Don’t bring your data silos into the ERP cloud

Jon Roskill Profile picture for user jon.roskill April 18, 2017
Moving ERP to the cloud might sound like a great idea - but if you're not careful, you'll wind up in data silo land. In his diginomica debut, Acumatica CEO Jon Roskill advises readers on how to avoid the ERP cloud silo.

So, you’ve decided to move many of your most important business processes to the cloud.

Are you planning to move your data silos to the cloud, too?

Most IT types would immediately say, “No way!” But unless your cloud technology plan includes a specific strategy for embracing today’s multi-cloud world, your move to the cloud may just perpetuate one of the costliest and most frustrating problems businesses have faced over the past 25 years.

A cloud-based data silo is still a silo

There’s no doubt that moving to the cloud can save you money. Nucleus Research estimates that migrating most of your systems to the cloud could save you more than 20% in IT spending as a percentage of revenue. They also report that cloud application projects deliver 2.1 times the relative ROI of on-premise projects.

But even as your cloud applications are saving you money, they may be trapping your critical business data inside data silos. And without the benefit of a “single source of truth,” a huge component of cloud business is squandered.

For years, most companies have used a wide variety of on-premises applications to run their businesses. These applications generally don’t talk to each other unless you build (or purchase) integrations between them. That’s why employees have to waste so many hours exporting data from one system and uploading it to another. And that’s why business processes that should be seamless are often fraught with error-prone manual steps.

Cloud solutions, as promising as they are, also don’t talk to each other unless you tell them to. To meet your various business needs, you’ll probably need to subscribe to a wide range of cloud solutions. You’ll be doing business not in one “cloud,” but rather, in what we call a multi-cloud environment.

Before you cry “buzzword alert,” just be glad I didn’t use the phrase “Hyper Converged Hybrid Cloud.” Though some folks debate the exact usage of “hybrid cloud” versus “multi-cloud,” these terms emerged for a very important reason: to help customers get a handle on their cloud choices.

The origins of the term multi-cloud begin with the practice of using more than one Infrastructure as a Service (IaaS) provider. Wikipedia defines multi-cloud as:

For example, an enterprise may concurrently use separate cloud providers for infrastructure (IaaS) and software (SaaS) services, or use multiple infrastructure (IaaS) providers. In the latter case, they may use different infrastructure providers for different workloads.

Wikipedia also provides a baseline rationale for going multi-cloud:

There are a number of reasons for deploying a multi-cloud architecture, including reducing reliance on any single vendor, increasing flexibility through choice, and mitigating against disasters.

Now, the good news is that your IT team won’t actually have to build and maintain integrations between all your cloud systems—cloud vendors usually provide connections to other popular cloud solutions. But simply connecting systems one at a time isn’t a plan—it’s a short-term survival strategy.

Before you move a significant portion of your business to the cloud, take the time to create a master integration plan. Otherwise, you’ll simply be building new data siloes in the cloud.

Finding a hub for your cloud systems

At Acumatica, we encourage customers to think about multi-cloud in a SaaS context. Today, your company may already have its hands full managing cloud services from vendors in CRM, HR, and procurement – and that’s just the beginning of where we’re headed.

Now, what would happen if you sat down with a blank sheet of paper, drew boxes for all the cloud applications your company plans to use, and then drew lines between them to represent the connections you’ll need to make?

If you’re really serious about the cloud, you’d probably end up with spaghetti.

Fortunately, there’s a better way to integrate your cloud systems: establish a hub system, and then connect all your other systems to it.

At Acumatica, we advocate using a cloud ERP platform your hub. When you consider that your ERP system is probably your most critical software solution, it makes perfect sense. After all, you’ve surely noticed that when your ERP goes down, your business pretty much slows to a crawl.

When companies decide to use a cloud ERP system as their multi-cloud hub, that has big implications for how an ERP system should be evaluated.

The ideal cloud ERP system is one that’s flexible enough to connect with a wide range of cloud services – not just those of your ERP cloud vendor. It should give you a complete, centralized view of your business – easily consumed on mobile devices. Of course, your cloud system should also be able to talk to your on-premises systems, which can remain a part of your operations even in a multi-cloud world.

Why paying by the user kills growth

There’s one more key trait you should look for in your cloud ERP system: a modern licensing policy.

In the old days, you paid for your software based on the number of users who were accessing the system. In our new world, this model doesn’t work. Your employees will need to access your ERP from a variety of different devices without incurring extra fees. And you may need to provide system access to various collaborators, including vendors, partners, and even customers. And that’s just the beginning.

Think about all the connections your cloud ERP system of the future will need to make with machines, sensors and all the other devices we call the “Internet of Things.” In that context, user-based licensing seems like an antiquated approach.

During vendor evaluation, be prepared to ask tough questions about how you might be charged for various forms of data consumption, including APIs. Listen carefully to how those questions are answered. Ask about policies on “indirect usage,” and how you might be audited for that usage later. The answers you get to those questions will give you a clear signal on which companies are aligned with how your data will move between clouds – as you eradicate those data silos once and for all.

Why should vendors charge you by the head? That’s like penalizing you for growing. Forward-thinking cloud ERP vendors will charge you by the bandwidth you use, giving you the freedom to add and remove users as you see fit. (Example: here’s how Acumatica handles usage licensing).

To learn more on how we view modern ERP at Acumatica, check out our webinar replay, Get to the Cloud with Modern ERP, with Ali Jani, Vice President, Partner Strategy, Enablement, and Services.

Call it multi-cloud or whatever you want, but never lose sight of your goal: a platform where you can connect easily with a wide variety of cloud and on-premises systems. That should put you firmly in control, even as your business continues to grow.

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