Dominic Howson, Supply Chain Planning & IS Director, Hovis
The foundations of thousands of companies across the globe are built on ERP platforms, with SAP holding the dominant share. These platforms have been built up over decades in some cases and with considerable bespoke developments that have adapted the software to fit the needs of the myriad of business processes out there and the perceived nuances of individual businesses. CIOs and the wider business are faced with a real challenge of what to do next given support for the core of SAPs historical platform ends in 2025.
Over the last five to eight years, SAP has introduced new generations of their SAP R/3 platform moving to in-memory computing with Business Suite on HANA and now more recently the introduction of S/4 Hana. For many years businesses have chosen to develop code and transactions to alter the core SAP processes to fit their business and in the majority of cases run those platforms on-premise and most likely on business-owned assets.
These decisions have generated an eco-system of System Integrators and a wide network of SAP professionals who have built businesses and careers supporting companies developing functionality on SAP platforms. Many of these businesses have also built a support and infrastructure architecture that surround these platforms ensuring that the most resilient and highly available infrastructure is in place, the tin has enough capacity to cope with the workload and the organisation has the capability and conscientious approach to testing, changes and upgrades.
My peers and predecessors have and continue to build organisations that are constructed in a way to support and run SAP or any other ERP platform.
Many CIOs are now faced with ageing ERP platforms that are uneconomical to upgrade to the latest version and where the burden of managing the testing of custom developments and code has become overwhelming. An ongoing requirement to periodically upgrade the underlying infrastructure and the ongoing management of a multi-layer infrastructure required for unit testing, quality, production and DR environments can burden businesses with an ERP Infrastructure that is leaden-footed and far from agile.
Many organisations are now consuming software and support as a service as the default when introducing new applications and technology into their businesses but until recently this has stopped short of their enterprise applications such as SAP. The newest kid on the block and the last and probably scariest to migrate to is Cloud ERP - SAP has been quick to move into this market with their Public Cloud version of S/4 HANA and it is now a maturing platform. S/4 HANA public cloud is a viable option for new SAP customers and those looking to migrate from their traditional R/3 platforms. The Public Cloud version, in addition, sees the introduction of the latest technology such as machine learning and AI features with the additional benefit of a much-improved user interface and in-application support.
The question is, are we ready for Cloud ERP?
How do you unwind decades of developments and customisations and move to a platform that has a degree of flexibility but by its very nature is a platform where changes to key code are not sorted after?
One route is to consider starting again, whilst it may appear daunting, migrating your master data and starting afresh is a possibility for some businesses. There are lots of very smart people developing these systems with standard business processes and the question becomes - can your organisation adapt to a system rather than the system adapting to it? If you can answer yes to this then Cloud ERP may be a cost-effective escape route.
Your organisation must be ready for their enterprise applications being served up as Software-as-a-Service with quarterly releases and a new look and feel; but, on the flip side, it will be benefiting from the latest and greatest technology being provided at regular intervals and with a modern UI.
The traditional IT organisation will also need to adapt to support a Cloud ERP solution. The people structures and supporting service contracts need to be radically different in a business consuming Cloud ERP rather than traditional on-premise versions of the tools. Teams and contracts that serve to support the underlying architecture (i.e. Basis, ABAP, Infrastructure) need to evolve and change into supporting regular release cycles, integrations and analytics.
The migration to a Cloud ERP platform is not a straightforward choice for any business but the short term pain will lead to long term gain. There are many comparisons to be drawn to the journey to cloud email, it is now the de facto starting point for any conversation and it’s just a choice of vendor, the worries and concern around robustness and security are now a forgotten memory, in time the decision over Cloud ERP will be similar.
As a CIO and business community, more and more of us are embracing the Cloud to provide elasticity to our IT landscape and in most cases a reduced total cost of ownership. Our crown jewels are our ERP platforms, the time is now upon us where a movement of this last bastion of on-premise, needs to be left behind with a movement to true public cloud ERP. Cloud platforms are now mature enough and most importantly robust enough to run your business on.