Many organisations are looking at the prospect of moving from their existing ERP to a SaaS, or cloud-based, platform. This could be organisations looking to move from Oracle’s E-Business Suite (EBS) to Oracle Fusion Cloud, or from SAP’s ECC6 to S/4 HANA. The latter is being largely driven by SAP ending support for their legacy ERP.
If you are on Oracle’s EBS there is not the same sense of urgency as Oracle are continuing to support it for the long term. So why should you consider moving and how can you make the business case?
Here are several strategic considerations that you can include in your thinking.
It’s a Different Product
Although it may seem as if a SaaS ERP is very similar to your existing “on-premise” system, it is not. You are moving from a software system that you have bought perpetual licences for (probably using a capital investment that features on your fixed asset register) to one that you effectively rent. The subscription fees will be much higher than the support you currently pay for. But you get a lot of extras included.
The obvious one is hardware. To be honest, the hardware costs are relatively cheap in the grand scheme of things, so they won’t make the case, even with replacing them every few years, the OS, database, and security software. But on top of the hardware you also need the server room, with air con, expensive fire control system, and physical security. You also need a team of people to support all of these. These people aren’t cheap and are often in increasingly short supply.
If you want to scare yourself, find out the age profile of your current team. I bet that a fair number of them are approaching the age when they could retire. You’ll need to factor the cost of replacing them into your “do nothing” business case option.
Another factor is the need for major upgrades to your on-premise ERP. If you want to continue to get that long-term support from Oracle, you need to keep your EBS upgraded. Future upgrades are unlikely to be as difficult as the move from 11.x to 12.x, but they can still be significant projects that need careful planning and outside help. This also needs to be added to the do-nothing option.
And think for a minute about why future upgrades might not be as disruptive. It’s because the bulk of Oracle’s development effort is focused on their Fusion ERP, not the EBS. The EBS is still getting some new features, especially those that can be easily back-ported from Fusion, but it is, and always will be, the poorer cousin. Is that the right strategic platform for your organisation?
Very few ERP business cases take into account that a SaaS ERP is not a static service. Most business cases that I have seen show a step change in costs and benefits from the as-is environment to the to-be state, without factoring in that the to-be environment will be continually updated with new features that deliver ever increasing business benefits. Of course, a small ongoing investment is needed to achieve these additional benefits, but these benefits continue to accrue like compound interest.
AI and Automation
Oracle, like the other ERP vendors, are building new AI features into their platform as fast as they can. And that’s very fast indeed!
Every quarterly update brings a substantial array of new features. Not all will be relevant for you. Some may be interesting and offer some slight improvement and value. But a few will provide substantial benefits for your organisation, and one or two could be game-changers. It’s difficult to put a value on these unknown future benefits, but you shouldn’t ignore them either.
Looking back over the last couple of years, it would have been difficult to predict how much things have changed. That pace of change is not going to slow down, if anything, it’s just going to get faster. So getting your organisation onto a platform that will keep pace with a rapidly evolving world sounds like a sound business strategy.
AI, both the new generative AI and classic AI, already enables substantial business benefits. That value is going to increase rapidly as AI, and our ability to identify it’s opportunities, matures.
Optimisation
Your legacy ERP was probably first built in the last century. The EBS went through a major upgrade in the early 2010s, but many of the underlying business processes have been unchanged for decades. Think about how much the world has changed since then.
Business today is fundamentally different, with mobile now standard rather than nice-to-have, and, thanks to Covid, the concept of work being what you do and not where you do it is no longer questioned.
Adopting a new SaaS ERP based on modern best practice provides an excellent opportunity to improve business processes across the organisation. Those who think of the move to a new ERP as a technology project and are looking to minimise the business impact are missing the point. The more impact the better (within reason), because each of these impacts is helping make things better.
Of course you need to support the organisation through this with an effective change management team or you won’t get the full benefits.
Resilience
Very few organisations are able to provide the same quality of service as the ERP vendors. They can afford to pay for the best engineers in the world. They can provide higher levels of uptime than almost any on-premise, in-house system.
The same is true for cyber security. The ERP vendor will ensure that the entire technology stack is on the latest version and that any vulnerabilities are addressed far quicker than most in-house teams could react. Not many organisations can afford a 24×7 team to support their ERP system.
Agility
Another benefit of a SaaS ERP is the ability to scale up or down as the needs of the organisation evolve. If your organisation doubles in size, either through organic growth or acquisition, then re-platforming an on-premise ERP can be a considerable challenge. In the SaaS world, that is all handled for you.
Capability
It’s likely that a SaaS ERP can do more than your current system. It’s very common to see organisations able to replace a number of legacy systems when they make the move to the cloud. The full savings of this are rarely fully accounted for. There will be a saving in licence costs, but there will also be fewer integrations to maintain, fewer support contracts to manage, fewer technologies to support, and a lower cognitive load for your organisation as they don’t have to learn and switch between as many user interfaces.
In Summary
There are many benefits from moving to a modern SaaS ERP that are not always appreciated. It’s not a panacea, it won’t magically fix all your organisational problems, but it can help make some things better.
If you would like help in building your case for cloud, you can find me on LinkedIn: https://www.linkedin.com/in/patrickhaston
ERP Success 