ERP is Changing Because of the Cloud—How Should IT Departments Change in Return?
by Andrew Sanders on

The cloud changes things, and not always in a good way. A recent survey from the security vendor AlgoSec shows that 30% of companies find that their applications don't work as expected after a cloud migration. ERP is no exception to that rule.

Those using cloud ERP solutions increasingly find that once their vendors finish porting their applications to the cloud, their legacy on-premises systems begin to break. What is the best path for organizations that need to adapt?

How the ERP Problem Started

Back in the 1990s, companies began large-scale adoption of monolithic single-vendor ERP systems from companies such as SAP and Oracle. These systems were comprehensive in terms of the issues they handled, but they aged poorly. Adding new features to legacy software is a tricky proposition, especially when the software in question is a monolithic application.

Without modularity, adding a single new feature to an application monolith means re-testing and tweaking an entire application. Relying on a large traditional vendor to provide these new features can therefore be an expensive process that requires a lot of waiting around.

Cloud ERP solutions are designed as an easy solution for vendor lock-in. Instead of waiting for traditional vendors to write in a clunky new feature, you can buy that feature as a single application from a cloud vendor. The cloud ERP software will then communicate with your on-premises solution via an API, seamlessly adding new functionality to your legacy application. This is often viewed as an alternative to a total rip-and-replace of the old on-premises software, but cloud ERP is often used as a complete substitute for the old software as well.

In Practice, Cloud ERP Software Can Be Less Convenient Than it Sounds

Here’s a sober prediction from Gartner—by 2018, a whopping 90% of all cloud ERP solutions will fail. The fact of the matter is that while adding new features to traditional on-premises ERP is a great idea, adding those features via the cloud (and while using different vendors) also adds complexity. Cloud vendors are reluctant to acknowledge this complexity, and the APIs they create often lack the ability to connect their new applications to legacy software in an efficient or scalable manner.

In other words, the shiny new applications that are supposed to bring modern functionality to traditional ERP are going to do so slowly, and most likely at considerable cost. Hence, a failed state.

How Do We Fix Cloud ERP?

2018 is here, but there must be a way for IT administrators to reverse course and turn their cloud ERP implementations around. Advice from IT executives suggests that companies need to:

  • Adopt cloud ERP with a critical eye, ensuring that your new vendor can actually solve your pain points before proceeding.
  • Properly budget for IT staff. Assuming that automation will take care of your new workload is a great way to get caught flatfooted when or if it breaks.
  • Implement on a slow, feature-by-feature basis, without trying to grab a whole suite of new functionality all at once.
  • Adopt a maintenance plan before adopting a cloud ERP solution.

This last point is the most important. Adding cloud ERP adds a layer of complexity to business operations. Being unable to handle that complexity is akin to being unable to handle the application itself. Administrators need a layer of monitoring software to help them understand where an application is going wrong—otherwise their expensive new investment will be as cumbersome as the software it’s intended to replace. We’ve seen these implementations go wrong, but we’ve also seen our performance monitoring turn around software adoption that isn’t going well. Cloud ERP may not be easy, but it’s certainly doable with the right tools.

Filed Under: cloud computing, Industry Insights

Tags: cloud applications , cloud ERP , erp