How to manage ERPs in the cloud revolution

By Steve Cowley, General Manager, IBM Cloud

Steve Cowley, General Manager, IBM Cloud

With the cloud revolution underway, change awaits some of the most hallowed ground in enterprise technology: enterprise resource planning (ERP) software and systems.

ERP systems, many of which come from Oracle and SAP, are the glue that binds many corporations. ERPs manage and integrate vital systems of record in areas such as planning, purchasing, sales, finance and human resources. These systems are 10-ton rigs; the dreadnoughts of corporate IT.

So important are ERPs that many CIOS consider them sacrosanct. After all, such systems have taken blood, sweat, tears and considerable investment to implement over the years. The prevailing attitude is, “Do not mess with my ERP.”

However, these days, when I talk with CIOs about their ERPs, I sense a cultural shift resulting from the power and possibilities of cloud technology.

Cloud is a journey, not a destination. It uses data as a natural resource to drive competitive advantage. To put data to work, CIOs and corporate innovators use cloud tools and processes of their own choosing. They work across whatever platforms they want and retain the option to adapt and pivot. On a practical level, CIOs are looking to manage more complex data and workflow integrations by bridging cloud and private architectures.

CIOs also want to heal the big pain points of ERP: the high cost of ownership, the complexity that defeats quick scaling, slow application development and a shortage of specialized skills.

One of the best approaches to the ERP challenge is a cloud managed services (CMS) strategy. With a fully managed cloud service, a CMS provider can build and manage the right cloud infrastructure for an enterprise’s ERPs. It can also manage operating systems, patching, backup, middleware and other critical functions.

When is a managed ERP solution on the cloud right for your enterprise? In my experience, many organizations that move their ERP systems to the cloud are in one or more of the following situations:

• They want to drive costs out of their infrastructure, particularly when it is time to replace hardware.
• They are consolidating systems onto the cloud and want take advantage of its capabilities.
• They need a new or revamped ERP system and do not want to invest the capital to do it on premises.
• They do not have the people or skills to implement and maintain the most robust ERP solution.

There are other reasons to take advantage of ERP in the cloud. It is ideal for setting up new locations or quickly deploying to new overseas markets. Moving your ERP to the cloud also makes collaboration easier among internal staff, partners and clients across geographies.

Let me be clear: moving ERPs to the cloud is not simply flipping a switch. The process, particularly data migration, is complex. Integrating cloud with your existing infrastructure can be equally challenging. It ’is also important to carefully consider cloud’s impact not just on your ERP environment, but on employees and business processes as well.

Working with an experienced implementation partner to develop a roadmap can help navigate the move from an on-premises ERP to the cloud. For example, we have clients that ask us to host their entire SAP or Oracle landscapes, including production and support systems. We also work with some large companies not yet ready to put their gigantic and global production systems in the cloud, so they opt for a hybrid approach and keep their production environments in-house, but run the rest of the ancillary support systems in the cloud.

The cloud revolution promises to unlock new value for organizations. Regardless of where enterprises are on their ERP journey, the cloud will enable CIOs to maximize their investments and gain greater flexibility and scalability.