1. The Journey Is Inevitable.

Legacy, on-prem solutions are going away (usually highly customized)

Legacy, on-premises ERP systems have long been the backbone of many organizations, supporting critical business processes and holding vast amounts of data. However, these systems are often heavily customized to meet specific business needs, making them complex, costly to maintain, and difficult to upgrade.

As technology advances and business requirements evolve, the limitations of these legacy systems become more apparent. They struggle to keep pace with the demands for real-time data, mobile access, and seamless integration with other applications. Vendors are also shifting their focus and investments towards cloud-based offerings, making it harder to justify staying on outdated, unsupported platforms.

The writing is on the wall: legacy, on-prem ERP solutions are gradually going away. Organizations that remain tied to these systems risk falling behind their competitors in terms of agility, innovation, and cost-efficiency. The journey to the cloud is no longer a question of "if," but rather "when" and "how." Embracing this inevitable shift and proactively planning for the transition is crucial for organizations to stay relevant and competitive in the digital age.

Cloud offerings will be the  new norm (highly standardized)

Cloud ERP systems offer a highly standardized approach to business processes and best practices, leveraging the power of cloud computing to deliver scalability, flexibility, and cost-efficiency.

One of the key advantages of cloud ERP is the ability to tap into a vendor's economies of scale and continuous innovation. Instead of maintaining custom, in-house solutions, organizations can benefit from the collective knowledge and experience of the vendor's customer base. Cloud ERP providers continuously gather feedback, identify common requirements, and incorporate them into the core product, ensuring that all customers have access to a robust, up-to-date feature set.

This standardization also simplifies the implementation and maintenance process. With a more streamlined, out-of-the-box approach, organizations can avoid the complexities and costs associated with extensive customizations. Regular updates and enhancements are managed by the vendor, freeing up internal IT resources to focus on more strategic initiatives.

Cloud finance applications and microservices will dominate

Cloud-based financial management systems offer a modern, agile approach to managing financial processes, from accounting and budgeting to reporting and analysis. These applications are designed to be modular and flexible, allowing organizations to adopt best-of-breed solutions that fit their specific needs. Instead of being tied to a monolithic, all-in-one system, finance teams can choose from a range of specialized applications and microservices that integrate seamlessly with each other and with the wider cloud ecosystem.

This modular approach enables finance teams to be more agile and responsive to changing business requirements. They can quickly adopt new features and capabilities as they become available, without the need for complex, time-consuming upgrades. Microservices architecture also allows for easier scalability and customization, as specific functions can be enhanced or replaced without impacting the entire system.

Cloud finance applications also offer advanced analytics and reporting capabilities, empowering finance teams to provide real-time insights and strategic guidance to the business. With access to vast amounts of data and powerful analytics tools, finance can shift from a transactional focus to a more strategic, value-added role.

2. It’s Not a Migration. It’s a Re-Implementation.

Treat it as a new implementation, not just a technical migration

The term "migration" implies a straightforward move from one platform to another, the reality is far more complex. Treat the journey to the cloud as a reimplementation.

Cloud ERP systems are built on fundamentally different architectures and design principles than traditional on-prem solutions. They offer a new set of capabilities, best practices, and user experiences that require a fresh approach to implementation. Attempting to simply "lift and shift" existing processes and customizations to the cloud is a recipe for failure.

Instead, organizations should treat the move to cloud ERP as an opportunity to redesign their business processes, optimize their operations, and adopt industry best practices. This requires a thorough analysis of current processes, pain points, and future requirements, followed by a strategic mapping of these needs to the capabilities of the cloud solution.

By treating the cloud ERP project as a new implementation, organizations can avoid the pitfalls of trying to force-fit legacy processes into a new system. This fresh implementation approach also allows organizations to engage key stakeholders, including end-users, in the design and testing process.

Reevaluate business processes and adapt to cloud best practices

A successful move to cloud ERP requires a thorough reevaluation of existing business processes and a willingness to adapt to the best practices embedded in the cloud solution. Legacy ERP systems often contain numerous customizations and workarounds that have built up over years of use, reflecting outdated or inefficient ways of working.

When implementing a cloud ERP system, organizations have the opportunity to hit the reset button on these processes. Instead of simply replicating existing workflows in the new system, they should take a step back and critically assess the effectiveness and necessity of each process.

This reevaluation should be guided by the best practices and industry standards that are built into the cloud solution. Cloud ERP vendors invest heavily in researching, developing, and refining these best practices based on the collective experience of their customer base. By adopting these proven processes, organizations can streamline their operations, reduce complexity, and drive greater efficiency and consistency across the business.

Of course, adapting to these best practices requires a willingness to change and a shift in mindset. Employees may be resistant to new ways of working, especially if they are accustomed to the quirks and workarounds of the legacy system. Overcoming this resistance requires strong change management and communication efforts, as well as a clear articulation of the benefits of the new processes.

Invest in change management and user training for the new system

Implementing a new cloud ERP system represents a significant change for an organization, and the success of the project depends heavily on effective change management and user training. Moving to a new system involves not just technical changes, but also shifts in business processes, roles, and responsibilities.

To ensure a smooth transition and high user adoption, organizations must invest in a robust change management program. This should include clear communication about the reasons for the change, the benefits of the new system, and the timeline and milestones of the project. Regular updates and opportunities for feedback can help build trust and engagement among employees.

Change management efforts should also focus on identifying and addressing potential resistance or concerns from users. This may involve targeted outreach to key stakeholders, such as business process owners or opinion leaders, to gain their buy-in and support. Celebrating early wins and sharing success stories can help build momentum and positive sentiment around the change.

User training is another critical component of a successful cloud ERP implementation. Employees need to be equipped with the knowledge and skills to effectively use the new system in their day-to-day work. Training should be role-specific and tailored to the needs of different user groups, from casual users to power users and administrators.

A variety of training methods can be used, including instructor-led sessions, online courses, video tutorials, and hands-on simulations. Training should be delivered in a phased approach, with opportunities for reinforcement and ongoing support as users become more familiar with the system.

3. Understand Product Maturity at a Granular Level.

Research the maturity and roadmap of specific modules and features

When considering a cloud ERP solution, it's important to look beyond the high-level capabilities and assess the maturity and roadmap of specific modules and features that are critical to your business. Not all areas of a cloud ERP system are equally developed or suitable for every organization's needs.

Conducting thorough research into the maturity of individual modules, such as financials, procurement, inventory management, or project management, can help you make an informed decision about the fit and readiness of the solution. This research should involve a combination of vendor documentation, customer references, industry analyst reports, and hands-on testing or demos.

Pay close attention to the depth and breadth of functionality offered in each module. Look for evidence of successful implementations and positive customer feedback in your industry or for similar use cases. Consider the vendor's track record of delivering on their product roadmap and commitments.

It's also important to understand the vendor's future plans and investments for specific features and capabilities. A mature module today may become outdated if the vendor shifts their focus or deprioritizes enhancements in that area. On the other hand, a less mature module may be a good fit if it aligns with your long-term needs and the vendor has a clear roadmap for improvement.

In addition to functional maturity, consider the technical maturity and scalability of the cloud ERP system. Evaluate the vendor's infrastructure, security measures, performance metrics, and uptime guarantees. Assess their ability to handle your organization's data volumes, transaction processing needs, and peak usage periods.

Identify potential gaps or limitations compared to on-prem functionality

When evaluating a cloud ERP solution, it's crucial to identify any potential gaps or limitations in functionality compared to your current on-prem system. While cloud ERP offerings have made significant advances in recent years, there may still be areas where they don't fully match the depth or specificity of legacy systems.

Start by documenting the key features and capabilities of your existing on-prem ERP system, especially those that are heavily used or critical to your business processes. Then, map these features to the corresponding areas of the cloud ERP solution you are considering.

Look for any gaps or discrepancies in functionality, such as missing features, limited configurability, or reduced granularity in data capture or reporting. Engage with the vendor to understand if and how these gaps can be addressed, either through built-in options, workarounds, or future enhancements.

Keep in mind that some gaps may be intentional, as cloud ERP systems often streamline and standardize processes to drive simplicity and efficiency. What may seem like a limitation at first could actually be an opportunity to modernize and optimize your business practices.

However, if you identify critical gaps that cannot be adequately addressed by the cloud solution, you may need to consider alternative approaches. This could involve retaining certain on-prem modules or integrating with third-party applications to fill specific needs.

It's also important to assess any potential limitations in terms of customization, integration, or data migration. Cloud ERP systems often have more structured and controlled environments than on-prem systems, which can impact your ability to tailor the solution to your unique requirements.

Plan for workarounds or phased implementations based on product maturity

Once you have assessed the maturity and gaps of a cloud ERP solution, you can develop a plan to address any limitations or areas of concern. This may involve implementing workarounds, phasing your implementation, or adjusting your business processes to align with the capabilities of the system.

If certain modules or features are not yet fully mature or suitable for your needs, consider whether there are acceptable workarounds or alternative approaches. This could involve using a combination of cloud and on-prem solutions, integrating with third-party applications, or manually processing certain tasks outside of the system.

While workarounds can help bridge gaps in the short term, they should be carefully evaluated for their long-term sustainability and impact on user experience and productivity. Look for opportunities to automate or streamline these workarounds over time, or engage with the vendor to influence their product roadmap and prioritize the enhancements you need.

Another approach is to plan for a phased implementation based on the maturity of different modules or features. Begin by implementing the areas that are most critical and well-developed, and gradually roll out additional capabilities as they become more mature or as your organization becomes ready to adopt them.

A phased approach can help mitigate risk and allow for a more gradual learning curve and change management process. It also provides an opportunity to gather user feedback and make adjustments before rolling out the system more broadly.

However, phased implementations also require careful planning and coordination to ensure data integrity, process continuity, and user acceptance. It's important to clearly define the scope and timeline of each phase, as well as the dependencies and integration points between different modules and systems.

4. Don’t Underestimate the Value or Complexity of Customizations.

Carefully assess the need and benefit of each customization

One of the key advantages of cloud ERP systems is their standardized, best-practice approach to business processes. However, many organizations still have unique requirements that may necessitate some level of customization. When considering customizations, it's important to carefully assess the need and benefit of each one.

Start by evaluating whether a proposed customization is truly essential to your business operations or competitive differentiation. Challenge assumptions and critically examine whether the customization aligns with your overall business strategy and goals.

Consider whether the customization addresses a short-term need or a long-term requirement. Is it driven by a specific pain point or inefficiency in your current processes, or is it a "nice-to-have" feature that may not deliver significant value?

Engage with key stakeholders and end-users to gather their input and validate the need for the customization. Look for opportunities to streamline or standardize processes before resorting to customization. Explore whether the desired functionality can be achieved through configuration, workarounds, or third-party applications that integrate with the cloud ERP system.

When assessing the benefit of a customization, consider both the tangible and intangible impacts. Quantify the potential time and cost savings, productivity gains, or revenue improvements that the customization could deliver. Also consider the user experience, employee satisfaction, and customer service benefits that may be harder to measure but equally important.

Keep in mind that customizations can also introduce complexities and risks to your cloud ERP implementation. They may require additional development, testing, and maintenance efforts, and can impact your ability to take advantage of future updates and enhancements to the standard system.

Budget additional time and resources for developing and testing customizations

If you do decide to proceed with customizations for your cloud ERP system, it's essential to budget additional time and resources for their development and testing. Customizations can be complex and time-consuming to build, and often require specialized skills and expertise that may not be readily available within your organization.

Start by clearly defining the scope and requirements of each customization, including the business processes, data flows, and user interfaces involved. Break down the development work into smaller, manageable tasks and milestones, and identify the dependencies and integration points with the standard cloud ERP system.

Engage with experienced developers or implementation partners who have a deep understanding of the cloud ERP platform and customization best practices. Ensure that they follow a structured development methodology, with regular code reviews, quality assurance checks, and documentation.

Allow sufficient time for thorough testing and validation of the customizations, both in isolation and as part of the end-to-end business processes. Test for functional correctness, data integrity, performance, security, and user acceptance. Involve key stakeholders and end-users in the testing process to ensure that the customizations meet their needs and expectations.

Be prepared for multiple iterations of development and testing, as issues or gaps may be identified that require rework or refinement. Plan for adequate buffer time in your project schedule to accommodate these iterations and ensure that the customizations are fully validated before deploying to production.

Consider the ongoing maintenance and support requirements for the customizations, and budget for the necessary resources and skills to keep them up-to-date and compatible with future system upgrades and enhancements. Establish clear ownership and governance processes for managing customizations over the long term.

Finally, ensure that you have a clear and compelling business case for each customization, with a quantified return on investment that justifies the additional time and resources required. Regularly review and reassess the value and necessity of customizations as your business needs and the cloud ERP system capabilities evolve over time.

5. Don’t Be Afraid of a Coexistence Strategy.

Consider a phased approach with temporary coexistence of cloud and on-prem

When transitioning from an on-prem ERP system to a cloud-based solution, a phased approach that allows for temporary coexistence can be a smart and low-risk strategy. This involves running both the old and new systems in parallel for a period of time, gradually migrating data, processes, and users to the cloud while maintaining the legacy system as a backup.

To successfully implement this approach, it's crucial to identify and plan for the data and process integration points between the two systems. Start by conducting a thorough analysis of your current business processes and data structures, mapping out the flow of data and transactions across the systems, and defining clear rules and procedures for ensuring consistency and accuracy.

Prioritize business processes and data entities that are relatively self-contained, have clean and well-structured data, and involve users who are ready to adopt the new system. Plan for a series of migration waves, each focusing on a specific set of processes, data, and users, with clear success criteria and cutover points.

During the coexistence period, maintain tight data and process integration between the cloud and on-prem systems. Establish clear data ownership and governance policies, and implement robust security and access controls. Choose the right integration architecture and tools, such as APIs, middleware, or data replication, to ensure seamless connectivity and data synchronization.

Monitor the performance and user adoption of the cloud system closely, gathering feedback and metrics to identify areas for improvement. Use this information to refine the migration plan and make necessary adjustments before moving on to the next phase.

Plan for eventual retirement of legacy systems as cloud capabilities expand

While a coexistence strategy can be a valuable approach for transitioning to a cloud ERP system, it's important to keep in mind that it is ultimately a temporary state. The long-term goal should be to fully migrate to the cloud and retire the legacy on-prem systems in a planned and controlled manner.

As you progress through the coexistence period, continuously assess the capabilities and maturity of the cloud ERP system. Look for opportunities to expand its usage and functionality, and identify any remaining gaps or limitations that are preventing a full migration.

Work closely with the cloud ERP vendor to understand their product roadmap and planned enhancements. Provide feedback on your specific needs and requirements, and advocate for the features and capabilities that are critical for your business. Consider participating in beta programs or early adopter initiatives to gain access to new functionality and influence the direction of the product.

As the cloud ERP system evolves and matures, gradually migrate more processes and data from the legacy on-prem system. Continuously monitor and assess the performance, reliability, and user acceptance of the cloud system, and make any necessary adjustments or optimizations.

In parallel, develop a clear plan for the eventual retirement of the legacy system. This should include a timeline for decommissioning specific modules, databases, and interfaces, as well as a communication and change management strategy for impacted users and stakeholders.

Consider the data archival and retention requirements for the legacy system, and ensure that any necessary historical data is properly migrated or preserved in the cloud system or a separate data warehouse. Plan for the shutdown and disposal of any hardware or infrastructure associated with the legacy system, and ensure that all necessary security and compliance requirements are met.

Throughout the retirement process, maintain a strong focus on user training and support. Ensure that users are prepared and equipped to fully adopt the cloud ERP system, and that they have the necessary skills and resources to perform their job functions effectively.

Finally, celebrate the successful retirement of the legacy system and the full migration to the cloud. Recognize the hard work and dedication of the project team and stakeholders, and communicate the benefits and value that the cloud ERP system will bring to the organization going forward.