Misconceptions about ERP vendor support costs and public cloud services need to be cleared up to formulate a solid DX strategy.
The fast-paced introduction of new cloud technologies into the market has often been cited as a distraction when organizations are debating on the right cloud strategy to embrace. In the ensuing dilemma, some even consider ditching their well-functioning (albeit expensive-to-maintain) enterprise resource planning (ERP) system.
The trouble is, businesses need to find a cloud vendor that supportive of their clients’ roadmaps, and lock clients into their own roadmaps.
For SAP or Oracle ERP users, one solution is to reduce the costs of vendor lock-in and integrate the system into cloud-delivered services: hybrid IT.
To explore the possibilities, DigiconAsia.net threw the soapbox to one firm that does just that. Andrew Seow, regional GM for ASEAN & Greater China, Rimini Street, helped to shed more light on his organization’s raison d’etre:
DigiconAsia: How can enterprises determine the correct mix of internally deployed applications and cloud-delivered services? Should enterprises just move all resources to the Cloud?
Andrew Seow (AS): An overlooked reality is that very few businesses have migrated to 100% cloud-based applications for their core systems like ERP. Before transitioning IT resources to the Cloud, business leaders need to consider their organization’s needs. By putting the business first rather than moving to the cloud for cloud’s sake, the cloud strategy will accelerate growth and innovation in the best direction.
Cloud services can offer a more scalable and reliable IT infrastructure, and enterprises can achieve significant savings in overhead costs such as software updates, management and data storage by utilizing cloud-based services.
IT departments are gradually moving various applications and infrastructure to the Cloud, but it is also important to note that moving certain capabilities to the cloud like ERP has hidden, long-term costs and risks of migration. In addition, some core ERP elements may never be cloud-ready. By leveraging hybrid IT, organizations can achieve cloud benefits like cost savings, scalability, and agility, while maximizing investment of non-cloud installed applications.
Hybrid IT is emerging as the operating model for the future, enabling organizations to combine cloud and non-cloud environments to achieve the best of both worlds. Cloud Infrastructure-as-a-Service (IaaS) is beneficial in terms of savings and performance—think public cloud infrastructure solutions like AWS, Google and Microsoft Azure.
Moving your ERP to a cloud Software-as-a-Service (SaaS) option has hidden costs and risks as you migrate this mission-critical backbone completely to the Cloud.
DigiconAsia: What are the common reasons why some enterprises are left behind in the pandemic’s current aftermath?
Budgets will be tighter in the aftermath of the pandemic, and organizations may not be able to devote budgets and staff to digital transformation initiatives that provide competitive advantage and growth.
Extracting the maximum value from existing enterprise software to invest in innovation will enable businesses to focus on these critical transformation projects.
DigiconAsia: How should CIOs convince the CEO to align C-suite and Board interests and expectations regarding hybrid IT infrastructure solutions?
Since vendors are not aware of the struggles that each business faces, CIOs are left to explain the benefits and risks of moving resources to the cloud or upgrading on the vendor’s schedule.
CIOs should ensure there are no conflicting priorities taking over the IT transformation agenda. Alignment in the C-suite and at the Board level ensures that. Also, instead of taking a ‘cloud first’ approach, CIOs should be taking a ‘business first’ approach when it comes to the digital transformation.
DigiconAsia: In your experience, what are the misconceptions that enterprise owners have harbored about cloud computing?
A common misconception is that they must move to the vendor’s SaaS ERP or risk losing full support— but they actually have the power to decide if there is value in making this change now.
Besides having the power to make the decisions for themselves, they can take advantage of alternative third-party support options to stay supported for a minimum of 15 years if they choose to do so. In reality, businesses do not have to move their ERP to SaaS if there is no business value in doing so.
Another misconception is that shifting their ERP system to the Cloud is better than having it internally deployed. However, operating an ERP suite as-a-service does not eliminate its complexity or improve the benefits of being tightly integrated. Instead, the resources devoted to migrating to the Cloud could be better spent on best-in-class applications that can modernize existing ERPs to drive faster innovations.
Early adopters have learned that results vary by cloud layer and that a hybrid approach to sourcing their ERP solutions often yields the best of both cloud and internally-deployed worlds. Businesses may also find that migrating to SaaS ERP increases overall costs if the new solution does not have the industry-specific features or support the customizations that they rely on.
Handing critical business data off to the organization’s vendor means relying on vendors’ security policies rather than your own. Organizations can still keep customized applications and valuable data stored on them despite migrating to the cloud.
DigiconAsia thanks Andrew for sharing his business’ views here.
