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Almost overnight, companies in every industry around the globe were forced to face the reality that cloud-based operations are no longer a nice-to-have; they’re a necessity. With more employees working from home, sharing data from home, and even sharing computers from home, recent events have forced our global dependence on technology into the spotlight.
Many companies in the midst of digital transformation may be finding they’ve been focusing on the wrong tech priorities — wondering what they could have done smarter or better to help their employees stay more connected and productive in the midst of the current global uncertainty. In fact, it’s possible that from here, digital transformation might well be known instead as cloud-first digital transformation. We’re all learning that the cloud is as essential to working and collaborating as the internet itself.
According to Futurum Research’s 2018 Digital Transformation Index, almost 73 percent of companies ranked cloud investments as a high or strong priority for near term. However, investing in cloud-based apps and software within silos across the organization is no longer enough. Right now, to gain the full benefit of digital transformation, companies need to focus on strategy and removing the silos — and that means they should be focusing on intelligent cloud-based enterprise resource planning (ERP).
Intelligent cloud-based ERPs make a huge amount of sense in today’s global business environment, bringing data and predictive analytics together, which can lead to huge cost savings and efficiencies if managed well. It’s clear that cloud-based ERPs are the backbone of digital transformation — let’s explore.
Cloud-Based ERP vs On-Prem
An ERP allows companies to manage all core business operations across the enterprise through one platform. Essentially, an ERP provides a single source of truth for all business dealings — finance, human resources, supply chain management, and business planning.
As with most technology solutions, there are choices when it comes to ERP systems: The traditional on-premise system, which until recently has been the norm in the ERP space, or a cloud-based ERP system, which is becoming more common. In the case of cloud-based ERPs, the value proposition is that this platform is available from anywhere at any time, unlike systems housed on-prem.
While there are use cases and arguments for each, cloud-based ERP systems generally offer greater stability and continuous updates from vendor partners, feature enhanced mobile accessibility, and also generally take less time to implement.
There also tends to be a significant upfront investment required in traditional on-premise ERP systems and increased costs related to both hardware and IT. For these reasons, it’s no surprise that many organizations are going the route of cloud-based ERP systems. I believe this is a no-brainer: A cloud-based ERP system is the answer — both from a technology standpoint for the digitally transformed organization, as well as from a culture standpoint.
When you factor in cost, functionality, speed to deployment, mobile accessibility, and the fact that departments across the company have access to the same data at all times, improving decision-making and knocking down silos as they go — it’s easy to see the inherent value. A cloud-based ERP isn’t just a must-have for today’s enterprises, it’s table stakes when looking to drive digital transformation.
Driving Digital Transformation
Digital transformation is not a department-by-department initiative. Success with transformation is a company-wide undertaking — and it’s as much about creating a data-driven culture as it is about the technology that empowers that culture. And yet not every department is on the same page when it comes to transformation. Our research on digital transformation found that IT, Customer Service, and Marketing departments are much faster to adopt technology than their counterparts in Legal, HR, and Finance.
An ERP connects the entire organization, eliminating the tendency to approach digital transformation as a piecemeal process. A cloud-based ERP allows companies to automate many routine, largely administrative tasks, connecting the departments within an organization that need to be connected with real-time on-demand data, and also freeing up employees to do what it is they are most needed to do.
Cloud ERP in Action: A Case Study
To give but one example, a company called Scrub Daddy, a high-performance manufacturer of cleaning products, struggled with inventory and supply chain management. They turned to SAP’s Business One, a scalable cloud-based ERP solution. This adoption of a cloud-based ERP gave the company a much better view of and control over their warehouse inventory levels.
The predictive ERP system can also alert both the procurement team and warehouse team when additional inventory is needed, decreasing response time and accelerating warehouse turnover. The intelligent cloud-based ERP system allows employees to respond instantly wherever they are and make decisions in real-time, armed with accurate data.
This is the kind of technology that will lead this company’s transformation in the future — allowing them to be proactive instead of reactive, connecting the entire organization and getting rid of siloed information, and allowing the organization to make decisions based on real-time data rather than guesswork.
Benefits of a Cloud-Based ERP System
Cloud-based ERPs can help support companies in digital transformation because it gives them a solid foundation to work from: a single source of infrastructure around which to start building their agile, smart, connected digital transformation initiatives.
Why cloud, specifically? Again, the name of the game in digital transformation is agility. And you can’t be agile in today’s work environment without being able to work remotely, make decisions quickly, and change directions on a moment’s notice. That’s exactly what cloud ERP (vs. on-prem ERP) allows you to do.
Here are seven key benefits you can expect from a cloud-based ERP:
- Lower implementation costs. Cloud-based ERPs can be implemented almost immediately compared to their on-prem counterparts. Cloud-based ERPs also cost less because they don’t require significant IT expenditures for hardware or support staff.
- Cloud-based ERPs enable better decision making with one source of data. With everything in one place, organizations using cloud-based ERPs can easily and effectively manage finance, supply chain, business planning, HR talent needs, cost turnover, benchmarks, and beyond. Every critical piece of business operations data is available in real time, in one centralized place, and accessible by those who need it, when they need it.
- Allows for better cost control. A cloud-based ERP system can help reduce costs while improving inventory control with automated, seamless processes for purchase orders, tracking, and replenishing items and services needed to support the organization.
- Improve operational efficiency with system consolidation. No more using 10 different programs to harness the same data, hoping it was all updated at the time you pulled it. With intelligent cloud-based ERP, you can consolidate for operational efficiency and even greater savings.
- Improve compliance with an always-on audit trail. Whether you’re dealing with HIPAA, PCI or other industry compliance standards, with a cloud-based ERP organizations can collect all required information during every transaction and be assured that each transaction can be auditable if needed.
- Greater organizational efficiency with 360-degree view of the organization. An intelligent cloud-based ERP can give managers and executives a complete view of finance, HR, and the supply chain. They can see where the budget is being spent and where money should be allocated, allowing for better decision-making.
- Better security for your entire company. A security-first mindset is imperative for all businesses today. Leading cloud-based ERP systems are the ones that are developed with a data-security first mindset and who have a long track record of excellence in deployment and integration. Organizations that move to cloud-based ERP need peace of mind that all data is safe and secure within the system.
In addition to the foregoing, an intelligent cloud-based system can help make success with digital transformation a reality, eliminating silos across the organization and also eliminating instances of disparate programs and software solutions purchased by separate business units or departments. At a time when every eye is on the bottom line, significant savings can be realized by reducing maintenance and subscription costs of other solutions.
Successful digital transformation is reliant upon enterprises becoming data-driven organizations. The right technology solutions, including cloud-based ERPs, can go a long way toward enabling that. Providing executives, managers, and other employees the ability to see a complete picture of an organization at any time, from anywhere is the key for staying competitive in today’s market. An intelligent cloud-based system also drives automation and gives an organization greater agility, allowing them to be prepared for anything in an efficient manner.
Embracing cloud-first digital transformation isn’t a magic bullet. It won’t prevent the unforeseen, nor will it eliminate the next global disaster. It will, however, help you stay strong, informed, productive, and efficient when those things inevitably happen.
If your company has not yet moved to a cloud-based ERP, now is the time: The SAP 4/HANA cloud trial is waiting for you. Once you take it for a test-drive you might find it’s exactly the cloud-based ERP solution you’ve been looking for.
Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.
This article was sponsored by SAP.
Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio