The estimated market share of Cloud-premised ERP systems has grown to well over 20% of the total ERP market. In other words, SaaS, or Cloud-hosted ERP solutions are growing at a fast rate. ERP systems are being 'forklifted', at least in part, to a Cloud platform. There are many good arguments that not all of the complexity of an ERP can be replicated in a Cloud. There are security, IP and control concerns as well. But the trend is rather clear, some aspects of ERP are going to be moved into the Cloud.
As with anything there are trade-offs in moving from a client-server, or ERP on-premise solution, to a Cloud environment. And of course, not every SaaS or Cloud model will fit every organization. In fact it is clear that the very terms SaaS and Cloud are nebulous and can be anything. Companies must adapt Cloud technologies and use them to support their organization. There is no simple, one-size fits all model. This is especially true with ERP systems. Most likely a hybrid ERP-Cloud model is what many firms will end up with in the end.
IMG is from baseline.com survey
ERP migrations are extremely difficult. Moving part of the functionality to the Cloud or SaaS will entail a high level of data integration and bi-directional exchange. It will involve adjusting data models, diagrams, E-R models, code and documentation. It will also involve training.
SaaS/Cloud solutions will entail a cultural shift as processes are hopefully optimized, new skills learned and more productivity is realized. Change management including carrots and sticks to use the new system; monitoring system usage and ensuring that workers are behind the changes will be important. Also, IT staff and the CIO will lose some control over software and infrastructure processes which can cause organizational and cultural issues. Security and data integrity monitoring are also paramount.
The IT industry is very good at hype. The latest and greatest is always 'what you need' and will be 'easier than our last era of hype'. ERP, SaaS and Cloud solutions are always more complicated, more risky and take longer to make successful than the hype suggests. Business processes need to be redesigned, employees will need organizational change management, and adequate resources will be needed to make the migration work. Mismanaged expectations are one of the root causes of ERP failures in general, but especially so with SaaS and cloud ERP implementations.
Few organizations use a methodology to calculate ROI, so the many benefits of cloud-enabling ERP systems, or part of them, are lost in the shuffle of change, problems and complaints.
Firms need a clear road-map of both the business and technological issues in migrating ERP to SaaS/Cloud environments. The usual questions words – what, why, how, when, how much, who – apply. Some ERP systems cannot be cloud-enabled. Parts of most ERP systems can and should be. The devil is always in the details of course.