The IDC predicts that the public cloud ERP market will reach $73 billion by 2026, up from $36 billion in 2021. While ERP has trailed other applications in its cloud migration, these solutions are prime targets for a shift to cloud as businesses look to gain more valuable insights from the information they have and seek the flexibility needed to scale as and when they need to.
For Emma Murray, VP for indirect markets at IFS, cloud ERP combines all the strengths and benefits of a world-class ERP solution with the innovations that the cloud has to offer. This helps to streamline operations, enhance scalability, reduce costs and provide real-time data access, which opens up the possibility for the business to leverage capabilities such as IoT for real-time metrics, and AI and machine learning to boost automation and provide the predictive capabilities needed to optimise their operations.
Business model innovation is important to keep up with customer and market expectations while remaining relevant and competitive, says Microsoft South Africa’s director for business applications, Karin Jones. Organisations relying on on-premises applications will struggle to compete with peers that are already embracing AI-powered cloud technologies. As such, it’s important for companies to migrate their critical business processes to the cloud as soon as possible. The good news for sceptics is that, yes, we have been talking about AI for the last few years, but a meaningful change is how easy it has become to operationalise this data. “It’s no longer something applied in dark corners of the organisation or something available to a select few; it’s now being democratised. AI is more accessible, and it’s important that we are responsible with this technology. It will lead to an explosion of applications and process improvements across the organisation. Businesses must not let this opportunity pass them by,” says Jones.
Vendors are now offering fully service-enabled solutions, and updates and upgrades no longer affect business operations. This means businesses have more time to focus on their core operations, says Murray, and this also creates space for digital transformation.
“At some point, all companies are going to take the decision to get going on their digital transformation journey,” says Gerhard Hartman, VP for medium business at Sage Africa and Middle East. According to a recent Sage survey, just over half of local SMEs are planning to increase their spend on technology in the next 12 months as the need grows for more modern applications, with the capabilities businesses need to be able to access data from any location, and at any time.
Anthony Poltera, principal project consultant for value prototyping at SAP Africa, agrees. “In 2023, CIOs and tech leaders are on a mission to digitally transform their enterprise applications,” he says. This is where cloud ERP systems come into their own because they align with changing customer expectations, while also offering a roadmap to unlock business potential.
But this is only possible, says Johan du Toit, strategic sales executive for SYSPRO Africa, when the necessary network capabilities are in place. Understand that with cloud ERP, one ideally needs 100% uptime and availability, he says. Given the prevalence of loadshedding, fears around availability and network downtime can put a bit of a dampener on the move to cloud because people are nervous about the reliability of the network. “If I’m running a factory and I don’t have access to my ERP systems, my factory can’t operate. No business can afford to stop their factory running because they can’t reach their data.”
Is cloud ERP for everyone?
Anthony Poltera, principal project consultant for value prototyping, SAP Africa:
A meticulous evaluation of individual needs, security, compliance and limitations is paramount. In our experience, a hybrid approach often proves to be the ideal solution, offering the flexibility to blend on-premises and cloud systems, thereby harnessing the benefits of the cloud while aligning with distinct organisational demands. Additionally, the suitability of cloud ERP depends on several key factors, like security and compliance, which may lead highly regulated or data-sensitive industries to prefer on-premises or hybrid ERP solutions. Data privacy concerns can drive businesses dealing with sensitive customer data to opt for on-premises ERP for greater control. Issues such as unreliable internet connectivity, customisation needs, long-term cost implications, legacy systems, organisational readiness, risk tolerance and industry-specific requirements should all be evaluated when determining whether to adopt cloud ERP.
Johan du Toit, strategic sales executive, SYSPRO Africa:
I have to assess my company’s ability to manage the process and the solution. And, probably, my overall cloud maturity. Remember that ERP is just one of the tools companies use. So this is not a decision that you make in isolation. If I’m running 10 other solutions and all of them are already in the cloud or are on-prem, this influences your decision. If I can use an analogy between the cloud market and the vehicle market, 30 years ago, everybody bought or financed a car. But as the motor vehicle industry has progressed, it’s more common to lease a vehicle. You do so realising that you’re probably paying more, but you don’t care because you don’t have to worry about maintenance or services or having to sell the car one day. It’s very convenient. The same can be said for cloud. Ultimately, each company has to make that decision for themselves based on their needs and capabilities.
How should firms navigate the shift to ERP cloud and how should risk be managed and quantified?
Suven Moodley, business manager for business applications, Decision Inc:
To navigate and manage the risks typically associated with an ERP implementation, an organisation should partner with an established systems integrator. Ideally, one would partner with a systems integrator that has performed several cloud ERP migrations and has established methodologies for managing these engagements. Another major consideration is how to manage legacy data. It’s typically quite costly to cleanse, transform and migrate vast amounts of legacy data from one ERP to another. One method of ensuring you’re able to use your legacy data for analytics is to migrate this data to a data lake. A systems integrator with deep expertise in both ERP implementations and enterprise data management is crucial to architect the right solutions for your organisation.
Emma Murray, VP for indirect markets, IFS:
With all significant IT projects, the crux of success is in the management of the process and ensuring the project remains aligned to the company drivers for change. This is done through an initial value-engineering assessment to identify areas in the business where maximum improvements and benefits should be realised – and where success of the project will be best realised. Strong executive engagement is vital to being able to decide when to adopt global practices and align the business model accordingly.
CLOUD ERP STUMBLING BLOCKS
While the lure of enhanced business value might be clear, according to Andrew Strachan, head of sales: applications, Dimension Data, there are a few things that can get in the way. These include:
- Implementation costs: The cost of disruption to a business migrating can be high. By optimising cloud costs to meet exact requirements, businesses can boost overall efficiency.
- Lack of time: Unfortunately, engineers are often inundated with day-to-day tasks and don’t have time for strategic innovation projects such as shifting your ERP to the cloud.
- Skills gap: Recruitment, training and retention of skilled IT professionals remains a major challenge across all businesses, regardless of size and industry. Should an organisation lack cloud ERP integration and control skills, this can hamper their migration and implementation efforts.
- Governance and security: Despite the promise of better protection, there are still concerns about the cloud that we need to overcome.
Strong executive engagement is vital to being able to decide when to adopt global practices and align the business model accordingly.Emma Murray, IFS
According to Fortinet’s Gary Peel, ERP systems are an attractive target for cybercriminals because these solutions provide access to a wide range of business information systems, including financial data, production systems, development and employee data, among others. Consider the following to enhance your cloud ERP security deployments:
- A web application firewall to block web attacks, such as code injection, cross-site scripting, or SQL injection.
- Cloud-based network firewalls to secure network traffic, including internal segmentation to reduce the extent of trust domains.
- An IPS to block attacks targeting system vulnerabilities.
- Data loss prevention tools to block sensitive or confidential information leakage.
- Cloud-native workload protection and/or cloud access security brokers to monitor security policies, configuration, usage patterns and compliance with security policies.
* Article first published on brainstorm.itweb.co.za