Many businesses have not yet made the move to a cloud ERP. Common concerns include finding the time and resources for such a big project and getting the organisation onboard the change management journey. In this article we help you get the thought process started by sharing key lessons learned from many successful cloud ERP implementations.
Set expectations: A cloud ERP implementation is not a one-time project
First things first. Moving to a cloud ERP requires a shift in mindset. It’s important you communicate internally and set the right expectations within your organisation. Implementing a new ERP is no longer a stand-alone, one-time project of swappingsystem A with system B. Instead, going live with a cloud ERP is the starting point for an ongoing transformation journey.
Some businesses hesitate to implement a new ERP because they think they want to wait for a new version or future capabilities, such as AI-powered functionality. But with the cloud, there’s no reason to wait. A cloud solution will be automatically upgraded, enhanced and extended over time. The sooner you move to a cloud ERP the better your organisation will be prepared to adopt future technology and adjust to market trends.
Set the expectations within your organisation. Moving to a cloud ERP will not change everyone’s life on the day of go-live. But it will set your business up for what the future may hold. It gives you the flexibility and agility to continuously improve and adjust as needs and requirements change. In fact, with the right setup, this may be the last ERP change you ever have to go through.
Do your homework
A common mistake many businesses make is rushing into an ERP project by selecting a system and partner on day one. Instead, you should start with a thorough analysis of your business needs.
Because the ERP is such a vital part of your business it’s critical you ensure the system you implement can support the entire organisation not only today, but in the next 3-5 years – and beyond. This means you need to understand which parts of your operations will be critical for your future success. When I meet with businesses at this phase of their cloud ERP journey, I always suggest they do their homework first - starting with activities like:
- Set a vision for the next 3-5 years – how do we want to operate our business and what do we want to achieve?
- Ensure executive buy-in – does everyone in the management team understand and agree on our vision?
- Define ownership – who is responsible for each function, and who provides input and makes decisions?
- Define process owners – which representatives have the best knowledge about ways of working and system needs? Will they be able to dedicate time to the ERP project?
- Create process maps – which processes require ERP support? How do we manage these today? Which processes are critical to our business operations?
- Prioritise requirements – in which areas can we use standard functionalities and where should we focus resources to be best in class?
The time you spend on doing this homework will pay off later in your cloud ERP transition. For example, a retail chain took six months to map out its processes and define ownership before selecting an ERP system. By doing so, they avoided costly mid-project changes and ensured all stakeholders were aligned from the start, resulting in a smooth cloud ERP implementation.
Conduct a gap analysis: Focus on standard cloud ERP functionality
When moving to a cloud ERP you will want to use as much standard functionality as possible. This way, you’ll get direct access to automatic upgrades, bug fixes and new features. As soon as you start customising, things can get complicated, and your ERP will be less scalable. With that said, there may be areas critical to your business that will need special treatment. A gap analysis will help you determine where to focus your efforts.
Start with an application map of what technology you have in place today, including integrations between systems. Then identify your master data, different data sources and if any data cleaning is needed before moving to a new cloud ERP. Clearly define ownership of systems and data to ensure the right people are involved to give input and make decisions.
Look at your process map from the homework above. Which of these processes can be supported with standard functionality in the cloud ERP? For most businesses, things like managing payroll and vendors are fully acceptable with standard functionality. But if a specific production process is core to gaining a competitive edge, then that may be an area where you should engage expert resources to investigate customisations or best of breed add-on solutions.
Launch an MVP version of your cloud ERP
Because a cloud ERP is a solution you’ll adjust, improve and add to over time you don’t need to get everything completely right at the first go-live. Instead, I encourage businesses to focus on an MVP (Minimum Viable Product) version of the cloud ERP to get started quickly. Then, define a backlog with new or optimised functionality for continuous improvements. It’s more important to start your digital transformation journey than to get every requirement covered in the first iteration. In fact, it’s often when people start using the system that they realise what functionality they need, how to set up configurations to best support daily operations and identify processes with automation opportunities.
For example, a manufacturing company moving to a cloud ERP initially focused on finance and procurement. But after going live, they expanded the ERP support to production planning and inventory management. Their journey didn’t end at go-live – it evolved as they identified new opportunities for efficiency.
Defining an MVP version is often harder than it sounds. This includes making some tough prioritisations and placing all the “nice-to-have” requirements in the backlog for future development. If you have followed the tips above – agreeing on a clear vision, gaining organisation wide buy-in and conducting the gap analysis – you should have a good view and consensus of what that MVP version means for your business.
Ensure a long-term budget
Don’t spend the entire budget on the first cloud ERP implementation. Instead, ensure there are earmarked funds every year to manage ongoing development and improvements. Create a backlog of requirements, work with agile principles to prioritise improvements and keep developing at a steady pace. This is how you’ll get the most business value out of your cloud ERP.
Plus, this way of working will help you involve more people within the organisation to contribute to the development of the ERP. With low-code functionality and user-friendly configuration capabilities, business users can drive improvements of the system without the support of IT resources or consultants.
Author: Henrik Leffler, Digital Advisor & Digital Transformation Lead
Are you considering moving to a cloud ERP? Contact us to discuss how Columbus can support your transformation journey.
