"The movement to cloud is an inevitable destination; this is how computing will evolve over the next several years." So said Oracle CEO Mark Hurd at Oracle OpenWorld 2017. Based on the results of new research, that inevitability is here, now.
In our first ERP Trends Report, we surveyed more than 400 finance and IT leaders. We found that 76% of respondents said they either have plans for ERP in the cloud or have made the move already. They are recognizing that waiting puts them at a disadvantage; the time to make the move is now.
The majority of respondents cited economic factors as the reason they made the leap, and it's easy to see why: Nucleus Research recently published a report that cloud delivers 3.2x the return on investment (ROI) of on-premises systems, while the total cost of ownership (TCO) is 52% lower.
But even more surprising were the benefits realized once our survey respondents got to the cloud. An astonishing 81% cited "Staying current on technology" as the main benefit of moving to cloud ERP. With a regular cadence of innovation delivered by the cloud, it is easier for companies to quickly incorporate game-changing technologies into everyday business processes - technologies like artificial intelligence, machine learning, the Internet of Things (IoT), blockchain and more. In the cloud, the risk of running their businesses on obsolete technology drops to zero. It's the last upgrade they will ever need.
"One of the key value propositions in engaging with Oracle and implementing the cloud solutions has been the value of keeping current with technology and technological developments," said Mick Murray, CFO of Blue Shield of California. "In addition to robotics, we're looking at machine learning and artificial intelligence, and how do we apply that across the enterprise."
As new capabilities are rolled out, cloud subscribers like Blue Shield can take advantage of them immediately. This gives them the agility to be both responsive and predictive. Uncertainty is the new normal in business and managing amid uncertainty is a must. It's no longer enough to be quick-to-change; competitive companies must also have reliable insight into how potential future scenarios could impact performance.
So, what does that mean in terms of daily operations? Basically, it means people using knowledge to make good decisions in a fast, productive, and highly automated manner at all levels of the business. Cloud systems provide the data integration and ongoing technology refresh to incorporate best practices and technology advances.
The cloud also makes it easier to integrate external sources of valuable, contextual knowledge that helps improve the accuracy of data models. This is important considering the scope of threats to sustainable operations for businesses with large, global footprints. Political, environmental, and economic factors across multiple regions could impact business, such as limited travel capabilities slowing down delivery of key supplies.
Business uncertainty is everywhere, and organisations must be able to say, ‘What is our plan if X happens? What is our plan if X, Y, and Z happen, but W doesn't' And this insight must come quickly. Business moves too fast for reports to take days to compile.
ERP replacement effort is not what it used to be
One final stone on the scale in favour of ERP cloud is that migrating does not have to be painful. Don't let memories of past onsite replacements haunt you. With the right products and the right expertise behind them, cloud migrations happen quickly, cause minimal business disruption, and don't require intense user training.
For example, Blue Shield of California had set aside $600,000 on change management for the adoption of cloud; in the end, they barely spent anything. Change adoption, they reported, happened quickly and seamlessly.
Considering the benefits for cost savings, elimination of technology obsolescence, and ease of adopting emerging technologies, it is becoming harder to justify a wait on migration to cloud ERP. Disruption is not an issue, and long-term cost saving are substantial. Most importantly, modernizing ERP is an opportunity to modernize the business and embed an ever-refreshing technology infrastructure that enables higher performance on multiple levels.
Steve Cox is Vice President, Cloud Business Group, Oracle.