Practical steps to follow when running cloud based erp systems

Practical steps
to follow when
running cloud-
based ERP systems
JUNE 2017
ENTERPRISE APPLICATIONS
HANDBOOK
FOTOLIA

2 PRACTICAL STEPS TO FOLLOW WHEN RUNNING CLOUD-BASED ERP SYSTEMS
In this handbook:
Editor’s Letter
Take it slow when planning
a move to cloud-based ERP
software
Cloud ERP move requires
grasp of different types of
cloud computing
ERP hybrid cloud
architecture causes
integration headaches
HANDBOOK
Plan carefully before you implement a cloud ERP
system
JIM O’DONNELL
Manufacturing ERP systems have been slow to move to the cloud, yet an
increasing number of manufacturers are feeling more comfortable with the
idea of implementing cloud ERP systems.
Still, they have to exercise caution before moving to a cloud ERP system. The
very nature of the cloud’s ease of access leads many organizations -- deceived
by cloud computing’s apparent simplicity -- to adopt the cloud before fully
vetting the issues. Instead, these companies need to prepare for cloud ERP
system implementation the same way they would for an on-premises system.
The most important step is to map business processes to see where they can
be improved by moving to a cloud ERP system.
First and foremost, let’s clear up some of the confusion surrounding available
cloud options. The cloud is more than just putting on-premises applications on
a vendor’s data center; it’s dynamic and based on next-generation services.

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
Cloud options include public, private, multi-tenant (shared infrastructure),
single tenant and hybrid (whereby some services move to the cloud and some
stay on-premises).
The hybrid options can be among the most attractive for manufacturers that
are wary of putting their entire infrastructure in the cloud. A hybrid system usu-
ally requires a primary cloud ERP system provider, while other tasks, includ-
ing logistics, warehouse management and payroll, are kept on premises. The
main challenge of putting together a hybrid system is data integration, which
requires careful planning upfront before system implementation. Be sure you
know your goals and the right way to get there.
This handbook by freelance technology writer Lauren Gibbons Paul provides
the practical lessons you need to follow before implementing a cloud ERP
system.

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
Take it slow when planning a move to cloud-
based ERP software
LAUREN PAUL
Everyone is doing it, or at least thinking about doing it -- migrating to cloud-
based ERP software, that is. According to preliminary survey results from
market research firm Mint Jutras, 67% of respondents from manufacturing,
distribution and service companies of all sizes said they would consider cloud
software-as-a-service ERP as an option for a new deployment. And more than
half -- 51% -- said SaaS ERP was their first choice.
But moving your enterprise applications to the cloud doesn’t automatically
simplify ERP, especially in the case of a hybrid cloud and on-premises archi-
tecture, which is an increasingly common setup. Simplicity can be deceptive.
Cindy Jutras, president of Mint Jutras, based in Windham, N.H., recently heard
a manufacturer lament a whirlwind six-week implementation of cloud-based
ERP software that ended with problems. “He said, ‘We did it too fast. We
didn’t understand all that we were doing.’ You can’t just jump in blindly,” Jutras
cautioned.

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
The cloud equivalent of “slamming in” a system, such ultra-fast migrations don’t
allow time to evaluate business processes to see what could be done better
under the new system. A shortened time frame also does not leave time for
other critical project steps, including gathering requirements and ensuring
user buy-in.
MIGRATION BY ANY OTHER NAME
The truth is, preparing for a migration to cloud-based ERP software is very
much like preparing for an on-premises ERP implementation. As much as some
people may not want to hear it, the prep work is very much the same, according
to Frank Scavo, president of Strativa Inc., a management consulting firm based
in Irvine, Calif.
“You don’t have to size and buy hardware. Otherwise, the steps for
implementation are the same,” Scavo said. The most important preparatory
step, he added, is to map business processes via storyboarding or some
other visual tool to identify where improvements are needed and can be
implemented in the cloud system.

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
“It is likely that your current business processes were constrained by the
[on-premises] system you use now,” he said. “Cloud is more flexible and
enables more advanced ways of doing things.” Making sure you understand all
the advanced capabilities of the new system is an important step.
Most companies need to do significant process improvement before, during
and after implementing cloud-based ERP software, just as they would with any
ERP rollout, he added. Business process re-engineering can be painful and
time-consuming, but if you skip it, you’ll lose out on the biggest benefits of the
cloud application. Many companies move to the cloud without understanding
what the new system makes possible.
Even at the early planning stages, you’ll need to keep an eye on the future,
Jutras said. You want to make sure you implement cloud capabilities that
provide maximum flexibility. Ideally, the cloud platform will enable easy
integration with add-in capabilities from third parties, should you need them.
Work with the cloud provider to identify possible integration points.
“Agility is very important,” Jutras said. “All you know about tomorrow is that
it will be different: [It] could be a little different, could be a lot different.” Your

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
products, services, clients, industry and even business model all may change
down the road. You want to ensure you are not casting your processes in
concrete.
Shoring up data quality and defining relevant terminology across data
systems -- master data management -- are two activities that should always
precede a move to cloud-based ERP software. Here, too, many organizations
might prefer not to give them their full attention. “If you don’t do them, your
implementation will fail,” Scavo said.
When it comes to selecting which processes and data to move first, a good
rule of thumb, Jutras said, is to pick areas that would experience quick
improvement -- the proverbial low-hanging fruit. For example, if operations are
suffering due to a bad warehouse management system or manual warehouse
processes, that would be a likely place to begin.
“Look for where you can get the most value with the least disruption to your
business,” Jutras said. The temptation is to address longstanding pain points,
but those tend to be complex. A modular approach can work well, she added,
using your business objectives to guide the order of functions to move to the
cloud.

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
Cloud ERP move requires grasp of different
types of cloud computing
LAUREN PAUL
One difficulty of planning to move your ERP to the cloud: The term is largely
a marketing creation. Depending on who’s doing the talking, cloud can mean
many different things. No wonder there is still a lot of confusion about the
different types of cloud computing.
“Cloud is more of a branding and marketing apparatus for the industry to
package services in a consumable way,” than it is a term with concrete
meaning, said Stephen Moss, senior vice president of managed technologies
at PCM, an IT services provider.
Chris LeBeau, director of IT at Advanced Technology Services chimed in,
“Many people are still confused, and sometimes fooled, by deployment options
that vendors slap the cloud buzzword on, but [which] are really the old hosting
model that simply takes what might have been on-premises and puts it in the
vendor’s data center.”

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
This arrangement describes classic IT outsourcing or managed services, and
it has existed for decades.
Cloud, on the other hand, carries the connotation of services and software
being delivered and maintained by a provider, along with an IT infrastructure.
“The cloud to me is more based on next-generation services and the ability
to continue to innovate and enhance your processes,” Moss said. Cloud is, by
nature, more dynamic than IT outsourcing.
Sorting through the different types of cloud computing is an important task
before proceeding with migration planning for ERP. The selection of platforms
and types of cloud computing services can affect your costs, degree of flexibil-
ity and security, as well as the amount of customization that is possible.
THE PROVIDER IS KEY IN DIFFERENT TYPES OF CLOUD COMPUTING
When most people talk about cloud today, they are referring to the shifting
of IT infrastructure from running on-premises to running in a cloud provider’s
environment. The software, platforms or IT infrastructures are maintained
by a services provider in the public cloud (such as Amazon Web Services or
Microsoft Azure) or the private cloud (one operated by a services provider).

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
With public cloud, the deployment may be multi-tenant, where infrastructure
is shared by more than one company, thereby reducing costs, or private -- also
called single tenant -- where the customer has its own dedicated database
and code base, resulting in comparatively higher costs. A software as a service
(SaaS) ERP system is a type of public cloud application that can be either
single or multi-tenant.
Today, most manufacturers that have migrated to the cloud have hybrid cloud
environments, meaning they use a mix of different types of cloud computing
and on-premises deployments of IT resources for the optimal balance of agility
and cost. Hybrid environments are often necessary, as cloud ERP vendors
do not always have every capability a manufacturer might need. Functions
such as distribution and warehousing are easily carved off to reside either
on-premises or with a different cloud service provider.
Private cloud allows a much greater degree of customization than public
-- where there is little to no customization -- but at a price. This offering is
designed for higher security, as the environment is not shared.
The key when sorting through the different types of cloud computing is to
understand, at a high level, what flavor of cloud the ERP vendor provides

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
-- some offer multiple types of cloud computing -- while not getting bogged
down in the technicalities.
“Don’t get hung up on the type of cloud offering,” said Linsey Ryan, principal in
the enterprise solutions practice at consulting firm KPMG. “If I were a buyer, I
would look at capabilities and how much they cost. Those things are the most
important to me.”
ERP hybrid cloud architecture causes
LAUREN PAUL
No doubt about it: Cloud ERP adoption is on the rise. But that doesn’t mean
manufacturers are migrating their key on-premises back-office and production
systems exclusively to a single software-as-a-service application in the cloud.
Many are adopting a hybrid cloud architecture to enjoy the best of both worlds.

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
According to the 2017 RightScale State of the Cloud survey, 58% of large
enterprise respondents have a hybrid cloud architecture strategy that blends
cloud functionality from one or more providers with on-premises systems. An
IDC study came to a similar conclusion: More than 70% of “heavy” cloud users
are considering a hybrid cloud architecture.
Here’s the basic idea: Select one provider to be your primary cloud provider
of computing power and enterprise software, which often means ERP. Then,
either fill in discrete tasks such as logistics and fulfillment, warehouse manage-
ment and payroll with other cloud applications or let them stay on premises.
What does that mean for manufacturers? Lots of integration will be needed for
sharing data between core systems. Integration can be an intimidating pros-
pect. But in today’s world of web services and service-oriented architecture,
the task is eased considerably -- if you do the right planning upfront.
“You’ll need to map out your integration points and get a picture of what
kind of connections are required,” said Michael Hughes, senior director at
consultancy West Monroe Partners. “[Manufacturers] are right to be cautious
about integration. It can be one of the things that can bring an implementation
to its knees.”

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
STRUGGLES INTEGRATING HYBRID CLOUD
Ryan Newman, vice president of IT at Traeger Grills, learned this lesson the
hard way. The 250-employee Salt Lake City company manufactures grills
and wood pellets in the United States and offshore. In 2015, it moved from an
on-premises Sage ERP system to Epicor, which runs in a private cloud.
Meanwhile, the company’s office applications, email server, supply chain
fulfillment and e-commerce systems run on public cloud with a different
provider. Having almost all of its systems in the cloud provides Traeger with
flexibility and a reduced need for IT maintenance. But the cloud migrations
mean Newman’s 10-person IT staff is now in the integration business.
“Seventy-five percent of my staff’s time is spent integrating platforms,” he said.
The small manufacturer has more than 30 integration points, and when the
connections don’t work as they should, business users get frustrated.
“Our architecture around integration was ad hoc and reactive,” Newman said.
“We didn’t start with a sound integration strategy.” Now, Traeger has settled
on an integration platform from yet another cloud provider to reduce the work
needed to ensure that everything works cohesively.

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
Any manufacturer considering a hybrid cloud architecture for its ERP system
should not take vendors’ claims of easy interoperability at face value, Newman
warned. “The cloud provider isn’t just going to handle making all the systems
work together,” he noted.
HYBRID CLOUD ON THE RISE
Despite these struggles, it’s no surprise that hybrid cloud architecture is used
by more manufacturers, according to Stephen Moss, senior vice president of
managed technologies at PCM, an IT services provider. “It’s all an integration
puzzle,” Moss explained. “You can go and buy cloud ERP, but you will likely
still have attributes that will be need to be on-premises.” Internet of things
applications, for example, will usually run on the shop floor or in the field.
It’s rare, even among the smallest companies, for a manufacturer to obtain
every capability it needs from a single cloud provider. “There are massive
catalogs of capabilities from third parties,” Moss said. “Integration is nothing to
be afraid of, but you should go into it with your eyes wide open.”
Map the data, identify the connection points and get the right partners and

In this handbook:
Editor’s Letter
software
cloud computing
ERP hybrid cloud
architecture causes
HANDBOOK
integration technology in place before you implement. That will significantly
lighten problems down the road. Just ask Traeger’s Newman.

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