there's also the additional concern of having to go through the pain of any sort of reimplementation.
I think the dangerous spot to be in is if leaders believe everything they're hearing from the vendors, which is, 'It's just a lift and shift. We just took our existing capabilities and moved them into the cloud. It's going to be so much greater and faster and easier to deploy.'
Believing in all that sales messaging can lead to bad decision-making, unrealistic expectations and risk that you're not aware of. I get why the vendors are saying that. Their job is to sell their software, but as an IT leader you have to take it with a grain of salt and recognize the risk of moving to the cloud.
But there's also risk to staying on premises too. I can make a very strong case for why you should not stay on premises.
There's no easy answer. Whichever way you go -- cloud or on-premises ERP -- there's risk.
And that speaks to the idea that as an IT leader, as a CIO, you need to really look at what your particular organization needs, what the legacy ERP situation is and what your security needs are, for starters.
Cloud ERP benefits
We've spoken about some issues tech leaders should be investigating, but what about cloud ERP benefits?
Kimberling: The bright side of the cloud is that it's really opened up a lot of versatility and flexibility in what organizations can do with technology. So they can be more forward-thinking by using cloud technologies, better data analytics and internet of things, for example, and really take advantage of some of the more emerging technologies. And some of these emerging technologies are starting to get baked into cloud ERP solutions.
A lot of organizations don't realize how much vendor choice they have in taking advantage of newer capabilities. They may instead just go to one vendor and say, 'I'm going to buy all of your applications, you're going to host it for me, and I have to live with that.'
But you can pick and choose what you want. Organizations don't always recognize or think about all the options because they're getting pressure to do one thing which is, to oversimplify, [the vendors saying] 'Buy all your applications from me and let me host it all for you.'
An exciting aspect of where things are headed -- though the marketing and sales messaging is way ahead of reality -- is that more cloud ERP systems are starting to incorporate machine learning and artificial intelligence. For example, RPA [robotic process automation] can automate basic workflows and high-volume transactions such as financials, product inventories and purchase orders.
Getting objective ERP buying advice
How can CIOs and other IT leaders cut through sales messaging and figure out what ERP is best for their organization?
Kimberling: Talk to people other than the vendors. For example, peers who have gone through an implementation of the cloud solution can tell you: Here's what works well. They can also share in what areas they really struggled or where they had to remain on premises.
That's another nuance: So many of these cloud systems have bolt-ons, especially certain modules that are still on premises because they haven't moved over to the cloud yet. So then that creates architecture and data issues that you have to resolve. It's not the end of the world but it's just another risk and another thing you've got to deal with, and other costs, other resources come into play. So I think talking to objective third parties that have been through it is important.
In addition to reaching out to peers from other companies or other organizations that have gone through a recent transition to cloud, I'd recommend asking vendors a lot of specific questions and being very specific in your demo requests. Ask them to show exactly which parts are the cloud solution and highlight where it's not in the cloud.
Editor's note: Responses have been edited for clarity and length.