What is the right route to the Cloud

Guest blogger – David Hobson, Business Development Director, Oracle.

Any business’ ability to affect change in their organisation varies based on many factors. The strength of leadership, its culture and organisational structure and increasingly the status of its legacy IT assets can either facilitate or inhibit the change agenda. With significant market shifts happening across all industries the challenge is to not only manage change but also knowing where and when to instigate it is vital to success and even…survival. Organisations have become ever more reliant on IT. Those who embrace digital technologies have higher revenues, margins and share prices than the laggards.

In this new dynamic organisational behaviour and change creates new priorities to focus on with an emerging view that IT systems built to change are more valuable than those built to last. This may seem counter intuitive at first but if we accept IT is an essential ingredient to facilitate business change then the systems we leverage need more “fluidity”. In the context of ERP systems, typically the heart and lungs of an organisation, we have gathered information from recent surveys of Business Leaders with nearly two thirds saying their current ERP systems are unacceptable and they ultimately want one ERP System (49% of those surveyed saying they had six or more!). Additionally, 47% of companies surveyed are actively looking to move ERP to the Cloud with the current view being it is not solely about cost reduction (moving to an OpEx model, lower IT infrastructure costs and related). Increasingly the move to the Cloud is about having more agility to respond to non traditional competitors and increasing the speed of innovation cycles.

The overarching catalyst of change is the drive for better operational efficiency with a view that excessive IT complexity is reducing productivity and ultimately the ability to deliver against KPI’s.

So although longevity is an important quality in most arenas, when it comes to an organisations IT systems most companies are seeking the ability to respond, adapt and modify how IT operates far more quickly than the legacy systems they have in place.

Leveraging what IT can deliver today, but also being able to take advantage of the continuous innovation model modern Cloud Applications deliver is the ultimate goal that successful companies are striving towards.

Most companies want to know how quickly new systems can be deployed, how they can rapidly improve productivity and how they can be used to automate non-differentiating business processes. The intended focus, therefore, is to concentrate available resources on the “secret sauce” or the differentiating capabilities and processes that distinguish the business from competitors.

This is the story for companies of all sizes, across all sectors and geographies as they evaluate the benefits they get from IT, and particularly ERP systems. In the words of one CIO:

“The whole point for me was how do I get 50% faster and 50% cheaper on ERP deployments? You’ve got to change your business process, you’ve got to adapt best practices. It’s financials…how different can it be?”

There is disruption in virtually every market this client serves (Healthcare, Financial Services, Consumer Appliances and many others) and the company is working to reduce the inherent complexity of its IT estate and unleash a culture of innovation. This complexity is certainly not unique to them and manifests itself in many companies in areas such as high costs, skills shortages, and process inefficiency – and leads to a lack of innovation in all cases.

Businesses need an IT capability that supports continual market shifts and a strategy where change and pro-active refinement of this business model is possible. This brings us to the Cloud and the role it can play in achieving this. It’s now well-established that Cloud technologies help companies standardise processes, cut costs, and reduce complexity with the question now being asked by most organisations is not “if” we go to Cloud but “when” to make the transition.

There is no single, one-size fits all approach to Cloud adoption. Some companies want a complete transformation across most functional areas whilst others are better served by incremental modernisation. The incremental approach might work best for a specific functional area or longstanding process identified as a weakness needing to be rationalised or improved as a critical component of a broader process. The transformational approach is more fundamental with a broader scope when the business has a greater need and although more complex to undertake will typically drive a broader and more fundamental business case for change.

Traditional IT systems have been subject to so much customisation, integration and general “stitching” together of non-standard components over the years that even when a holy grail of single instance ERP was first envisaged things rarely turned out this way. Most companies had multiple “bolt-on” applications propped up by spreadsheets. The business landscape has since changed a great deal and new requirements, acquisitions, divestures, and re-organisations have continued to complicate the landscape and these systems are no longer deemed fit for purpose. Businesses have therefore been paying higher overhead costs to maintain technologies that have delivered diminishing returns.

Many companies approach the Cloud thinking, “We want to modernise everything”, but this approach isn’t always practical. It’s vital they first address questions like: “Where do we start? What are the foundational layers? In what sequence should we tackle things? Are there any dependencies?” The responses will be different for every organisation, but once they do answer these questions companies will be ready to define their ideal path to the cloud.

Whatever customers you serve today may or may not be the customers of tomorrow so mapping out a business / IT change journey to cloud that is pragmatic, flexible, deployed rapidly but always capable of change will help keep companies relevant and delivering great customer experiences.

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Gemma Mills

Oracle Alliance Driver, PwC United Kingdom

Tel: +44 (0)7917 772 824

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