The three Ts of ERP Cloud transformations

In recent years, Enterprise Resource Planning (ERP) systems have benefitted significantly from a transition to cloud-based platforms, allowing them to become more integrated, data-driven and user-friendly than ever before.

While the case for cloud-based ERP systems is strong, the truth is that many organisations have been sluggish in transitioning away from on-premise systems. With many ERP providers ending support for legacy systems (such as SAP who will end support entirely for their ECC ERP system by 2030), transitions to cloud-based ERP systems are not a matter of “if” but “when”.

However, these transitions can be tricky if not managed correctly. Gartner estimates that between 55-75% of ERP transformations fail to meet their objectives[1], which indicates a potential lack of understanding of the intricacies of this change. This article attempts to expose these issues in three distinct categories: Task, Team and Technicalities (see Figure 1).

Figure 1. The Three T’s

Task

Task considerations relate to the actions needed to progress ERP transformations. One crucial task is clearly defining the scope of the project and identifying requirements specific to your business. While outlining every requirement at the outset may not be necessary, understanding the distinct challenges your organisation may encounter in adopting the new ERP system is essential for devising an effective implementation strategy. As project teams take decisive action, additional requirements will surface, and these should be captured to refine what the final implementation should look like. However, be cautious of an ever-changing scope. Trying to do everything may mean you end up achieving nothing, and a sure-fire way to derail transformation initiatives is by not sticking to clearly defined goals.

Further, considering the iterative nature of requirements capture, adopting an agile approach can be a powerful driver of success. Breaking down the transformation process into bitesize chunks allows for more focused problem-solving and the creation of meaningful, long-lasting change.

Be wary that the task of data migration into the new ERP system is not underestimated. Collating and cleansing data demands substantial time and effort. Don’t waste the opportunity for data improvement by merely copying from old systems as this may jeopardise the integrity of insights generated. Instead, use the transition as an opportunity to enhance data quality across the organisation.

A final consideration is the magnitude of change required for a successful ERP transformation. The change will extend far beyond being solely an IT initiative and resistance to change across the business may arise, necessitating proactive change management strategies. Recognising the wide-ranging impact and complexity of the transformation journey is crucial for navigating challenges and facilitating a smooth transition.

Team

Team considerations encompass the people-centric factors impacting the success of an ERP transformation. Take for example cultivating a collaborative mindset that fosters compromise and cooperation between the IT department and other business units. It is crucial to view the ERP adoption not merely as a system update, but as a catalyst for meaningful business change. To achieve this, hands-on engagement from everyone across the organisation is essential. Employees should not only be consulted but should also feel a sense of ownership in the transformation, which will simultaneously help to gather the unique requirements and navigate the change resistance previously discussed.

Nevertheless, even with support from employees on the ground, driving bottom-up change requires top-down buy-in. Aligning senior stakeholders with the transformation roadmap creates a shared sense of direction at the strategic level. It is vital for these stakeholders to trust and empower project teams with the autonomy to make decisions independently and act swiftly. But be aware that clear roles and accountabilities must be established before this to ensure effective collaboration and execution of projects both within and between these teams.

The people side of process is also an often-underutilised resource in ERP transformations. Consulting and engaging so called “process champions” (subject matter experts) may be overlooked, especially if processes are expected to change. But even if change is expected, actively involving individuals who are intimately familiar with current workflows, legacy ‘gotchas’ and improvement opportunities can prove invaluable.

Awareness of these team-centric factors ensures active participation, effective leadership, and the utilization of valuable domain expertise throughout these transformations.

Technicalities

These considerations encompass the often-overlooked details around the actual implementation of the system. Primary amongst these is recognising the restrictive nature of heavy customization. Unless there is a compelling reason to deviate, utilizing out-of-the-box configuration is strongly advisable. Heavy customization in Software-as-a-Service (SaaS) solutions can lead to issues with future system updates and complicate access to the data capabilities offered by the system's cloud infrastructure. The ‘vanilla’ or out-of-the-box configuration is specifically built to leverage the benefits of the ERP system and deviations from this configuration can cause complications down the road.

Additionally, proper scoping of process performance indicators is essential from the outset. These indicators will measure things like execution times and quality of outputs, which provide baselines to compare new process ‘improvements’ against. In this way, measuring the delivery of expected benefits to the appropriate areas of the company is made possible. Additionally, monitoring these indicators enables rapid corrective action if any process shortcomings materialise, ensuring that desired outcomes are achieved.

And finally, it is crucial to recognize that ERP development extends well beyond the designated project "end." As businesses grow and evolve, the chosen ERP system should be capable of accommodating these changes. Selecting an ERP that can adapt and scale alongside your organisation is the key to allowing for continuous evolution and long-term success. By bearing these technicalities in mind, organisations can navigate the intricacies of system implementation with greater foresight and effectiveness.

Conclusion

There are many intricacies to ERP transformations, in terms of task, team and technicality considerations. One should also realise that these factors are not distinct from one another. In fact, they are highly interdependent factors which influence each another and also directly affect the success of an ERP transformation. While proactive awareness and management of these considerations may not guarantee success, ignorance of them will surely guarantee failure. By categorising these intricacies into Task, Team and Technicality considerations, it is easier to keep these critical details in the front of your mind and give your organisation the best possible chance for a successful ERP transformation.

[1] Andriole, S. (2021). 3 Main Reasons Why Big Technology Projects Fail – & Why Many Companies Should Just Never Do Them. Forbes.