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Gauging the benefit of cloud ERP for SMBs

The ERP system is the workhorse of the business, housing critical information — from human resources to finances. Ideally, it’s the silent backbone, working in the background of the business. But for SMBs, where the IT department could very well be a party of one, upkeep and troubleshooting could become an all-consuming, overwhelming task. Add to that cost and security considerations, and cloud ERP can seem quite alluring.

In fact, in a recent web presentation, Gartner analyst Nigel Montgomery said cloud ERP is a hot topic for SMBs — even more popular than among enterprises. This is due in large part to the fact that cloud ERP offerings for SMBs are maturing at a faster rate.

But whether cloud is right for a particular small business depends on several factors. For example, whether you’re self-contained, a satellite office or on the small side of “small business” will factor in to what your company should consider when it comes to cloud ERP. The decision also hinges on whether ERP is viewed by the organization as a value or simply a cost. More often than not, ERP is viewed as the latter because its value goes unmeasured. In a recent Gartner poll, only 37% of SMB respondents said they actually calculated the value of their ERP. You can’t expect to get budget approval for cloud acquisitions without providing information about the value of traditional ERP, Montgomery said.

Cloud shouldn’t be seen as an all or nothing proposition, especially for SMBs that have been doing ERP on premises for years Montgomery pointed out. For some companies, yes, cloud could come in as a wholesale replacement. But for businesses with years of legacy add-ons, this all-in approach is neither reasonable nor particularly wise. That doesn’t mean counting out cloud. As Montgomery noted, there are a myriad of ways cloud can be used to aid or augment on-premises systems, either for the long-term or as part of a gradual, calculated move away from a legacy system.

It’s also important to evaluate business goals and priorities you’re hoping an investment in cloud ERP will achieve before you or your IT organization starts considering cloud vendors. Decide what exactly you want to do:

• Leverage existing investments

• Deliver new capabilities/application modernization

• Deliver rapid time to market

• Avoid operating expenses, preserve capital

• Support scalability requirements more cost effectively

• Provide access to all users, all customers, all devices

• Free-up data center space

• Improve operational efficiencies

• Develop easier integrations with other web and cloud apps

As with any major change or acquisition in IT, it can’t — or at least shouldn’t — be done without a clear strategy. If you organization is lacking an ERP strategy, build one. Without that strategy and how it serves the business, the desired benefits will never be achieved, Montgomery said. These are some of his recommendations for those considering cloud ERP:

• Do not seek cloud solutions unless there are clear business objectives. Cloud is not one-dimensional, it involves significant business

• Understand the continuing development of cloud and its potential impact. Even within a domain, there are different levels of adoption and benefits for SaaS, PaaS and IaaS.

• Keep pushing established on-premises vendors for their road maps, proofs of viability and case studies.

• Use pace layers to structure the discussion with the business and adjust your application strategy as needed.

• Fuse pace layers with the cloud options available today and in the next three to five years. Generate a workable road map.

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