Migrating from legacy on-premise ERP systems to the cloud - SystemsAccountants

Estimated reading time: 9 minutes Migrating from legacy on-premise ERP systems to the cloud

A strategic guide to successfully migrating finance systems

Today’s competitive business landscape requires operational leaders who steer their organisations towards ever-greater efficiency and scalability. The migration of legacy Enterprise Resource Planning (ERP) systems from on-premise to the cloud is central to this effort. It’s a transformation project that offers game-changing possibilities for businesses, propelling them to new levels of scale and profitability.

However, the migration process poses its own set of challenges, requiring careful planning and execution. Success hinges on having a thorough understanding of how cloud solutions can be used to their full potential. Organisations that make the transition successfully can modernise their IT and finance functions, bringing new levels of agility, data-driven insights, and digital security.

Why the future is in the cloud

Embarking on the transformation of a core business function, such as the finance department, is a significant undertaking for any business. While the scale and complexity of change can be daunting, those persisting with legacy software should fear more the risks associated with inaction.

These risks are particularly pronounced in finance offices, where operational inefficiencies can significantly impede the broader goals of the business. A survey conducted by Deloitte revealed that 78% of CFOs who embraced cloud-based financial solutions reported improved collaboration and decision-making across departments

A recent Gartner report revealed organisations that migrate their finance systems to the latest software built for the cloud experience an average efficiency gain of 25%, leading to significant cost savings over time.

For growth-minded CFOs, remaining on-premise also limits what is possible within the finance office, given how advanced many AI-powered cloud-based ERP systems are. Embracing cloud technology offers a revolutionary shift, providing unmatched flexibility, scalability, and cost-effectiveness. On-premise systems are particularly vulnerable to this when they’re provided by vendors that are de-supporting, or no longer adding functionality to their solutions.

Cloud-based ERP solutions, with real-time data access and collaborative capabilities, present a unique strategic opportunity to reimagine operations and gain a competitive edge. When basic processes and manual-intensive tasks are eliminated, costs and time are saved. The knock-on impact is your team has more time and resources to focus on value-added tasks such as strategy.

What are the dangers of staying on-premise?

CFOs must be aware of the red flags that continued reliance on legacy systems can trigger, and act promptly to give themselves the best chance of executing a successful cloud migration. Legacy systems have an expiry date, which leaves businesses at risk of running limited applications. Ongoing support on offer can vary significantly between vendors and the specific terms of service agreements.

The maintenance of legacy software is another major headwind given the significant human capital expenditure. The loss of a key employee, a system error or sunset notifications can derail the proactive support a legacy system requires to continue. Such obstacles can severely restrict operational efficiency and impede adaptability to changing market dynamics.

What are the options when considering a move away from on-prem?

CFOs who have decided that change is necessary have several options ahead of them. Each has advantages and disadvantages, however, your team must be effectively prepared for whichever approach you decide to move ahead with.

  • “Big Bang”

A “Big Bang” lift and shift implements the system(s) all at once, going live with little to no user testing, and making adjustments once the system is up and running.

  • Phased

The migration can be phased, more slowly through a waterfall model. In this system, modules of the new system are launched sequentially, replacing the functions of the old system over time.

  • Hybrid

A hybrid model is also available, where the goal is to update the system and move operations to the cloud quickly. As this approach is crafted to fit the unique needs of the organisation, it is advisable to consult with industry talent experts given the methodical requirements.

Strategic Planning

Strategic planning is the cornerstone of a successful cloud migration. CFOs and their supporting teams must meticulously analyse the existing infrastructure, align business goals with cloud capabilities, and assemble a cross-functional team to navigate the complexities of the migration process.

Before initiating the migration journey, a comprehensive assessment of the current ERP infrastructure is required at the outset. This involves a deep dive into the existing system architecture, identifying dependencies, and understanding data structures. It allows the project leader to build a detailed inventory of the components to be migrated, modified, or retired during the process. By mapping the organisation and systems in this way, implementation leaders can make the right decisions at the right times to deliver success.

A successful migration also requires technology to be aligned with business objectives. To that end, CFOs must identify how cloud solutions can support overall organisational goals.

This involves a strategic evaluation of scalability, flexibility, and analytical capabilities offered by cloud platforms. The migration is not just a technical upgrade but a strategic move to enhance business operations, and this alignment allows for leveraging the full potential of cloud technology to drive efficiency and innovation.

During the planning stage, CFOs should carry out a thorough risk analysis to anticipate potential challenges that may arise during migration. Identifying and prioritising risks, whether related to data security, system integration, or user adoption, allows organisations to avoid pitfalls before they arise.

The importance of the right team

The migration process also requires collaboration across various departments, necessitating the formation of a cross-functional team. This team can be contracted for the specific project, whether that’s to select, implement or maintain the relevant systems.

  • This team should include IT experts, business analysts, end-users, and project managers who collectively bring diverse perspectives and expertise to the table.
  • Other vital roles include Cloud Solutions Architects, Data Migration Specialists, Change Management Experts, Transformation Directors, Programme Managers and Business Architects.
  • Organisations undertaking a finance office transformation will almost certainly also require ERP Consultants and Specialists, System Integration Specialists, and Compliance and Regulatory Experts

Delivering a Successful Cloud Migration

Institutions can become attached to legacy software, and may have genuine concerns that stop them from moving to a new ERP system or cloud version of an accounting product.

These worries are often about data – what to keep, what to erase, and how it will impact the implementation. Systems consultants are trained to help with data quality, as well as migration, and validation. The processes they put in place will help deliver a successful go-live where the end users have the data they need.

When it comes to migration, some firms will move all their data to the new system, while others will abandon the old data and start again with the new software. Expert guidance recommends finding somewhere in the middle, where the business brings essential data, which can also be used for more accurate testing of the system to ensure fixes are made ahead of go-live.

An unwavering commitment to security measures and compliance standards is foundational to the success of ERP migration, instilling trust among business stakeholders and regulatory bodies alike. While some organisations believe keeping their systems on-premise enhances their digital security, cloud providers invest heavily in security software and provide regular updates – compliant with international standards – to keep your system secure.

The cloud unlocks ERP’s potential

Successfully migrating legacy ERP on-premise systems to the cloud is a challenging and complex, but potentially transformative initiative. It goes beyond technological upgrades to indicate a major strategic shift in how a business operates.

The decision to transition away from on-premise systems may initially appear formidable, but businesses that remain tethered to legacy software face greater challenges, particularly as they limit future growth opportunities.

By navigating the complexities of strategic planning, assembling the right team, and ensuring a commitment to security and compliance, organisations can unlock the full potential of cloud technology and position themselves for sustained success.