Moving to cloud ERP-as-a-service

If there’s one thing the COVID-19 pandemic has taught business executives, it’s that agility is everything. Pivot has become the watch word as leaders work to keep up with technology during a seemingly ever-evolving period.

Cloud-enabled enterprise resource planning (ERP) can provide the foundation and the power needed for companies to keep up with the complexities of fast-moving technological change without taking on a lot of technical debt. Sound too good to be true? ERP and agile doesn’t have to be an oxymoron, and that’s where cloud ERP-as-a-service comes in—a subscription-based, highly pre-configured solution to ERP-enabled transformation. Reality is, companies without a modern finance platform may struggle to maintain a laser focus on growth, and this is especially true for mid-market companies.

Here’s how it works

ERP-as-a-service offers flexibility and scalability in a single, predictable managed services contract. It’s a model that allows leaders to focus less on core data services and cloud infrastructure (i.e., processes and systems that aren’t competitive differentiators for most companies) and more on what matters most to their business today—and well into the future.

The model offers accurate and granular data and information that is critical to generating actionable insights and informed operations. Legacy systems don’t have the ability to capture the robust information that’s a key asset in the differentiation and performance needed to maintain a competitive advantage. ERP-as-a-service fills this essential need.

ERP-as-a-service offers customizable innovation on demand that can help organizations get where they want to be faster and more efficiently, while costing less than building systems internally.

Even more so, ERP-as-a-service can advance an approach that enables finance teams to reach high levels of flexibility, agility and automation in order to support enterprise strategy. It’s a shift to paying for outcomes over activity and a move from a “function of activities” to a “dynamic capability” where finance can give stakeholders information in the moment, accelerating growth potential and innovative revenue-generating ideation.

Overcoming obstacles

As with any business transformation there are real and perceived obstacles to ERP-as-a-service, but they are not insurmountable. And with much of the business world in transition, now is a favorable time to embrace the possibilities.

“My business is different.” The reality is cloud provides standardization, and that’s not a negative as some may perceive it. In fact, through our extensive experience working across sectors, we’ve found that roughly 85% of processes are the same across companies. This means that for 85% of processes, adopting best practices is quite practical and useful. The other 15% of processes can and should be customized to help drive business value based on an organization’s unique strategy and differentiation. To develop the methodology on this formula for your organization, get everyone, starting with business and IT leaders, on the same page, with an understanding of business strategy and the role of technology in advancing that strategy.

“ERP isn’t the priority this year.” There will always be competing forces for budget and resources but consider that you can’t afford not to move on ERP transformation. If the foundation of your business infrastructure isn’t updated, it could be an inhibitor to growth as new projects can fail to integrate with expensive legacy systems that are falling obsolete or are no longer supported. Specifically, the potential value of other digital or cloud solutions an organization is looking to employ are eroded if the right ERP doesn’t exist.

“We’ve invested so much in our on-premises solution.” ERP-as-a-service is both revenue-generating and cost-saving. Wall Street perks up to the first. Legacy systems often can't capture the data needed for strategic insights and, even it can reach that level of granularity, it usually takes a long time to compile reports. Innovation comes from insights that are immediate, so does agility and responsiveness to the market. In addition, on-premises ERP will likely not be supported forever, which increases momentum for early adopters of cloud ERP.

“We need more control.” ERP-as-a-service doesn’t take control of the essentials of your business. It controls the nuts and bolts leading to more business value. It can enable you to spend less time figuring out why the data in System A is not congruent with the data in System B (and then reconciling those reports), and more time focused on figuring out the root cause of business variance (e.g., Why did actual revenue not meet projections?).

“Our people won’t want to change.” Think of this as a retention issue that allows you to build a workforce for the future. That workforce wants to interact with systems at work like they do in their personal lives from their mobile devices. They want modern experiences and higher value tasks. They don’t want to reconcile reports when a machine can do the heavy lifting. If you want to hire and keep the best people, you need to offer different ways of working.

Delivering tangible benefits

ERP-as-a-service is designed to deliver benefits your organization can realize sooner rather than later:

• Innovation: New information sparks new ideas. ERP-as-a-service provides the foundation for innovation that will keep organizations at the forefront of the latest technology, allowing leaders to focus on what matters to their business—products, services and growth.
• Faster, data-backed decisions: The information a business needs can be accessed anytime, anyplace and by anyone in the organization with clearance.
• Automation: The model enables the workforce of the future, employees who add business value by working with technology to get more done.
• Time to value: Upfront development and the huge associated costs are gone. Instead, subscriptions allow costs to be spread out over time. And a home in the cloud means the migration to new systems and subsequent scalability happen faster. Returns are greater and are recognized more quickly.

Bottom line

ERP-as-a-service is an opportunity to move to a modern finance system more seamlessly, while potentially reducing costs, technical debt, and the technical management and confusion of implementation for busy executives and their teams. Companies can now better focus on the systems and processes that are market differentiators for them—and deliver growth.

Authors

Matt Schwenderman
Principal
Deloitte Consulting LLP

Chai Desai
Senior Manager
Deloitte Consulting LLP