365 Quotes for ERP Implementations

I consider myself an ERP/Cloud implementation practitioner on the road to becoming a better ERP advisor and leader.  I have been on this path for 20 years and believe that I have much to share with my peers.  I also believe that I still have much to learn on this journey.  My hope is that you will partner with me in the never-ending quest for ERP implementation success.  During my ongoing research I have collected a database of over 1500 quotes on ERP-related topics (pains, success, best practices, failures, mistakes, implementations, selections).

As part of that partnership I would like to share 365 quotes from valuable books/resources that have influenced/guided my ERP journey.

 

# Quote Resource Author(s)
1 Often the problem lies not with the ERP concept. But in the demand for quick fixes and rapid cures to underlying structural problems. e-Business Roadmap for Success Dr. Ravi Kalakota & Marcia Robinson
2 Putting yourself on the same side as the customer is one of the best ways to avoid the massive rework caused by the customer deciding that the product you just spent 12 months on is not the right product after all. Rapid Development  Steve McConnell
3 Reliability is results driven. Repeatability is input driven. Agile Project Management Jim Highsmith
4 One of the most important areas in enhancing the value added to clients is designing the presentation of information so that it can be readily assimilated and internalized as knowledge. Developing Knowledge-Based Client Relationships Ross Dawson
5 All of the work that goes into development is not adding value until the software is in the hands of the customer. Lean Software Development Mary Poppendieck & Tom Poppendieck
6 Iterations systematically reduce the trade space, grow the knowledge of the solution, and increase stakeholder buy-in. At the same time, each iteration, or spiral, is planned to mitigate specific risks in the project. Evolutionary Process for Integrating COTS-Based Systems (EPIC) Carnegie Mellon – Software Engineering Institute
7 Good people can make a bad system work; bad people can’t make a good system work. The Reengineering Handbook Raymond L. Manganelli, Mark M. Klein
8 The truth is, no organization plans to fail – rather, they fail to plan. Control Your ERP Destiny Steven Scott Phillips
9 Many ERP implementations proceed without sufficient knowledge of the possibilities or potential in the new systems. This relegates the design process to a discussion of repeating the current design (the only thing the client knows) or implementing a process that the consultants happen to know (limited to what the consultants have experienced). Maximize Return on Investment Using ERP Applications Worster, Weirick, Andera
10 There are literally thousands of decisions that must be made on these projects. The project team must be empowered to make most of them. That is one reason organizations must put their best people on these teams.

 

E-Business and ERP Murrell G. Shields
11 Achieving early wins and optimizing user buy-in can pave the way for controlling both political and fiscal costs down the road and increase the chances of delivery project on time and on budget. Total Cost of Ownership: A strategic tool for erp planning and implementation Richard West, Stephen L. Daigle – California State University
12 In making design decisions, the entire process should be considered, not just the individual steps, in isolation. As in many things, the business process is only as good as its weakest subprocess. Most of the attention should be focused on the process bottlenecks. Managing the Change Process

 

David K. Carr, Kelvin J. Hard, William J. Trahant. Coopers & Lybrand Center of Excellence for Change Management
13 To integrate business processes, there is a tendency to employ a bottom-up technical integration, stitching together application components that were never intended to work together at the business level. Business Process Management – the third wave Howard Smith and Peter Fingar
14 The “Train the Trainer” Pitfall: It is not realistic to assume someone can be trained several weeks before the go-live and expect him/her to deliver quality training. Control Your ERP Destiny Steven Scott Phillips
15 Requirements creep must first be differentiated from requirements evolution (elaboration). Agile Project Management Jim Highsmith
16 Two overriding criteria that mast be present if the implementation of a COTS solution is to be successful: realistic expectations and organizational flexibility. Successful Packaged Software Implementation Christine B. Tayntor
17 Every organization that implements an ERP system is, in effect, reengineering. Modern ERP Marianne Bradford
18 Remember that if you fail to implement, who cares what the software (ERP) does? Modern ERP Marianna Bradford
19 Not all process-integration problems are technical, and not all about IT. Integrating computer systems is not the same as integrating the business. Business Process Management – the third wave Howard Smith and Peter Fingar
20 Having an ERP system is not a luxury but a necessity. It is a must for survival in this competitive world. ERP Demystified Alexis Leon
21 A major cause of this difficulty is that organizations building these systems tend either to assume that components can be simply thrown together or they fall back on the traditional engineering skills and processes with which they are familiar-skills and processes that have been shown not to work in the building of a COTS-based (ERP) system. Evolutionary Process for Integrating COTS-Based Systems (EPIC) Carnegie Mellon – Software Engineering Institute
22 The acquisition of the tools, of and by itself, will not make you proficient in their use and thus will not provide a competitive advantage. ERP: Making It Happen Thomas Wallace & Michael Kremzar
23 Inclusion of end users promotes acceptance of the solution and helps break down “us versus them” barriers.   Working together, the two groups will provide a balanced evaluation. Successful Packaged Software Implementation Christine B. Tayntor
24 Planning can become mechanistic and succumb to a checklist mentality. Balancing Agility and Discipline Barry Boehm, Richard Turner
25 Good design can’t fix broken business models – Jeffrey Veen Why New Systems Fail Phil Simon
26 When managers of a company select an ERP package to implement, they are “buying into” the ERP vendor’s view of a certain industry’s best practices and relying on the system to support their efforts to embrace these practices. Modern ERP Marianne Bradford
27 The gap between a person’s current knowledge level and the knowledge requirement associated with the change will directly impact the proability of success for those individuals. ADKAR – A Model for Change in Business, Government and Our Community Jeffrey M. Hiatt
28 Prototypes are generally designed to handle only the nominal cases; they aren’t expected to handle the exceptional cases. Rapid Development Steve McConnell
29 The development of knowledge is an iterative process, in which experience and lessons provide the basis for deeper understandings in ongoing feedback loops. Developing Knowledge-Based Client Relationships Ross Dawson
30 Organizations are now in a business environment where their success will depend on their ability to rapidly respond to changing business requirements. E-Business and ERP Murrell G. Shields

 

JIT is Just Plain Wrong for Cloud ERP

Given that we are well in the third decade of ERP implementations, I still observe ERP implementations following outdated/misguided concepts that do not utilize limited resources to the fullest.  One of these misapplied concepts is Just-In-Time (JIT) training.  End user enablement continues to be an implementation challenge primarily due to the limited investment made for the most important component of an ERP business solution.  This limitation must be addressed in order to realize the value of ERP in the Cloud.

Evolving Traditional ERP Testing for Cloud ERP

Consider the following illustration that highlights the tradition user involvement model:

Limited User Involvement

Traditional User Involvement

Traditional ERP implementation approaches view end users as an audience versus an active participant to leverage during the entire implementation.  End users by far make up the largest stakeholder group in an ERP implementation however; they have the least amount of involvement and responsibility.  Let’s further contrast and identify opportunities where end-user involvement can have a positive influence on ERP implementations.

Rethinking the Waterfall Testing Paradigm

If we take a stroll down memory lane we can recall the standard testing approach we learned from the Waterfall Software Development Lifecycle (SDLC):

Limited ERP Testing

Traditional Testing Approach

Consider the following:

  • The majority of testing and hands-on experience occurs with a limited group of users leaving a small window for direct users to gain confidence and experience with the ERP system.
  • The limitation with direct user involvement is based on the premise that a working system is not available until the end of the implementation.       This is not the case with a Cloud ERP system that can be provisioned early during the implementation life cycle.
  • JIT End User training is a big bang approach – one time shot to get end-user training right. It also gives end users limited time to internalize the change. This approach naturally requires additional support and creates a greater potential for user errors.

Waterfall is based upon software being developed from scratch – i.e. you could not actively involved end users until the software existed.  When ERP came to the market many approach/processes designed for software development were incorrectly applied to ERP implementations.  The next section we will discuss how to involve the target audience sooner during a Cloud ERP implementation.

Increasing End User Involvement

There are two key value propositions for increasing end-user involvement:

  1. Additional validation of the solution via testing.
  2. Greater user adoption and enablement.

For robust testing business users should first be trained on the ERP Cloud service.  Remember that testing can be “hands-on” learning for business users.  Consider the following illustration:

Increasing User Involement

Incremental User Involvement with ERP Implementations

Let’s expand on some key themes.  First, education/learning is an iterative process where new information needs to be assimilated by users before knowledge is created.  Second, an educated user is a better contributor to the project.  Third, it is easier to manage and support educated end users.  A forward-thinking end-user enablement process drives greater participation and ownership.

Consequences of Not Evolving your User Enablement Approach

As ERP Cloud adoption continues we will see an increase in the following implementation drivers:

Market Drivers for Cloud ERP

Market Drivers for ERP Cloud Implementations

Consider that traditional ERP implementation approaches do not effectively leverage the largest resource pool available.  I can appreciate that with additional resources comes greater coordination and communication channels (N * (N-1) / 2) yet I have witnessed that the business value outweighs the associated project risk.  With the above said I do not recommend we start involving end users without some level of enablement and guidance.  Just as an individual user learns a new system over time the end-user training approach should incrementally prepare the user for greater involvement during the ERP Cloud implementation.

Following are key consequences if we continue with a JIT user involvement strategy:

JIT User Enablement

Potential issues/risks from take a JIT user enablement approach

The JIT approach is being used to squeeze pennies out of an ERP Cloud implementation when the potential risk that results is far greater and eventually must be solved through additional dollars or lost opportunities.

Challenge to Cloud ERP Service Providers and Implementation Partners

Cloud ERP Service Providers and Implementation Partners should take the lead in promoting and supporting end-user involvement earlier during the implementation.  Unfortunately, Cloud ERP Service Providers are not providing a robust set of tools and services for incremental user enablement.  Test cases should be business process focused and not just business function oriented.

Implementation Partners must also adapt to this new paradigm.   It is unfortunate that many implementation partners choose to address ERP Cloud Implementation drivers (mostly cost) by reducing project leadership and transferring user enablement to the customer – regardless if the customer have the required tools/competencies for incremental user involvement.  This short-sighted approach ultimately leads to an unfavorable customer experience with Cloud ERP.

Summary

Just in Time (JIT) is an operations management approach for improving ROI by minimizing inventory and related carrying cost for a production process.   JIT is a viable strategy given that the process is production quality and all input variables are within controlled tolerances.   Implementing a Cloud ERP solution is not a production quality process nor are all input variables can be controlled.  This concept has been applied to ERP end-user training with the intent of maximizing training investment.  JIT training reduces the need for refresher training due to ERP knowledge loss experienced if training precedes the go-live event over a long period of time.  JIT training may be a valid approach for end users after the ERP Cloud service is in Production but it is a limited strategy to employ during an ERP implementation.   Make the end-user an active partner not a passive customer.

ERP SaaS 101: Services Trump Software

How many ERP SaaS offerings are in the market today?  The number depends on who you ask but it is a fair statement to say that all Tier I and the majority of Tier II ERP vendors have a SaaS offering.  A majority of the market and many ERP analysts still take an on-premise approach to evaluating ERP SaaS offerings.  Services, not software, will have the greatest impact on ERP SaaS success.  The purpose of this article is to examine the impact services will have in a SaaS model.

Installation Is Not an Implementation

Ah, the battle cry of ERP SaaS “You can be up and running in a matter of minutes!”  Now, it is a fair statement you will have a running system but it is a far cry from a configured business solution.  Consider the key activities required for this transformation:

SaaS Implementation Services

SaaS Technical Services

Even though ERP software and infrastructure can be provided in an accelerated fashion, the business value realization of an ERP SaaS model can only be achieved through the effective delivery of technology services.   SaaS ERP is not a push-button solution.  I submit that technology services should have an equal or greater emphasis on ERP SaaS selection than ERP SaaS software. 

Great Services Can Cover a Multitude of Software Gaps

ERP SaaS software installation is a very small step in ERP SaaS experience.  Consider the following illustration:

ERP SaaS Solution Lifecycle

ERP SaaS Lifecycle

Following are a few points I would like to elaborate.  First, installed ERP software does not provide any business value own its own.  Business value is only realized when software is configured and implemented in a production environment.   Second, let’s not forget that an ERP SaaS model is outsourcing technical services to the ERP vendor.   Third, ERP SaaS software release cycles will be at least three times faster than traditional on-premise ERP software.  That means that a SaaS software model will address gaps in a shorter term.  As more customers look at SaaS ERP I believe that services not software will be the emerging competitive differentiator. 

Majority of ERP SaaS Offerings are Non-Competitive Differentiators

For purposes of this discussion please allow me to broadly categorize business processes into three areas:

ERP supporting business models

ERP supporting key business process groups

There are some key concepts that should factor in the ERP SaaS selection process.  First, competitive advantage only comes from revenue-generating business processes.  For example, would having the best of breed solution for SOX compliance enable you to gain market share?  Also consider if you would highlight your Payroll system as a competitive advantage to your customers. A best practice is not a competitive practice.  Organizations, just like individuals, cannot be the best in everything but it makes sense to be the best in your revenue generating activities.  A best-of-breed SaaS solution is of little value if the ERP SaaS provider does not provide competent technical services for reliable integration across multiple environments.

Summary

Too often we focus on the cart before the horse.  I believe that we are experiencing this misalignment with the emerging ERP SaaS market.  The best ERP software is of little value if you cannot implement a viable, manageable solution.  Technical services provided by the ERP vendor’s SaaS operations will have the greatest, long-term impact for business success.  Pick an ERP vendor that will focus on improving both their ERP software and SaaS technical services.

SaaS ERP is not a push button solution

SaaS ERP is the latest effort in the ERP industry to provide a rapid, cost-effective solution for customers who want an enterprise solution.  A SaaS deployment model does provide the potential for greater value realization; however, the value proposition is dependent upon appropriate expectations and implementation approach.  The purpose of the following article is to provide insight to ensure customers make realistic and informed decisions.

General Expectations for SaaS ERP

I firmly believe that one of the key reasons for failed ERP implementations is that expectations were not correctly established and managed throughout the implementation.   Consider the following:

Common Expectations of SaaS ERP

Common Expectations of SaaS ERP

 

  1. Cheap:  The customer does not need to make a huge expenditure to implement and utilize.
  2. Fast: Answer a few questions and have an up and running software in weeks.
  3. Flexible:  Business users can make changes.  Minimize IT involvement.
  4. Intuitive:  Quick to learn and easy to navigate.

We can all agree that the above targets are worthy goals of any ERP solution.  However, this is only part of the story.   The next section discusses the efforts required to achieve the goals listed.

Desired Results of SaaS ERP

To better understand ERP SaaS expectations we need to elaborate on the desired results that should be realized by customers. 

Elaborating on SaaS ERP Expectations

Elaborating on SaaS ERP Expectations

 

Some of the desired results are directly addressed by the SaaS model but the majority of results are addressed either by (a) the ERP software architecture or (b) the delivery model.   Example:  SaaS ERP does not require an initial outlay of funding for capital expenditures for hardware and related infrastructure.  SaaS ERP eliminates the need for a separate effort for ERP software installation and certification.  Yet, it is important to remember that ERP software installation represents at most 5% of the total time required to implement an ERP solution.  Therefore the SaaS model by itself does not have a dramatic impact on accelerating ERP implementations.

SaaS ERP Realities

Allow me to share some observations I have regarding the ERP SaaS model that may not appear to be readily evident:

SaaS ERP Realities

Let’s take one of the above desired results to elaborate on the above diagram.  A goal for SaaS ERP is to reduce the Total Cost of Ownership (TCO).  One of the key ERP design strategies is to enable business users to tailor the functionality to meet requirements without having IT to make a costly customization.  However, it is important to understand the shift of effort from IT to functional users.  There may be a reduction in the effort or a change in the nature of the work but the effort is still required.  There is no “push button” to eliminate this work. 

For another example let’s take the ERP value stream.  ERP vendors can create additional value to customers by providing new and enhanced functionality.   The leading SaaS ERP delivery model should provide a 3:1 ratio increase in the software release cycle.   Yet, it is important to realize that more frequent ERP software releases require additional testing and deployment (organizational change) work.  It is interesting to note that many of the leading SaaS ERP vendors do provide an out-of-the-box testing automation solution.  Again, the customer will experience a shift from technical to functional effort.

 Summary

Sorry if I burst your bubble, but I rather have an informed customer that will have reasonable expectations versus a customer with unrealistic expectations.  SaaS ERP is one of many delivery models that ERP vendors offer to customers.  While it is true that SaaS ERP provide customers with new options not available previously, it is not a slam dunk for all customers.  Developing the customer’s use case and understanding all technical and organizational impacts will better ensure an informed decision is reached.

Cloud ERP Strategy: Goodbye IaaS, Hello IaaS

One of the first deployment models for cloud computing was Infrastructure as a Service (IaaS).  Currently, there is a price war between the major IaaS providers like AWS and Rackspace to provide the cheapest infrastructure. However, enterprise customers looking to move their ERP solutions to the cloud should focus more on Integration as a Service (IaaS).  Integration, not infrastructure, will have a greater impact to TCO and ERP success.    In the next sections we will briefly compare the influences that infrastructure and integration have on an enterprise solution like ERP.

Cloud Infrastructure versus Integration

In a previous blog I reviewed the key competencies to consider as part of selecting an ERP cloud provider (ERP Cloud: Finding the Right Provider).  Both infrastructure and integration are key considerations yet I view enterprise integration the greater challenge.  Consider the following:

Cloud Infrastructure & Integration

Key Cloud Consideration Factors

Cost

The cloud storage war appears to be getting the most press in cloud computing but consider two factors driving this type of pricing strategy

  1. Vendors cannot provide a material differentiation or competitive advantage.
  2. Technology improvements continue to drive down disk storage costs rapidly.  Combine this trend with the economy of scale that cloud providers generate to continue driving costs down by another 40% in the next 3 to 5 years.

Moore’s Law highlights the computing hardware trend resulting in greater technology capabilities and driving down MIPS costs.  However, the same cannot be said for integration.  As discussed in one of my earlier blogs (Best of Breed vs. Integrated ERP), integration costs can be up to 8 times the cost of the ERP software. 

ERP Integration Considerations

ERP Integration Considerations

We have all heard the proverb “A chain is only as strong as its weakest link.” Applying this concept to business software, we would conclude that a business solution is only as strong as its weakest integration.

Business Value Realization

Allow me to make the general statement that outsourcing IT infrastructure to a cloud provider should result in a cost savings to customers.  However, I believe that IT organizations will quickly learn that providing this cost savings is a short-term value proposition to their business owners.  Ultimately, IT-driven innovation will drive business value realization.  Gartner identifies Integrated Ecosystems and Hybrid IT & Cloud Computing as two of the top 10 strategic technologies for 2013.     Every ERP solution has a portfolio of edge products/3rd-party integrations to external solutions to provide holistic support of business processes.  The only true method of creating business value is through business processes.

Socialization & Collaboration

The ERP software industry is realizing that people have the greatest impact on business results.  It is refreshing to see the increase in socialization and collaboration capabilities.  Infrastructure is necessary but integration is the critical path to success.

Market Trends

In my opinion, I expect to see the market changing for IaaS providers.  Given how important integration is to a viable cloud solution either existing IaaS will grow into a Platform as a Service (PaaS) or will be acquired by PaaS vendors looking to provide global support.   Just take a look at AWS and Rackspace’s transition from an IaaS to a PaaS:

Summary

History always has a way of repeating itself.  Recalling the Y2K problem, storage (infrastructure) was seen as a strategic/limited resource.  This view resulted in the programming practice of representing the year with two digits and we all know how that came back to haunt IT organizations.   Infrastructure is a cheap commodity when compared to a collaborative, enterprise integration framework.  Infrastructure is a key enabler for cloud computing but integration will ultimately determine your success of ERP in the cloud.   

Building a Business-Aware Cloud Solution

In a recent study conducted by Forrester Consulting “Enterprise Cloud: Lessons Learned From Early Adopters” a key conclusion made is “A complete, application-centric, business-aware cloud solution is needed.”  Let’s say that your C-level executive stops by your office and asks you to lead a project to develop a business-aware cloud solution.  To be successful it is important to understand what you are building.  In the following blog I will attempt to define a business-aware cloud solution.

Defining a Business-Aware Cloud Solution

Your project objective is to develop a business-aware cloud solution.  As you are a competent project manager one of the first areas you want to define is the project scope.  As your humble project assistant, I have searched the internet for you and have leverage greater minds from the University of Edinburgh:

“What different employers mean when they talk about business awareness varies, however their views broadly fall into two areas: (1) understanding an occupation, and (2) understanding the business environment.”

What is Business-Awareness?

I would like to elaborate upon on this definition with the following model.

Defining Business-Awareness

Defining Business-Awareness

There are three key areas that enable business awareness. The business process area includes the business functions, related-activities, and the individual tasks that must be performed in order to generate the desired business results.  The business role(s) area includes the concatenation (grouping) of business activities into responsibilities that can be competently accomplished.  Finally, business awareness also requires an understanding how an industry operates and how it is influenced by local, national and global economics.

Now, your experience as a project manager tells you that a well-defined project scope statement not only explains the end result but also elaborates on what is considered out of scope.  With this best practice in mind let us clearly articulate on some areas that may misalign the focus on business.

 

Losing Focus on Business-Awareness

Blurring Focus on Business-Awareness

Please allow me to elaborate. A business function is a necessary structure resulting in a concatenation of activities/tasks that aligns with the skills/experiences of the organization to best support business processes.  The ERP software industry started as discrete, functional applications that continue to evolve into enterprise-wide, business process solutions.  In general, software applications focus more on business functions requiring the implementation of multiple applications to support an entire business process.  As a veteran project manager, you understand that an application focus may result in gold-plating or poor support of functional hand-offs (integration).  You also appreciate that technology is only one component of a business solution.

We are halfway to having a better understanding of our project objective.  Now, let’s focus on what some may consider the mystical realm of the cloud.

What is a Cloud Solution?

Forgive my “tongue-in-cheek” response above but it is hard to define a clear picture given the varied information available in the marketplace.  Once again, I refer to brighter minds (NIST) to provide a definition.

Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”

I would like to focus on what’s not in this definition that may be perceived expectations of moving business software to the cloud

Implied Expectations for Cloud

Implied Expectations for Cloud

The immediate, short-term savings will be reduction in capital expenditures required for IT infrastructure requirements. As correctly pointed out in the book “Cloud Computing – Assessing the Risks“, there is a general misnomer that there is a risk reduction with the cloud.  There is a transference of risk from the IT organization to the Cloud Provider.  Technology results (reliability, response, availability, scalability)  may lead to business benefits – but it is not a guarantee. 

Now that we have a little better understanding of project objective, let’s briefly review the role that the key enablers will play in the implementation of a business-aware cloud solution.

Enablers for a Business-Aware Cloud Solution

As a competent project manager, you know that the project must address all three components of a solution in order to be successful in meeting all expectations.  For the sake of brevity we will only focus on a key expectation for each component.

ERP Business Solution

Business Solution Defined

  • People:  People innovate.  People accept.  People resist.  People ultimately drive project success. 
  • Process: Innovation is a process and not just a brainstorming event.  IT needs to move up the business value chain with a rapid, iterative delivery method.  Governance is not an acceptable substitute for properly educating users on the effective use of cloud technology.
  • Technology: A reasonable expectation is to select a cloud vendor that provides a  reliable, secure, scalable IT infrastructure solution on par (or better) than existing services.   For business software like ERP to be business-aware, the software must have access to business model, roles, and rule metadata that is maintained by business users.

Summary – Are We There Yet?

Do all the technical components exist in the marketplace today to build a business-aware cloud solution?  Technically speaking, the answer is yes if you want to seamlessly integrate multiple technical components with multiple UI experiences, data sources, and training requirements.  Will it be a practical and viable solution?  I suspect that there is room for improvement.  If you wait for a complete solution then it may be too late for your business users.  But you are not just a project manager, you are a project leader!  You know that this effort is a project program with iterative projects that incrementally build upon the individual project results.  Start planning, start delivering!

P.S.  I am conducting a webinar: Best Practices for Selecting the Right ERP Cloud Provider on Wednesday, December 12, 2012 1:00 PM – 2:00 PM EDT

Overview – Next stop: The Cloud! Everyone is talking about it but there is a fog of disjointed information out there regarding moving to the Cloud. In this webinar we will demystify the cloud and discuss one of the key activities customers should carefully consider in moving to the cloud – selecting the right cloud provider. We will also discuss some of the key factors to consider as part of your cloud deployment strategy. Register at http://www.oracle.com/go/?&Src=7604459&Act=251&pcode=WWPN12035291MPP257 .

ERP Cloud: Finding the Right Provider

I recently attended Oracle’s OpenWorld Conference in San Francisco this October.  There was a huge volume of information on the Cloud.  As I walked through the Exhibitor’s halls at the Moscone Center, I observed that every SI partner had ERP in the Cloud or could get customers to the Cloud seamlessly.  What I did not see is any offering or advisory service to guide ERP customers through the storm clouds to find the right provider.  In the next sections we will discuss the key competencies to consider as part of making an ERP Cloud provider selection.

Capabilities for ERP Cloud Providers

ERP Cloud Provider Key Competencies

Hardware Competence

Typically, this is the first area that customers think of when evaluating Cloud providers.  For this discussion, hardware includes servers, processors, network, processors, and storage.  Now, I may be chastised by my technology peers but I take a very practical approach to hardware.  Business users are more concerned about technology results (reliability, response, availability, scalability) versus what hardware configuration is being used.  I’m all for engineered solutions if they provide a material impact to technology results.  I would not consider millisecond improvement on response time as a material impact on response time nor would I pay an additional $100 per hr /month for special hardware.  Remember to keep the end in mind – you are moving an ERP solution to the Cloud.  Review and identify Cloud providers that offer hardware configurations that best aligns to the hardware specifications and recommendations made by ERP software vendors.

Software Competence

For this discussion, software competence focuses on software and standards that enable a viable Cloud solution.

Selecting Cloud Providers - Software Considerations

Selecting Cloud Providers – Software Considerations

For brevity sake, we will focus on a few of the key software enablers for the Cloud.

Software Area Considerations
Open Standards & Technology Open Standards promotes interoperability and data exchange among different products or services and are intended for widespread adoption.  This area will be a key enabler (and indicator) of portability.
Integration A viable ERP Cloud solution must provide a robust toolset for integration back to the customer’s on-premise supporting systems.  Integrations can be a potential point of failure that must be addressed with a cost-effective solution.  Cloud + Poor Integration = Failure. 
Load Balancing Load Balancing is vital for effective distribution of work across a multi-tenant hardware environment.   Optimal resource utilization, maximize throughput, minimize response time, and avoiding overloads are not possible without a robust load balancing capability.  Be leery of simple load balancing algorithms like random choice or round robin.
Virus Protection Viruses can live in the Cloud.  Malware known as Crisis can infect VMware virtual machines.  Moving to the Cloud does not end the need for antivirus protection.
Virtualization Virtualization is a key enabler for Cloud computing.    In order to realize the technology benefits associated with virtualization, Cloud providers must be able to provide a robust solution for the following capabilities: Elasticity – dynamic scalability is an integral feature (enabler) for agility and fundamental IT cost savings. Logical isolation for data protection. Hypervisor management for VMs.VMs replications.
ERP Software Not all ERPs are created the same for the Cloud.  Following are areas to review in determining how “Cloud-Friendly” is your ERP solution.     Single-Tenant vs. Multi-Tenant – Single-Tenant provides a more formal logical isolation for customer data.  Multi-Tenant reduces duplicate upgrade efforts and technology resources. SOA Compliance – How well does your ERP solution expose methods and related data components to external solutions via SOA services? Network Latency – High data volume transfer between Cloud server and the on-premise client. ERP Experience – Also ask if the Cloud provider has “hands-on” experience with supporting your ERP solution. A leading Cloud provider will have a competent level of technical support knowledge for your ERP software.

 Security Competence

Security is a key selection criterion for Cloud providers.  A realistic expectation is that Cloud providers should have a greater level of security than your current on-premise IT environment. Following is an illustration of the key security areas you should consider as part of your ERP Cloud provider. 

Cloud Provider Selection - Security Considerations

Cloud Provider Selection – Security Competence

 There are three key areas that I would like to further discuss.

  1. Identify Relevant Security Standards:  Viable Cloud providers should be able to assist their customers in identifying and applying relevant security standards for their specific industry.  
  2. Security Validations:  Leading Cloud providers are able to demonstrate their security competence via (a) audit and evidence gathering, (b) providing security audit findings for customer review, and (c) enabling customers to perform independent security audits if desired.
  3. Data Encryption:  Encryption of customer data either in transit or at rest should be a non-negotiable requirement for Cloud providers.

 Value-Add Partner Network Competence

 Every ERP solution has a portfolio of edge products/3rd-party integrations to external solutions.  It stands to reason that customers should consider the portfolio of ERP edge products that a Cloud provider can host as part of the selection process.

Cloud Providers - Value Add Partnerships

Cloud Providers – Value Add Partnerships

Selecting a Cloud provider is not a short-term relationship so ensure that you can grow and generate greater value from your ERP investment within the Cloud.

Services Competence

A strategic competency that I feel is being overlooked in the Cloud market is the service portfolio that a Cloud provider should deliver.   Consider the following reality check: 

Reality Check for ERP Cloud

Reality Check for ERP Cloud. Used by permission.

Technology is only part of the solution.  What is the value of providing new ERP features if end users are not formally trained?  Who will perform regression testing for both technical and functional upgrades?  In my mind, a leading ERP Cloud vendor should provide both an automated testing solution and on-demand training solution to facilitate rapid deployments.   Cloud providers should have a services framework such as ITIL or ITSM.  This is a validation that your Cloud provider is committed to delivering reliable professional services.

Summary

Overall, I am very excited about the opportunities that Cloud can offer to existing ERP customers and potential customers who could not afford a Tier 1 ERP solution.  Yet, we must not forget that there are advantages and challenges that we must address in order to provide a reliable solution for ERP customers.  It is also important that we keep realistic expectations for the Cloud.  Cloud is more about a new way of delivering computing resources versus being a new technology.

P.S.  If you are interested then the blog author will conduct a webinar: Best Practices for Selecting the Right ERP Cloud Provider.  Overview – Next stop: The Cloud! Everyone is talking about it but there is a fog of disjointed information out there regarding moving to the Cloud. In this webinar we will demystify the cloud and discuss one of the key activities customers should carefully consider in moving to the cloud – selecting the right cloud provider. We will also discuss some of the key factors to consider as part of your cloud deployment strategy. Register at http://www.oracle.com/go/?&Src=7604459&Act=251&pcode=WWPN12035291MPP257 .

 

SI Partner for PeopleSoft/Fusion ERP

Blog Sponsor – Cardinal Point Solutions, LLC.

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