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Moving ERP To The Cloud? First, Optimize Your Processes

If you’re thinking about moving your core ERP systems to the cloud, you are not alone. Migrating ERP to the cloud is a key trend for IT executives this year, and the movement grows bigger every day. Gartner estimates nearly 50% of businesses worldwide will move their core ERP systems to the cloud over the next five years. Many observers believe cloud ERP adoption is expanding even faster than Gartner predicts.

SAP’s larger-than-expected cloud-related revenue growth signals the shift in the market. In addition to selling cloud to clients, the enterprise software giant is itself leveraging cloud in areas like procurement and travel applications to increase productivity, its new CIO Thomas Saueressig recently told the Wall Street Journal’s CIO Journal.

It seems everyone wants in on the cost savings and increased agility of moving enterprise systems and application to the cloud. But before you can even make concrete plans to migrate, you need to stop and consider how your business processes can be improved and refashioned for the cloud. Many dysfunctional business processes grew up from the limitations of legacy technology. Companies also customized their on-premises ERP software to fit byzantine business processes that took root years ago.

Running a modern ERP system in the cloud removes those constraints, freeing you to shine a light on broken processes and fix them. If you don’t seize this opportunity, you risk missing out on all of the efficiency cloud has to offer as well as advanced new capabilities.

As an example, let’s look at financials. Rethinking processes such as general ledger and reporting is a start. But don’t stop there. Take your chart of accounts, for example. Most legacy on-premises financial solutions use a hard-coded structure that becomes impossible to manage when you need to track multiple locations, departments and projects. Under the old regime, just adding one new location or department could potentially force you to add hundreds of additional accounts manually – not a good use of anyone’s time. Many cloud-based financials allow users to set up primary account codes, eliminating the need to add hard-coded segment combinations as conditions change.

Optimizing processes for the cloud goes a long way toward helping manufacturing enterprises run lean, as the reengineered processes are likely to be much simpler and quicker to execute. Review your production processes for any that are overly complex or produce too much waste. Tackle the biggest problems first. Don’t worry – you don’t have to be perfect to run in the cloud, otherwise no one would ever get there. The idea is to smooth out processes that are overtly dysfunctional (and your employees will be happy to point these out) so you don’t just bring a mess to the cloud.