Are Firms Really Ditching Traditional, On-premise ERP for Cloud-Based Systems?

The answer is an unequivocal Yes! A new generation of workers and buyers raised in a cloud-driven, mobile workplace are rewriting the playbook for services and project-driven companies. They expect better metrics, process automation and a genuine customer-centric experience. Still, over 70% of companies struggle with outdated business management solutions that are costly to maintain and anchor the organization to yesterday’s traditional ERP model. Here are key considerations for a cloud ERP vs. your on-premise system, as well as benefits you can expect from making the switch.

What is your on-premise ERP system costing you?

If your current, on-premise ERP system lacks the power to support your business needs and is costly to maintain, then you should be considering moving to a new system that runs on the cloud. One of our professional services clients, Andrew Advincula, CFO, at Berkowitz Pollock Brant Advisors stated that “once he went onto an ERP system and platform that was cloud-based, the company was able to leverage more valuable data not only for their staff but for their clients”. A key element to success of any organization is having the key data needed and accessible for analysis.

Hosting and Licensing

Remote hosting and big IT overhead are large costs of older systems. With cloud ERP the cost to entry is low, especially compared to the cost of hardware and perpetual license fees of on-premise systems. One study stated that 93% of enterprises are currently adopting cloud-based software in their organization.

Cost of Maintaining Customized Applications

Your company has cobbled-together point solutions to get by and the systems aren’t well integrated. If this is your organization, then you are faced with having your employees do the work that your systems should be doing. This is unproductive and raises motivational challenges as your employees work harder not smarter. A Gartner study predicts software integration will account for 40% of the money spent on digital business solutions through 2020. Over that same period, the number of businesses adopting postmodern ERP strategies will rise to over 40%, up from 15% today.

A Struggle to Integrate Acquired Firms

You acquire companies that have their own disparate systems that either don’t integrate easily or are so old that they need to be replaced or sent to the Smithsonian Institute. Harvard Business Review states that 70% to 90% of mergers and acquisitions result in “abysmal failure.” You may ask, why do these mergers and acquisitions fail? The reasons for failure rate can be complex since no two situations are the same, however, technology integration is one of the key factors indicated.

Cloud-based ERP systems can benefit your business with:

A Subscription-Based Revenue Model

The days of time-and-materials billing are dwindling. Customer requirements and regulations are forcing firms to make the move. Unfortunately, you may be discovering that your current software isn’t capable.

Better Control of Resource Management

As your firm grows, it gets harder to know who has specific skills, or availability. There’s a real need for automated skills-based resource assignments which today’s systems can provide. Microsoft states, “business process automation software gives your organization the ability to automate time-intensive tasks, thereby optimizing operations and bringing a new level of efficiency to your company”.

A Way to Understand the Talent and Keep Employees Happy

As you probably know, the shortage of skilled labor is the biggest challenge in today’s economy. Firms need a way to understand their talent, their talent pipeline, and provide workers with up-to-date tools to do their job efficiently and effectively. Additionally, ”process automation allows your employees to use their skills for the jobs they were hired to do instead of routine tasks that may take up valuable time”, according to Microsoft.

A Completely Integrated System

Many Professional Services firms have disparate customized software systems that don’t talk to each other. Their front-office system isn’t connected or integrated well with the back-office system. Dashboard A isn’t connected to Dashboard B so you can’t see a holistic view of your operations across the organization. You can’t reconcile what the CRM and Professional Services Automation (PSA) systems are telling you. One study by Forrester that was commissioned by Microsoft looked at the ROI for enterprises in adopting their Teams solution.

Teams is a shared workspace that brings many of the collaboration and communication solutions within Microsoft 365 into a focused workspace. It also helps organizations collaborate across all Microsoft solutions including Office 365 and the Dynamics 365 CRM and ERP applications, therefore optimizing overall productivity and the ability to easily integrate even further through the Microsoft Power Platform. In this study, which had a large majority of professional services firms represented, it was found that that by leveraging Microsoft Teams organizations increased cross-functional and cross-geography collaboration, enabled and accelerated digital transformation initiatives, and reduced solution costs and improved security.

An Ability to Plan

This is a big one. If you can’t pinpoint efficiencies and inefficiencies in your resources, you can’t scale. You can’t compare capacity to utilization. You can’t spot opportunities. You can’t improve the customer experience. You can’t plan for your company’s future. Having an integrated cloud vs. on-premise ERP solution solves this problem. As the famous quote from Ben Franklin goes, “If you fail to plan, you plan to fail!”

An Ability to Grow the Business

Whether you’re facing an infusion of private-equity funding, growing by acquisition, going public or exceeding your organic growth plan, Professional Services firms need a system that can scale as rapidly as they do. You want to profit from your growth and not be a victim of it. Deloitte states “the cloud offers the potential for optimized data architectures and processing engines, flexibility and an opportunity to scale, and streamlined integration with other emerging technologies.” Professional Services organizations need to consider this when deciding on a business management system that will scale with them as they grow.

If you don’t have a plan to modernize your ERP, you could be facing some challenging times ahead. It takes excellent planning and execution to get there and a technology-oriented mindset along with leveraging the right software and technology partners. Velosio, a leading partner of Microsoft, has over 30 years helping Professional Services firms get there.

To learn more on this topic watch our on-demand webinar done in collaboration with CFO Magazine: Are CFOs of Professional Services Firms Really Ditching Traditional ERP? or click here to request a cloud assessment for your business.

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