How to Avoid Failure in Cloud ERP Implementation
Cloud ERP provides an integrated business system environment via a browser. It is a system with many advantages and mainly for small and medium-sized enterprises, but it is also true that there are many cases where implementation fails. One of the reasons is that we couldn't accurately capture the benefits of cloud ERP and couldn't operate it properly.
In the future, many companies that want to set up an integrated environment with ERP will probably consider implementing it in the cloud.
In this article, I will introduce the benefits of cloud ERP, which are often misunderstood, and the points of cloud ERP implementation in order to avoid mistakes in cloud ERP implementation.
Table of Contents:
- Benefits of Cloud ERP that you don't want to get wrong
- How to avoid mistakes in implementing Cloud ERP
Benefits of cloud ERP you don't want to get wrong
Let's start with the benefits of cloud ERP.
1. Server procurement, quick implementation without infrastructure development
Cloud ERP is a system used via a browser, so, of course, there is no need for initial preparation for the implementation as in the packaged ERP such as server procurement and infrastructure development. All you need is a computer and an Internet connection. As a result, the implementation is quick, and depending on the scale and environment, cutover may take as little as a month.
However, initial parameter settings and account settings are required depending on the business. Therefore, it is not always possible to go into full-scale operation in about a month.
2. Fewer tasks related to system operation and increased productivity
The ERP vendor that provides the system that operates the cloud ERP without servers or infrastructure at hand. So as a user company, you can continue to use cloud ERP with little to do with system operation. However, it is necessary to fully evaluate the reliability of the ERP vendor before implementing the system since it is not possible to respond to failures on your own.
3. The system is always up-to-date without having to deal with version upgrades every time
Upgrading is a very burdensome task in packaged ERP. To begin with, you are building a large-scale system environment, and you may have to stop operations while upgrading. In addition, the cost of upgrading the system is high, making it a financial burden.
In contrast, cloud ERP always provides the latest system, and there is no need to deal with version upgrades separately.
4. Easy access from outside the company via browser
Cloud ERP is a system used via a browser, so you can access the system as long as you have an Internet environment wherever you are outside the company. For example, it is possible to check the real-time inventory status from the sales company and respond to the delivery date.
You can also access package ERP from outside the company, but it is necessary to build a VPN (Virtual Private Network) or similar.
5. Fixed monthly cost makes budget planning easy
The basic fee structure for cloud ERP is to pay a fixed monthly fee. The fee often varies depending on the number of users and can be increased or decreased at will. Since the monthly expenditure for cloud ERP is clear, it has the advantage of making budget planning easier than with packaged ERP operations.
However, it does not necessarily mean that the cost savings will be better than with packaged products. Therefore, it is important to note that if you only aim to reduce costs, you will not be able to take advantage of the benefits of cloud ERP, which will lead to different results from your expectations and increase the possibility of a failed implementation.
6. BCP (Business Continuity Plan) stands up in the event of natural disasters
It is essential to formulate BCPs in the event of a disaster.
If the data center that operates the business system is damaged, the damage will be enormous. It is necessary to secure a communication network such as a VPN so you can use it from outside the office. In this regard, cloud ERP is usually operated in a robust data center and is geographically redundant. And since you can use the system via a browser, it is naturally a BCP-compliant environment.
7. Robust security to prevent information leakage by third parties
Many people are concerned about security when implementing cloud ERP. However, it may actually be surprising, but it seems that there are many cases where security is strengthened. In the first place, it costs a lot of money and effort for a company to take its own security measures as robust as those of cloud vendors. Cloud ERP provides robust security at a lower cost and effort.
8. Visualize and control most of the management resources
Cloud ERP is a system for the centralized management of information such as people, goods, and money. The information generated by each business system is managed in a single database, allowing you to keep track of any information you want at any time. If you succeed in visualizing these business resources, you will have more control over your management than ever before.
However, if you want to use the information to do something like "big data analysis," you need a separate business intelligence (BI) tool.
9. Eliminate complex double work and improve the operational efficiency of the entire organization
These business systems, such as sales support systems, customer management systems, human resources management systems, and financial accounting systems, usually operate in a divided environment. Therefore, there was no connection between business systems, and the same data entered into different business systems. On the other hand, cloud ERP connects these data into one single database, significantly reducing the time and effort such as double work where data is naturally shared.
10. Management reports to speed up decision making
Management reports are a function that allows managers to obtain the information they want in real-time to make decisions. The data can be viewed on well-designed screens, allowing you to judge the business situation intuitively and speed up decision-making.
How to Avoid Failure in Cloud ERP Implementation
Based on the benefits of cloud ERP introduced so far, let's consider the key points to avoid mistakes in the implementation. The first thing to do is to clarify the purpose of the deployment. The cloud ERP that you should implement is quite different depending on whether the objective of the cloud ERP is clear or not.
Then, clearly define the functional requirements that are unique to your company. In that case, you do not promote information systems or implementation personnel at their own initiative, but you also make it necessary to define them by involving the user department. In reality, the users, who are most in contact with cloud ERP, are sales and accounting departments. So if you define functional requirements at the own time of information systems and implementation personnel, you will implement cloud ERP that is not in the field.
The last thing is to embrace innovation through cloud ERP implementation. Unlike packaged ERPs, cloud ERPs are complete from the start, so the functions are fixed to some extent. Although there are some parts that can be customized, it will undermine the benefits of cloud ERP. Therefore, it is necessary to adapt the business to the system, so to speak, which creates innovation in the organization. Whether or not you can accept this will make a big difference in the success or failure of the implementation.
If you are planning to implement cloud ERP, I hope you will refer to the contents of this article and aim for a failure-free implementation.