As recently as a couple years ago, many, if not most, of the enterprise resource planning customers I called on were very much in an “on-premise” mindset. The conventional wisdom, reinforced over decades of experience, was that it was less risky, more agile, more competitive, and less expensive to keep everything within the four walls.
But the popularity of cloud computing has quickly changed the landscape. Now, most longtime customers to whom I speak assume – and rightly so – that their next ERP upgrade should bring them to the cloud. The former mindset was that perpetual software ownership, and its customizations, modifications and ongoing upgrade cycles was preferable. The mindset now is that the hyper-competitive markets in which these customers operate demand three things – constant attention to core competencies; more and better data; and the ability to scale, pivot and outflank the competition.
Gartner estimates that by next year, six in 10 manufacturers will be implementing composable, or highly adaptive, ERP technologies, and that “organizations that have successfully renovated their ERP platforms will achieve at least a 40% improvement in IT agility to deliver business outcomes.”
It should be self-evident that manufacturing core competencies do not include software support and operational report generation. And yet for decades manufacturers used their software systems simply to generate the decision-making data they needed. Such data was accurate, as far as it went, but it provided a static snapshot that hid key context and became outdated shortly after reports printed.
Legacy software systems served their purpose well as a repository of key enterprise data, but still presented an ongoing struggle to truly function as systems of engagement. And in today’s environment – with supply chain flux, inventory and planning challenges, labor recruitment and retention issues, and competitive pressures emerging all the time – no one can afford to take their eyes off the ball.
Which brings us back to the reasons our customers’ mindset has shifted. There are several advantages of multi-tenant software as a service, or SaaS ERP solutions over perpetual, on-premise ERP. But here are three of the most important:
That was then … Having an on-site server room seemed to make sense because it could be protected. But we’ve all heard stories of fires destroying non-backed-up information, or hackers using ransomware to extract a payment.
This is now… Running ERP on a secure multi-tenant platform takes the risk of disaster recovery or ransomware attacks off the table. I advise my customers to carefully consider whether their firewall / lock-and-key system is more impervious to attack than a market leader like Amazon Web Services, which, in addition to hosting Infor’s solutions, also is the platform of choice for BMW, Capital One, Netflix, Twitter and many of the largest enterprises in the world. Their security protocols and army of security professionals simply cannot be duplicated.
That was then… The old-school belief among executives, understandable for decades, was that business software should adapt to their respective business processes; not that individual business processes should adapt to software. This is the reason so many legacy systems were heavily customized. The downside of these customizations is that they often left customers with a choice of re-investing in implementation work or, worse, becoming version locked.
This is now… Market leaders like Infor have built industry best practices and last-mile functionality, right down to micro-vertical segments, into their core ERP software. For most of our customers, 90 percent of specific business requirements are enabled either out of the box or with simple application layer customizations. What’s left can be covered using other readily available programming tools. Going forward, updates reflecting industry best practices are pushed every month to keep manufacturers competitive. You cannot get version locked. What’s more, edge applications supporting other business needs, such as warehouse or expense management, can easily be integrated thanks to the dynamic architecture of composable systems.
That was then… Once a perpetual ERP system was paid for, an annual maintenance fee enabled companies to access patches and download subsequent versions. But servers age, upgrades need to be completed, systems need ongoing troubleshooting, and recurring capital expenditures abound.
This is now… Maintenance fees are replaced by subscription costs. Server and infrastructure fees go away. And the upgrade in which you invest now never has to be done again, because advancements are being refined and pushed out every month. This results in a lower total cost of ownership over the short term, and even more so in the long term.
As you look to make an informed decision about your manufacturing software upgrade, be sure to factor in the advantages of collaborating with a recognized leader in cloud ERP. Making ERP changes in the coming years will become much simpler thanks to cloud deployments, but it’s still not a project most organizations wish to repeat.
Visit www.godlan.com or further information or call 586.464.4400 to speak with us about beginning the process today.