Migrating from On-Premises to Cloud ERP: 5 Key Considerations
Migrating to a cloud ERP? Here are 5 key considerations to keep in mind for success.
For most organizations, migrating their ERP solution from on-premises to the cloud is the next logical solution. Cloud ERP comes with a long list of benefits, including increased flexibility and agility, reduced operating costs, and hassle-free upgrades, to name a few.
However, moving from on-premises ERP to the cloud is a big decision, and there are several factors to consider when deciding to migrate.
Factor #1 – Total Cost of Ownership
The first factor to consider when deciding whether to migrate to a cloud ERP is assessing your Total Cost of Ownership (TCO). TCO is a financial estimate of all the costs, both upfront and hidden, that are associated with your ERP solution. These generally include:
Software licensing fee
Implementation costs (which includes training and customization)
Operating costs for 5 to 10 years
For on-premises solutions, you will also need to factor in on-going costs, such as infrastructure expenses, on-going IT support, and yearly maintenance fees, which can often run up to 18% of the current list price. For cloud ERP TCO, consider monthly or annual software fees and costs associated with additional users and storage. Your company should assess your TCO for each option and compare the two before deciding to migrate.
Factor #2 – Types of Cloud ERP
There are three different ways cloud ERPs can be deployed. While they may offer some of the same benefits, their differences in the way they are set up can impact your company in terms of finances or flexibility. These include:
Public cloud, where you share the same hardware and storage with other organizations. It offers lower costs, high reliability, and scalability.
Private cloud, which is exclusive to your company only. It offers improved security, high scalability, and flexibility.
Hybrid cloud, which combines your on-premises infrastructure with a private or public cloud, offering you the best of both ERP worlds.
When you’re thinking about migration, you will need to evaluate and choose the one that is right for your business.
Factor #3 – Security
Security is a key factor when deciding to migrate to cloud ERP. With on-premises solutions, security is controlled by the individual company. That means that the company is responsible for setting user access policies, installing firewalls and other protective software, ensuring security patches are installed correctly, and guarding against cyber attacks. Keep in mind that a misstep or mismanagement in-house can leave a company vulnerable to security.
Security for cloud ERP solutions is handled by the provider, who generally invest heavily to ensure multiple levels of security. When selecting a cloud ERP, it is essential to research their security protocols and measures. Ask questions like
How is the data center protected?
How often are security fixes run?
What measures are in place against cyberattacks?
What is their disaster recovery plan?
Factor #4 – Cloud Migration Plan
Formulating a solid migration plan is a critical consideration. As data migration is one of the most challenging parts of migrating to the cloud, simplify the process as much as possible by having a strategy and roadmap in place.
Begin by assessing how quickly you want to move your ERP capabilities to the cloud. You must also determine which applications and components would benefit from the cloud. Consider the following points:
Which applications deliver the most value by moving to the cloud?
What impact will the move have on your business processes?
How difficult would it be to move this application to a new platform?
Your ERP implementation partner will play a big role in helping you create a solid migration plan and walk you through the different phases of the process.
Factor #5 – Change Management
To ensure a successful migration to the cloud, implement a change management plan to help your company throughout the transition period once the new system goes live. Ensure everyone is on the same page by communicating essential information and changes to existing processes.
You will also need to plan for your employees to receive training on the new platform and navigate the new changes with post-go-live support. Successful change management has numerous benefits, including:
Higher adoption rates and satisfaction levels among end-users
Higher ROI from your new ERP solution
Avoid lost productivity or push-back due to lack of buy-in or understanding
If you’re considering a migration to the cloud, selecting the right ERP partner has a significant impact on your success. Contact our team to learn more about cloud migration and talk to us about your objectives and challenges. We’re happy to answer any questions you may have.