What you must know about moving ERP to the cloud

By:  David Linthicum

Nearly 70 percent of enterprise organizations are currently migrating data for enterprise resource planning (ERP) applications to the cloud, according to a report from the Cloud Security Alliance. Almost 90 percent of those surveyed said these business-critical ERP apps (SAP, Oracle, and Microsoft Dynamics) lead to many migration challenges and concerns.

The top cloud migration concerns among the 200 managers, executives, and enterprise staff surveyed include the moving of sensitive data (65 percent), security (59 percent), compliance challenges (54 percent), disruption of business operations (47 percent), and time to migrate data (46 percent).

You need to take these kinds of reports with a grain or two of salt, because they are often paid for by cloud technology providers. However, this is pretty much what I’ve been seeing in the last year and anticipate for 2019.

Why migrating ERP to the cloud is happening now

The migration of critical business applications is happening right now for several reasons.

First, hardware leases are up for renewal, or upgrades need to occur to move to the next generation of ERP or other critical applications. So, the ERP providers are showing up with new software and new compute requirements that are also growing, and this means more hardware procurement and data center space for IT. That cost is becoming prohibitive. With today’s public cloud alternatives, the issue is not if you think cloud is safe or not, it’s that you can’t afford the on-premises alternative.

Second, the sky has not fallen. A few years ago, naysayers predicted outages, breaches, the Zombie Apocalypse, and so forth as a consequence of cloud migration—none of which happened at a noticeable scale. So, those who pushed back on cloud computing based on the impending-doom argument are no longer listened to, or they were moved out of IT leadership.

Addressing the special pain of ERP in the cloud

Here’s the rub: While it’s proven to be safe to move to cloud computing, you still need to do your business case analysis. You can’t just pick up and move to the cloud. That’s even more true for ERP.

In my experience, ERP migrations to a cloud provider are costlier in many instances. Many ERP providers that support public clouds may charge much more to run on the cloud, such as what they call “special support fees.”

They do this, of course, to make money on the migration to the cloud. Enterprise customers are pretty much stuck, because ERPs and other canned enterprise applications are the mothers of all lockin.

I have a few suggestions to reduce the pain:

  • Make sure you’re ready to stay put on-premises when negotiating. I have too many clients who announce to an ERP provider that they are moving to the cloud before they ask for a cloud-based price.
  • Look at alternatives. Often, SaaS-based ERPs are much better and cheaper than traditional on-premises ERP. I empathize that switching ERPs is like a heart transplant, in terms of the pain, but sometimes it’s worth it.