How to Upgrade Your Old ERP System To The Cloud, Without DYING

How to Upgrade Your Old ERP System To The Cloud, Without DYING

- by Dan Aldridge, Expert in WorkTech

If you have an old ERP system and you’re on the fence about moving to the cloud, you’re caught in a squeeze. You might say you’re in between a tombstone and a hard place!

On the one hand, you have legacy server hardware, a relatively large IT staff focused on maintaining old on-prem applications, expensive customizations, and antiquated ERP software that can’t keep up with business demands.

On the other hand, you have your ERP vendor(s) saying you must upgrade your on-prem ERP to the latest cloud platform by a certain date (e.g., SAP ECC to S/4HANA by 2027), and you don’t necessarily want to go. But, if you have an old system, it will eventually be R.I.P. No pressure!

If your company is beyond a certain size, say $50 million in annual revenue and up, you almost certainly have multiple “end-of-life” clunky ERP systems. If you’re a manufacturer or distributor, I’ll bet you’re experiencing the following “near-death” symptoms:

  1. Your users grumble about having to use the antiquated system, such as “old school” screens and too many clicks to get a process done.
  2. You struggle to retain younger workers. What millennial or Gen Z wants to use that ugly monster? They’d rather die!
  3. Older employees are retiring with the “Great Resignation”, taking their experience and “tribal knowledge” with them. Typically, they were the ones running the old ERP systems.
  4. You can’t expand your business as your geezer wheezing system can’t effectively handle multi-site, multi-country, multi-language, etc.
  5. You can’t take advantage of new Industry 4.0 and SmartFactory technologies like the Internet of Things (IoT), and your manufacturing plants remain stuck in the “last century.”
  6. You struggle with not enough “human intelligence”, let alone artificial intelligence.
  7. You’re drowning in old customizations, and most of the time, you don’t even know who wanted them in the first place.
  8. Your user interface (UI/UX) is from 1999 when Prince was singing. Yes, the ‘90s called, and they want their ERP system back!
  9. After COVID, your supply chain is riddled with disruptions, and you can’t get materials in time. Even worse, you can’t see the shocks coming until it’s too late!
  10. You’ve been taken over by a Private Equity (PE) firm or VC, and they are acquiring companies that are bringing in many more old ERP systems. They arrive like zombies (the ERPs, not the PE folks).

Do any of these “pain points” exist at your company? If they do, then the ERP Doctor (yours truly) might have just the remedy to heal you!

In this article, I will explain how my company does business transformation and a cloud ERP upgrade project in general – including the implementation methodology we use. Then, I will explain how you can upgrade your old manufacturing ERP system to one of the market leaders.

ERP software selection and digital transformation firm Panorama Consulting Group coined the phrase “ERP Titans” for the top 4 Tier 1 ERP vendors: Infor, Microsoft, Oracle, and SAP. All of these vendors have thousands of customers (yes, like you) with aging ERP systems stuck on various versions, either on-prem or older “hosted” solutions that are not up to date. Many of these ERP systems are like the “Walking Dead”, either end-of-life (i.e., sunset) or near death!

Some of the Titans are forcing customers to migrate to the latest cloud version in a relatively short time frame, such as the SAP ECC to S/4HANA, by the 2027 mandate, or they will lose support. Because the cloud versions are all new products, though, upgrading to the latest cloud version with the same vendor (e.g., Oracle EBS to Oracle Fusion ERP Cloud) will often be a “reimplementation” anyway. No matter what the vendor or systems integrator (SI) tells you!

Justifying the move to the cloud

The big ERP vendors and SI’s have generally used a carrot and stick approach to get customers to move to the cloud, but it’s been mostly stick and not a lot of carrot. For example, SAP has established several uncomfortably tight deadlines for moving: 1) Upgrade all previous versions of SAP ECC to version EHP 6 by 2025, and 2) Upgrade SAP ECC all versions to S/4HANA by 2027.

Basically, the message is to move to S/4HANA NOW or risk losing your health insurance (maintenance and support)! Maybe a carrot approach would have been better. For example, here are some good reasons why you should move to the cloud courtesy of Oracle NetSuite.

I get it. You have other priorities than a cloud ERP upgrade. But consider this. If any of your old codgers die, as in it shuts down your operations, then you’re in a world of hurt. So, bottom line: you want to root out those geriatrics while you still can!

Who is PCG, and how can we upgrade you to the cloud?

Business Transformation is an opportunity to take your business to the next level, and in my opinion, no ERP upgrade to the cloud should be undertaken without a transformation. While a technical migration, sometimes called “lift and shift” or “brownfield”, is possible, to me it’s a wasted opportunity because you’re not reengineering old business processes or cleaning up dirty data.

It’s like changing your surroundings and recreating the same problems in a new environment. Hardly a recipe for a healthy cloud ERP! Instead, I’m a fan of business transformation in a measured or hybrid fashion, sometimes called “bluefield”.

Contrary to popular belief, “reimplementation” is not necessarily a dirty word. You don’t have to reinvent the wheel (ha, see what I did there?). It’s simply taking a fresh look and reimagining a system that could be 5, 10, or even 20 years old. Believe me, you don’t want to recreate the process and system mistakes of the past. Instead, you want to:

  1. Thoroughly assess the readiness of your culture for the project. We have automated tools for this.
  2. Secure executive and key user sponsorship for the project. This is #1 on McKinsey’s list of key success factors for a transformation project.
  3. Develop an organizational change management (OCM) plan and perform the assessments throughout the upgrade project. Many projects fail here because customers devalue this step.
  4. Rethink Key Performance Indicators (KPIs) to align with business metrics you want to measure in the future, and then set them up in the new system using Birst Analytics, Microsoft Power BI, or Tableau with our Actualize methodology.
  5. Do a gap analysis against the new system’s functionality. This is designed to identify areas where customizations and integrations will still be needed with the new system. Our experience with 25+ years of ERP consulting is that we can typically eliminate over 50 percent of them!
  6. Use Business Process Management (BPM) to develop “to be” processes in the ERP system itself, rationalize customizations, and produce a “core business model” that will make it much easier to speed up the rollout of the upgrade to new sites.

PCG uses a Cloud ERP upgrade project methodology, which was built using the Infor Deployment Method and enhanced by us with many new templates and best practices. This is described in the following sections.

The Cloud ERP upgrade project

Here is the methodology we use at PCG, the Cloud ERP Deployment Method (CEDM). We started with the Infor Deployment Method and then enhanced many of its templates to make it faster, more accurate, and less expensive for you.

Although the CEDM and Velocity were built with Infor CloudSuite and Oracle NetSuite in mind, and they work especially well for those solutions, they’re also great for upgrading your end-of-life or near-death solutions from other ERP vendors! We don’t want any zombies roaming around in your “back office”.

Here’s the graphic explaining the CEDM. Each phase of the project is explained in the sections below.

The milestones and components on the graphic are pretty self-explanatory, and not all of them are needed in an upgrade project, but I wanted to highlight a few that we believe are most important in upgrade projects vs greenfield (start from scratch) projects. I also identify symptoms of troubled projects and make recommendations to avoid failure (aka, death).

These are the ERP Doctor’s orders, and I’ve got a PhD from the school of hard knocks!

Phase 0/Engage Phase

In our methodology, the first phase is called “Engage,” but I often hear it called “Phase 0.” Here, we assess readiness for the upgrade project, including cultural fit and the all-important executive sponsorship.

Not shown in the graphic is the identification of the business metrics that the client wants to measure and the alignment to the Key Performance Indicators that can be set up in the new ERP.  Some examples of KPIs are a reduction in inventory value, an increase in inventory turns, and a reduction in Days Sales Outstanding (DSO) in Accounts Receivable.

Here is a description of our patented PCG Actualize module. It has preset KPIs that you can choose from, and you can create as many as you like to fit your business.

Actualize is very versatile because it works with Birst Analytics (Infor), Microsoft Power BI, and Tableau.

Deliverables of this phase:

  • Strategic Plan
  • Statement of Work (SOW)
  • Multi-site deployment plan, including systems to be replaced and locations
  • High-level enterprise architecture (ERP and edge applications)

The ERP Doctor recommends

  • You can think of this phase as the “health check” and the preliminary diagnosis, including the scope of the treatment from a high level.
  • In this “phase 0,” there is also a “triage” to determine which ERPs and other systems are in critical condition—that is, the ones that are at a high risk of dying!
  • KPIs are like glucose meters for diabetics. They should align with the most important metrics for the business so that after you go with your new cloud ERP, you will have real-time monitoring of the patient’s health!

Project Initiation and Planning

After the SOW is completed and released from Engage, it’s crucial to secure the best people possible on the project team from the customer side (yes, that’s you) to ensure commitment and key stakeholder support for working with the consultants (that’s us) and the consulting firm PM.

The project plan must fit to the SOW, the project team (key users) schedules and the strategic plan. We generally use MS Projects but can use other online tools as well (ask us).

Deliverables of this phase:

  • Project plan and schedule – This is the detailed plan with the phases and milestones clearly laid out.
  • Resources and staffing plan – Who are the key stakeholders, key users, and end-users at each plant or location? This helps ensure the best people can be backfilled from their “real jobs.”

The ERP Doctor recommends

  • You can think of this Project Initiation and Planning phase as assembling the best treatment team, both from the customer side and the consulting doctors, and dedicating them to the treatment of the patient.
  • Accordingly, the project plan is the detailed treatment plan including the “milestones” on the road to a healthy cloud ERP system upgrade, optimization, and business transformation.
  • The Doctor recommends developing a “core model” that goes into production first at the first location/plant. Subsequently, there will be “rollouts” in a phased fashion. Note: Beware the “big bang” approach because you could get yourself killed.

Inception

  • Define an Organizational Change Management (OCM) plan. OCM is perhaps the most important step in the People part of the project and perhaps the most frequently undervalued. The readiness for change of the people working on the project and the organization, in general, should be measured at each stage of the project. That’s why the development of OCM is in this Inception phase, and then Performing OCM is listed under every phase after.

Here’s a diagram that shows the major parts and details under each for OCM courtesy of projectplanexcel.net.

  • Review High-Level Requirements—This is a “50,000-foot” review of the main business processes. It is a survey of the “as is” business processes and the business’s desires/needs that aren’t being met by the current ERPs. This should include a listing of the customizations because many may be eliminated, but some may have to be recreated.
  • Define Key Business Data Structure – This is an assessment of the data that’s in the old ERP systems plus any production “edge” systems. Before the start of the data conversion, there should be an attempt to clean it up and to normalize bad master data that the transactions will use. For example, there could be duplicate business partners (e.g., customers and suppliers that were entered because of slightly different spellings or addresses that are really the same.

The ERP Doctor recommends

  • The OCM plan can be thought of as a way to convince the patient that they need to change, and the change will be positive. Nobody likes to be told their systems are old and need to be retired. They’ve gotten used to them, kind of like an old friend or even a family member. Here’s where the doctors’ “bedside manner” becomes so important, and a “communication plan” needs to be laid out.
  • Reviewing high-level requirements is like the initial exam in the doctor’s office. While we may know which systems need to be upgraded at this point, we don’t know the details.
  • Defining the data structure and cleaning that data with a master data management approach is recommended for the health of the new system. Old ERP systems are almost all polluted with dirty data. Remember: garbage in, garbage out…and you don’t want garbage in your new cloud system!

Elaboration

  • Review Business Process Models – This is where we use business process management (BPM). It can be aided with Infor Process Catalogs (IPCs) that start at the highest Business Control Model level 1. Some examples are (Sales) Order to Cash or (Purchasing) Procure to Pay. Then we drill down all the way through the levels, using the Dynamic Enterprise Modeler (DEM), to do a complete development of the “to be” business processes.
  • Develop and Validate Prototype (CRP 1) – The prototype typically involves a day-long conference room pilot (CRP) presentation by the key users to the stakeholders and maybe end users. It uses sample test data from the client’s existing data and the level 3 (main) and level 4 (more detailed) process flows to run through the actual entry of orders and transactions.
  • Perform Gap Analysis – This is an analysis of “as is” processes, integrations, reports, etc. that are missing from the “to be” core model. If a gap is identified it needs to be not just put on the list, it needs to be followed up on regularly until it’s filled.

The ERP Doctor recommends

  • The Review Business Models step is another opportunity to assess the health of the patient. Usually with a dead or near-death ERP, there are a lot of processes being done in spreadsheets or incorrectly (e.g., the dreaded “workarounds”) that need to be rooted out.
  • CRP 1 is a diagnostic for the consulting team too, because if the key users can’t follow their documentation or they fail at the keyboard, then the project isn’t healthy. Usually better training and documentation, plus time spent pounding the keys, is the right therapy.
  • Gap Analysis is a process revealing “what did we miss?” in our treatment plan (i.e., project plan), “as is” process review, or customizations examination. If the reason for a process is “Because we’ve always done it”, it’s probably not a true gap. So, find the true gaps and treat them – but not before there’s been an exhaustive check on whether the treatment is needed.
  • Prepare and Perform Data Conversion Rehearsal – Data migration may be the most important process in an upgrade project, and it’s frequently done inadequately. We use a data migration to cloud process which is called A2CE which stands for Anything to (Infor) CloudSuite Enterprise (CE).

Here is a great slide which shows an overview of the proven data migration process that we use at PCG. Essentially, we can take ANY legacy ERP systemincluding on-prem, old single tenant or hosted cloud ERPs, and convert the data/system to the CE multi-tenant cloud on AWS – in an automated way.

  •  Perform System Testing (CRP 2) CRP 2 should be done after the initial data conversion with cleaned-up master data has been done. It should be done in the production-configured Company, and the “to be” process flows should be done in the DEM. Sometimes, companies don’t do all the exception processes in CRP 1.
  • Prepare Documentation and End User Training – Documentation can be a lot of things, including online help, module descriptions, different presentations, and the business model itself. A huge help with documentation is that Infor has put all its documentation online in this amazing resource! 

The ERP Doctor recommends

  • Data migration rehearsal is not a one-and-done activity. If the tests show polluted data, clean it up and do it again. Do it as many times as necessary, and get the users to do data validation.
  • One way to do a thorough CRP 2 is to use the “80/20 rule,” where the processes you do 80 percent of the time (e.g., entering a sales order) are in CRP 1 and repeated in CRP 2, and the processes you do 20 percent of the time (e.g., a return sales order) are covered in CRP 2 only. As long as you cover them all!
  • We recommend developing “work instructions” that document not only the system parts, such as screenshots, but also all the decision points and reports, such as a sales order acknowledgment.

Transition

  • Prepare Final Production Environment – This is the final system with all the companies, modules activated, master data, data sharing set up, operating service (OS) installed, workflows defined, business process flows for all processes defined, all applications installed (e.g., Birst Analytics), KPI’s running and approved customizations built. It’s ready for final data conversion.
  • Train End Users – We generally use a “train the trainer” approach, where the key users train the end-users, but that doesn’t always suffice. If the step of end-user training has been done well, which typically means help from the consultants at that stage, then the end-users should be able to follow the “work instructions.”
  • Perform User Acceptance Testing (UAT) – We have templates for the UAT scripts (documents) and the UAT list for monitoring how it’s going.
  • Final Data Conversion – This is the proof the data is solid and that it’s been cleansed of impurities like duplicate records. We recommend migrating only master data, open orders (sales orders, purchase orders, production orders) and open transactions such as open Accounts Payable (AP) and Accounts Receivable.

NOTE: Migrating history weighs down the new system and there tends to be many referential integrity errors caused by dirty data. If you start to use AI, dirty data is also going to cause “hallucinations” and maybe even bad decisions if you allow AI to make decisions in workflows that include it. Scary!

The ERP Doctor recommends

  • The final production environment should be like a “step down” where recuperation starts.
  • Training end-users thoroughly is maybe the most important part of the preparation for going live.
  • UAT is a battery of tests to ensure that the training has been effective and that the users know how to do their jobs in the new system. If they fail any tests, then they need more “hands-on” time with the system!
  • Final Data Conversion is the last chance to clean up the data before it starts running. Once the blood starts running, it’ll be very difficult to stop any impurities from reaching the vital organs!

Optimize

I used to say to clients, “The optimization of your systems is never over.” It’s a continuing, virtuous cycle that leads to efficient processes, happy employees, accurate data as the “source of truth”, and ever-improving business metrics. Basically, your systems can stay healthy and ready to rock!

The ERP Doctor recommends

  • This is your wellness program! Stay on it. Have you heard the saying “Happy wife (or husband)….happy life”? Well, that applies to companies and employees, too!

Conclusion

If you have old on-premise ERP systems, then you’re already at risk. They may not be dead, but they are dying. Fortunately, the forecast is for a cloudy future – and that’s a good thing! If you follow the ERP Doctor’s guidance that I’ve provided here, then you will be able to upgrade your old ERP system to the cloud – without dying.

Once the system is upgraded, clients can have all the benefits of the multi-tenant cloud, such as:

  • Automatic upgrades twice a year, including all code fixes and product enhancements
  • iPaaS to connect the ERP to other systems and ERPs via REST APIs
  • Low-code/no-code customization development tools
  • Infor Generative AI
  • Robotic Process Automation (RPA)
  • Business process automation of workflows (ION)
  • Infor Document Management (IDM)
  • And much more…..

And a bonus: Here are the Doctor’s tips and tricks for keeping your new cloud system healthy:

  • Continue to practice and monitor OCM even after you are live and during rollouts. It’s like having a therapist do a periodic “check-up from the neck up.”
  • Keep a “clean core.” Customizations have a way of becoming addictive, like smoking, and they can lead to expensive lung surgery when the system is upgraded automatically and all the customizations have to be retrofitted.
  • Perform audits of your data frequently and install procedures to keep the data pure. Let’s call this “blood work” where you’re making sure you have a “single source of the truth”. An example is having business partner records entered centrally (i.e., in a shared service center) to make sure you don’t get duplicates. Bad data = bad blood; and bad blood can kill you.
  • Install a “continuous learning” program and invest in upskilling. Make the older users the teachers and the young ones the “med students”. This will keep both from leaving prematurely and it will keep your system clean and running smoothly.

If you want to speak to me about how PCG can help you upgrade your old ERP systems without dying, contact me on LinkedIn or email me at daldridge@pcgservices.com. Our website is https://pcgservices.com/ . And yes – we make house calls!!