What are the top five cloud ERP benefits? A use case review

Profile picture for user jreed By Jon Reed August 23, 2017
Summary:
Cloud ERP projects are not miraculous cure-alls. But looking back on the last year's use cases, I see notable benefits across vendors and projects. I forced myself to pick five.

top-five-benefits
There is still considerable debate about what cloud ERP means - both from a functional scope and architectural perspective. Many vendors placed under the "cloud ERP" umbrella rarely compete against each other. Some reject or downplay the term.

As my piece on ERP buyers with Gabriel Gheorghiu shows, shows, there are reasons to consider an on-premises ERP solution, not the least of which is functionality.

Still, there are cloud ERP themes worth exploring. For my review, I will impose the following criteria:

  • Benefits must be from my use cases from the last 9 months (or so).
  • Benefits must surface across multiple use cases.
  • Some of the vendors mentioned are diginomica partners, one is not. I will keep vendor mentions to a minimum to focus on themes.

Top five cloud ERP benefits

1. Simplifying tools improves adoption - and streamlines processes. Many customers were using a collection of scattershot tools, making daily tasks complicated. Converging work onto a cloud ERP system with a practical - if not always beautiful - interface helps. From a panel of non-profit customers at Intacct Advantage, Mizmun Kusairi, Vice President, Strategy & Finance at GuideStar said:

We wanted to delay our audit and our 990 filing, because I thought our accounting and finance team needed a new solution… We were using a really outdated on-premise system that people had to take turns logging into. When someone was in it, someone else would say, “I can’t get that report to you Miz, because Terry’s using that system now"... It's just having that real-time access in a cloud-based system, accessible from everywhere. (Non-profits speak to their mission, and why cloud ERP matters).

2. A single source of truth allows for problem solving rather than spreadsheet chaos. "Single source of truth" is an exaggeration for most. Usually a couple other systems of record are still in play. But "towards a single source of truth" is still a result.

Stacey Rohrbaugh and her team at Lendkey Technologies were in their own version of spreadsheet hell. LendKey’s homegrown system had served them pretty well, but growing pains exposed the problem. Rohrbaugh:

In 2014, it just became so clunky with everything being in spreadsheets. Download this, export this, marry it all here... We started getting investors who were asking for economic loan information. “What is your acquisition cost? What is your profitability on this asset class?” We simply couldn’t do that just by tracking everything in Excel. (How LendKey created a different kind of loan business - with a cloud ERP engine).

For LendKey, an Acumatica customer, cloud ERP put them on a better path. She credits the new system with landing some big clients:

The reason we’re able to do that is we now have fancy robust reporting, and we can tell [clients] their return on acquisition. We now have all the metrics with their portfolio performance, their borrower information. I think it’s helped us in the sales process of getting future clients.

3. Platforms and apps provide a viable alternative to clunky customizations. SaaS ERP does not have to be as rigid in standardization as some think. Yes, the standardization discipline can be a good one. But for truly differentiating processes, the ability to extend on the cloud ERP platform matters (Caveat: not all cloud ERP vendors have the same level of platform commitment. Few have a true "apps ecosystem" yet).

At Sapphire Now 2017, early S/4HANA cloud customer and partner Donald Dickinson, President of Dickinson + Associates, told me they've have been able to impress customers by using the SAP Cloud Platform to differentiate:

We can also develop custom apps, maybe to handle something that’s not within the core of S/4HANA. Like you said, the whole benefit is quick time to value. That, by default, means you’re going to fit to standard. However, businesses have differentiators. (S/4HANA cloud customers emerge - a video review and analysis)

4. A modern UI is a must-have for talent - and for employee productivity. The UX bar employees are willing to put up with is gets higher each year. Blame the superior UI experience of smart phones for the unflattering contrast. As Judy Nagy, General Manager at North American Lighting, told me at Plex's PowerPlex user event, the green screens had to go:

How do you think that looks to young people who come off the street? Green screens. They’ve never seen anything like it. And I said, “This is a problem.” (From green screens to results - how North American Lighting changed supply chain planning)

Better UX leads to higher productivity:

It’s way better… Right now, it’s probably 100% better… The planners love to see the whole system. They like to see, “When did purchasing request the components? Where is it along the process? When did they arrive?” They love to see the MRP in there. They can see everything, soup to nuts, all the way through.

5. Data visibility leads to a different way of running the business. When you do cloud ERP right, the end result is increased visibility – real-time or close to it. At FinancialForce Community Live, Joe Grover, partner at LiquidHub, spoke directly to this issue:

One of the best analogies I can make relates to the finance team, and their comfort with the new system. We started building reports and dashboards fairly early in the process. Through that, we came up with some dashboards that allow our delivery leaders to run the organization, but also our executives to be able to see what’s going on in the business. Not only from today, but what’s forecasted. (Cloud ERP impact is about data visibility)

Count the CFO amongst the happy campers:

We push out three dashboards every week to our executive team that gives them utilization, and expenses, and forecasting the way our business is running. Our CFO said to me multiple times that he lives in that dashboard on a weekly basis. It’s his truth, right? His source of truth.

Douglas Caira, Vice President, WW Professional Services at Imprivata. at FinancialForce, took the data transparency theme further. The goal: put data in the hands of customers. As he told my colleague Phil Wainewright:

In the next phase of our financial reports, we’re looking to take that information and expose that to our customer base. We want it to be used as tool for sharing information back and forth with our customers, so that in a real time, they can see what we are seeing.

My take

The IT benefits of moving to the cloud weren't always emphasized by these customers. Some of them are cloud-by-default, others are case-by-case. None want the burden of administering ERP patches and upgrades. When they invest in internal IT teams, they want those teams to focus on customer-facing apps and smart product development, not ERP admin.

I didn't get into "choose a good partner" as that doesn't apply in every case here (some worked directly with the vendor), but those relationships must be chosen with care. Despite the theme of data visibility, cloud ERP vendors are in very different stages with the robustness of their analytics offerings, so that must be evaluated with rigor.

"Change management" is a theme in every single cloud ERP interview. It's not flagged here because not all customers had a culture change struggle. In some cases, employees were fed up with the old and embraced the new. Still, a good change management plan is needed, no matter how nifty the new software is.

Just because these cloud ERP benefits are possible doesn't mean they are always achievable. Execution is everything. Even these successful projects had difficult, gut check moments.

These use cases involve products that are either multi-tenant or heading in that direction, but multi-tenancy is not the religion is once was. However, for ERP customers thinking cloud, almost all of them place a priority on software they don't have to manage or upgrade, with a modern licensing plan that includes casual users and ease of data consumption, and yes, no hassles over indirect usage.

I suspect if I do this again next year, APIs and data integration across platforms will be a big theme, with external data sources factoring in. Machine learning and algorithmic talk is on the way, but not prime time in ERP use cases yet. Integration never goes away and needs to turn from a hassle to an advantage.

Cloud ERP can have integration advantages with APIs and pre-built cloud interfaces but again, a case-by-case look at vendors is needed there. For more on where ERP is going next, I recommend Brian Sommer's A new Aera for ERP in the search for productivity gains.

Updated 7am UK time, August 24 with a series of small tweaks for readability.