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13 secrets of a successful cloud ERP migration

13 secrets of a successful cloud ERP migration

Migrating legacy ERP systems to the cloud is a big undertaking rife with gotchas. Here’s how to ensure your massive shift of mission-critical enterprise applications goes smoothly.

Migrating legacy ERP systems to a modern cloud-based platform has become a business imperative for most enterprises. It might also be the most challenging, complex, high-stakes project that a CIO undertakes in their entire career.

If you get it right, the company will be well positioned against its competitors for years to come. New research from IDC indicates that organizations which had begun an ERP cloud migration as part of a digital transformation initiative prior to the COVID-19 pandemic fared far better than organizations that didn’t. “It allowed them to set themselves up for building out new products, allowed them to disrupt their own market and become market leaders,” says IDC analyst Mickey North Rizza.

But getting it right isn’t easy. As Rizza points out, “If you’re missing one little data element when you go through this migration, you can literally turn the business upside down.”

To help CIOs avoid the traps and pitfalls, here are some of the secrets of a successful ERP migration to the cloud.

1. Draw on lessons learned from prior cloud migrations

Virtually every enterprise has moved non-ERP applications to the cloud or to SaaS platforms. That experience should inform your approach in migrating ERP to the cloud.

Early on in the process, CIOs should bring business leaders, end users, and IT staffers associated with those past projects together to identify unanticipated costs or technical roadblocks that may have cropped up, as well as any unexpected security, privacy, data backup, or networking issues. Also important is to identify any groups or individuals inside the company who were particularly resistant to change. Every company has a unique culture, so it’s important to understand how previous cloud rollouts were communicated, how they were received, and how they were executed.

2. Create a comprehensive plan and stick to it

No one would be foolish enough to embark on a project of this magnitude without a plan. But you need more than one plan: You need an applications migration plan, a data migration plan, and a communication plan, in addition to plans for training, security, networking, and ongoing monitoring and maintenance. An ERP cloud migration at a large enterprise could take three or four years to complete, so the overall comprehensive plan of plans has to have specific milestones. Organizations should try very hard to stay on schedule and avoid scope creep. But the plan also has to have some flexibility in order to accommodate changing business conditions.

3. Inventory your applications and data

Sounds pretty basic, but after 10 years or 20 years of customizing commercial applications and writing a few of your own, you’d be surprised what you find when conducting a comprehensive survey of the applications portfolio. Same with data, you need to know what you’ve got, what kind of shape it’s in, where it’s located, how much of it needs to move with the applications, what historical data needs to be archived, and for how long.

4. Take stock of business processes and institutional knowledge

ERP apps don’t live in a vacuum, so it’s important to understand how ERP systems “spill into other systems,” says IDC’s Rizza. And that applies to both internal systems, such as CRM, as well to business partners who might have to make alterations to their processes in response to your changes.

In addition, organizations need to take a “knowledge inventory” to gain a clear understanding of not only what you have, but also what you do in terms of processes and procedures that might be impacted by a move to the cloud.

5. Decide on a one- or two-step approach

There are two strategies that organizations can take when moving ERP apps to the cloud. You can “lift and shift” existing apps to a cloud platform as the first step, and then over time refactor or rewrite specific applications to take full advantage of the business benefits of a streamlined, optimized cloud-native app. Or you can do it all in one step by modernizing applications while they are still on-premises and then migrating those updated apps to the cloud. Generally speaking, the two-step approach is more popular; it delivers benefits faster and is less risky.

6. Establish a comprehensive training program

Wellesley College CIO Ravi Ravishanker was a veteran of two ERP upgrades at past jobs when he launched a project to move the college’s legacy ERP applications to the Workday cloud platform. The availability of vendor-provided training materials and methodologies is “a game changer,” he says.

Ravishanker found it useful to customize Workday’s training materials for his end users. “We needed to create documents that walked people through the process with screenshots,” he says.

His team brought groups of employees into the computer lab for hands-on training; and in some cases, IT conducted one-on-one training in the employee’s office (this was pre-COVID). Ravishanker points out that training is an ongoing process; even after the system has been deployed, organizations need to carve out staff time so that training materials can be constantly updated to reflect new releases from the vendor.

7. Automate as many processes as you can

Automation can help organizations speed up their cloud ERP migrations and it can also help reduce human error. There are a variety of available automation tools, including those that automate data transfers, audit the data migration to make sure everything was done correctly, and automate testing, backup, and disaster recovery.

8. Migrate the least critical applications first

ERP vendors often recommend creating a matrix that categorizes apps on their level of usage, complexity, and impact on the business. When embarking on an ERP migration, IT leaders should start with the apps that have the least impact on the business, according to this strategy. Ravishanker used this approach in moving Wellesley’s ERP apps to Workday, saving mission-critical finance and payroll for last. As part of this strategy, Ravishanker actually ran the old and new systems in parallel for a period of time to make absolutely certain that the switchover would go off without a hitch.

9. Consider the networking and security implications

Once you have core business processes running in the cloud, it’s critical that employees are able to securely access those apps from any location. Companies should make sure that employees connect over a VPN and that two-factor authentication is required. Organizations should also have redundant connections to the cloud, with some combination of MPLS, Metro Ethernet, fixed wireless, and traditional broadband links.

10. Uncover any skills gaps that might impact the migration

For companies without much experience in moving applications to the cloud, it’s important to do an honest assessment of the skills required to do the job, and match that against the skill set of the IT staff. Do they have the bandwidth and expertise to be rewriting applications for the cloud? Are they plugged into business processes to the extent that they can evaluate applications and decide which might have to stay on-prem for regulatory or security reasons, which should move as-is to the cloud, and which would provide a significant business benefit if re-written for the cloud. At this point, many companies bring in outside consultants who have the relevant skills and experience.

11. Re-evaluate disaster recovery and business continuity planning

Once your ERP apps have left the building, it’s important that DR/BC plans reflect the new reality. The good news is that moving applications to the cloud provides an opportunity to revamp backup and DR plans to include cloud-based backup and recovery. This could eliminate the need for a backup data center or a physical facility that hosts backup disks or tapes.

12. Keep the lines of communication open

“It’s important to have empathy and know the pain that people are going to feel,” says Ravishanker. CIOs need to communicate with everyone involved in the project from the get-go and maintain constant communication throughout the process. Be willing to listen to end users and allow them to help shape the project to the extent that you can, says Ravishanker. His team even set up a hotline so end users could call if they had problems when the new system went live.

Organizations need to also extend their communication efforts to customers and suppliers, making sure to emphasize that any changes that are occurring are being done to improve business processes and make everyone’s life easier in the long run.

13. Don’t forget to factor in data sovereignty

With a cloud ERP migration, mission-critical applications are moving outside of your direct control and may end up being replicated across multiple cloud availability zones. Organizations need to understand that they are still responsible for complying with privacy regulations such as GDPR and protecting customer data no matter where it’s located.