The accelerating digital transformation in companies around the world is taking place primarily through the cloud. ERP systems won’t escape migration either, with 6 out of 10 organizations expected to have a cloud presence in the form of an ecosystem of applications and technologies as early as 2 years from now, according to a recent Gartner report.
Organizations using cloud ERP report reductions in operational and administrative costs or increased on-time delivery, among other benefits. An Aberdeen Group study estimates that by moving a system to the cloud, cost efficiency in these areas can increase by as much as 22-24%. ERP systems are also gaining importance in the era of building digital workplaces (Digital Workplaces).
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Overall, 95% of companies report improved business processes after implementing a modern ERP system. In practice, the shortest implementation period is provided by cloud solutions. Not surprisingly, according to Gartner forecasts, by 2025 up to 80 percent of companies worldwide will move resources from their own data centers to third-party providers. The scalability and availability of services offered by cloud solutions will also be attractive to companies planning to significantly increase their growth momentum – both in terms of volume and geography.
How to choose an ERP system?
To reap such benefits, however, it is important to properly match the system to the company’s needs. The multitude of available options and functionalities makes such decisions time-consuming and requires the involvement of many people on the customer side. In such situations, there is often a temptation to rely on the services of an already well-known provider, without conducting an in-depth market analysis.
This, however, is already changing. A recent report from Gartner clearly shows that at least half of companies will consider multiple vendors in their ERP system selection processes, carefully analyzing the benefits associated with each proposal, rather than automatically upgrading from their current vendor.
What happens when a company doesn’t take the time to research the market and see if a system fits its needs? More than 6 in 10 ERP implementation projects go over budget, and 74% take longer than anticipated in the schedule. The data clearly shows that companies simply cannot afford to approach system implementation in a lax manner. And on the other hand – they often don’t have the time or the right knowledge to do so, which would make it easier to act with the topic. Because the answer to the question “which ERP system is the best” is not at all that simple, even if you know the specifics of business operations.
Which ERP system is the best?
Among the market leaders in the latest edition of the Gartner Magic Quadrant report are the solutions of Oracle, Microsoft Infor and SAP, which have consistently been ranked by Gartner among the leading cloud ERP providers for the manufacturing industry. S&T works with all of the companies in a leadership position in Gartner’s Magic Quadrant and implements their solutions. The report takes a closer look at each of these systems, showing their strengths and weaknesses.
According to Gartner analysts, Infor offers support for multiple complex manufacturing scenarios within a single ERP ecosystem and multi-tenant cloud capabilities tailored to the needs of a specific industry, and with its open data bus architecture, it can meet the needs of organizations focused on developing ERP capabilities through application services. SAP provides irreplaceable industry expertise and technological and analytical capabilities, but the multitude of implementation options and functionalities based on different license versions and pricing can be challenging.
ERP in a public or private cloud?
Another question that companies face when migrating ERP software to the cloud is the question of choosing between a public (multi-tenant) and private (single-tenant) model. The former includes banking systems that offer account services to companies and individuals, or email systems that make services available to multiple entities within a single server. A private cloud, on the other hand, is space shared with only one company. The single-tenant model is usually equated with greater security, but the cost of maintaining it is often analogous to spending on traditional IT infrastructure. And given that for many companies migrating to the cloud is a way to perform budget optimization, choosing a private cloud is not optimal.
Meanwhile, application solutions experts agree that the multi-tenant model can be fully secure and successfully meet the expectations set for a cloud service. A single software instance in a scalable architecture provides access to dedicated services and functions to multiple clients. Each of them can use a section of the application specifically dedicated to them, which will enable them to achieve their goals. At the same time, none of the entities using such a service has insight into the activities of other companies. Sharing software and energy consumption among several companies translates into cost savings that would not be possible in a private model, but also reduces the environmental impact of the business – which happens to be increasingly important for brand customers.
Using a multi-tenant cloud-based ERP system allows companies to reduce budgets devoted to IT infrastructure also because of the tools provided by the cloud provider as part of the subscription.
How to simplify the ERP implementation process?
Choosing an ERP system is a challenging task. This is due to the diverse needs of individual businesses and the fact that system implementation is a series of complex tasks. Above all, it’s a process that requires a company to define its goals and priorities. Cloud ERPs help improve business procedures and bring them in line with industry standards, but for this to be possible, companies must first adapt them to a specific format.
The process must involve the right people on the customer side, representing different departments and their expectations, as well as managers who have insight into the overall functioning of the business. Getting the processes right is a time-consuming effort that often goes down the drain. But this is a requirement of all cloud providers – for digital transformation with the support of this technology to be effective, it needs proper preparation. And delaying the introduction of order in a business may not be beneficial to it – especially since it is the chaos in procedures that often translates into increased operating costs or expenses due to, for example, duplication of departmental competencies or limited communication between employees.
The issue of maintaining market competitiveness is also an important factor for companies to consider. More and more businesses are reaching for cloud-based ERP systems, thereby increasing cost efficiency, enhancing customer service and accelerating the pace of innovation. Delaying the decision to use the cloud may shift the prospect of incurring the costs associated with implementing a new technology, but could result in lowering a company’s position in the market.
Is there any way to simplify the cloud implementation process, or is it always tedious and unpredictable? A significant support here is to be an IT integrator. Years of experience and knowledge of many industries and the needs of specific segments help an integrator such as S&T analyze the processes of a company that wants to digitize. And, as a result, reduce staff involvement and advise on the selection of the right ERP system tailored to the needs of the business and the existing application and infrastructure environment. It is crucial to be able to propose a realistic project schedule and budget, so that all activities can be properly planned, and potential problems can be anticipated and efficiently prevented before they occur. And as a result – help the company achieve its goals.