Skip to Content

So you have been living in the “on-premise” software world.  The business is pretty much satisfied with the information they need to run the company profitably.  So why do you need to move to the Cloud?  Well, if you look at the total cost of ownership (TCO) of Cloud solutions compared to on-premise software, it becomes very clear that Cloud can be a much cheaper option.  Additionally Cloud solutions allow you to easily turn on or turn off capabilities to meet your ever-changing business needs giving you more flexibility than traditional on premise solutions.  Keeping up with new innovations in the IT
industry is also a compelling reason many industrial manufacturers to move to the Cloud.  These innovations combined with the previously mentioned lower TCO are driving more companies away from a classical on-premise software approach and toward the Cloud.

Cloud4.jpg

Once you come to the realization that you are moving to the Cloud, how do you go about taking the steps of moving your business processes from on-premise to on-demand?

There are a series of steps that I would suggest you take to help you decide the best path forward in moving your current on-premise solutions to the Cloud.  These are not long, drawn out steps, but you do need to plan in advance to make sure you are moving to the Cloud in the most cost effective, risk adverse and efficient manner possible.

Steps:

  1. Review your business processes and place them into 3 groups:
    1. Commodity processes – these are processes like HR or Travel & Expense which are
      required, but not mission critical to your core business.
    2. Core processes – these are your key processes like Order- to-Cash for example.
    3. Mission critical processes – these are the market differentiating processes that set you
      apart from your competition.
  2. Determine the level of investment you have in an existing business solution.  If you have a large initial investment, you probably don’t want to pick this process first, but go after a less cost-intensive opportunity for improvement.
  3. Analyze both the ease and cost of moving the process to the Cloud.  This is where you need to look at your existing process and evaluate the new Cloud solution to project the cost of moving to a new Cloud solution in terms of factors such as time, money, resources, and change management challenges.
  4. Decide how complete the Cloud solution is compared to your existing solution and whether or not it will be sufficient to cover your business process requirements. Since Cloud solutions are still young in terms of functionality scope compared to on-premise solutions, you will need to make sure that the Cloud solutions cover the basics of what your business processes require.  Nothing really new here, as you already do this sort of compare and contrast for every solution evaluation.
  5. Review the compliance and regulatory requirements you must follow.  Does your company have constraints in moving data to the Cloud?  Government regulations such as ITAR, Title 21 CFR Part 11, and other mandates place restrictions on where data can be stored; and who can have access to the data. These regulations often apply directly to Cloud software support teams as well as IT control of software upgrades.  Understanding your regulatory compliance requirements is paramount for any project.

Once you go through these steps I suggest that you look at the Commodity processes as the first ones to move to a Cloud solution.  This will allow you to gain experience and get a quick win with a Cloud solution, gaining the trust of your company and its users.  You must be careful with your Core and Mission Critical processes until your company has some experience in the Cloud, and you have the confidence that the Cloud solution will support your core and differentiating processes.

You will find that Cloud solutions have a lower TCO than classical on-premise software, which will make moving to the Cloud quickly very tempting.  Don’t let this temptation get in the way of your evaluation of the risks and rewards to the business.  It is critical that you go through the steps to select the right processes and roadmap for your company’s move from on-premise to Cloud solutions.

So, that’s the why and how of moving to the Cloud for industrial manufacturers.  I look forward to your comments on what you are doing with the Cloud at your company.

To report this post you need to login first.

2 Comments

You must be Logged on to comment or reply to a post.

  1. Andy Silvey

    Hi Jay,

    thank you for a breath of fresh air and an article about planning and executing the journey to the cloud rather than simply telling everyone to go to the cloud.

    I’ve also wondered about the possible paths to the cloud here and here, your article really lays down methodically the questions/thoughts/decisions/actions and in an easy to understand and visualise way.

    We need more articles like this, more articles talking about how to get to the cloud rather than just saying, GO TO THE CLOUD

    Best regards,

    Andy.

    (0) 
    1. Jay Krueger Post author

      Thank you Andy!  I have worked in the SAP Cloud organization the past 7 yrs. so I have seen what makes sense for companies moving to the Cloud.  It needs to be done not as a “have too” but rather as a planned process just like any other business solution upgrade
      or change.

      (0) 

Leave a Reply