{"id":1827,"date":"2024-09-18T19:05:45","date_gmt":"2024-09-18T19:05:45","guid":{"rendered":"https:\/\/solutionsreview.com\/thought-leaders\/?p=1827"},"modified":"2024-09-20T19:24:55","modified_gmt":"2024-09-20T19:24:55","slug":"how-to-upgrade-your-old-erp-system-to-the-cloud-without-dying","status":"publish","type":"post","link":"https:\/\/solutionsreview.com\/thought-leaders\/how-to-upgrade-your-old-erp-system-to-the-cloud-without-dying\/","title":{"rendered":"How to Upgrade Your Old ERP System To The Cloud, Without DYING"},"content":{"rendered":"

If you have an old ERP system and you\u2019re on the fence about moving to the cloud, you\u2019re caught in a squeeze. You might say you\u2019re in between a tombstone and a hard place!<\/p>\n

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\u2019t keep up with business demands.<\/p>\n

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\u2019t necessarily want to go. But, if you have an old system, it will eventually be R.I.P. No pressure!<\/p>\n

If your company is beyond a certain size, say $50 million in annual revenue and up, you almost certainly have multiple \u201cend-of-life\u201d clunky ERP systems. If you\u2019re a manufacturer or distributor, I\u2019ll bet you\u2019re experiencing the following \u201cnear-death\u201d symptoms:<\/p>\n

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  1. Your users grumble about having to use the antiquated system, such as \u201cold school\u201d screens and too many clicks to get a process done.<\/li>\n
  2. You struggle to retain younger workers. What millennial or Gen Z wants to use that ugly monster? They\u2019d rather die!<\/li>\n
  3. Older employees are retiring with the \u201cGreat Resignation\u201d, taking their experience and \u201ctribal knowledge\u201d with them. Typically, they were the ones running the old ERP systems.<\/li>\n
  4. You can\u2019t expand your business as your geezer wheezing system can\u2019t effectively handle multi-site, multi-country, multi-language, etc.<\/li>\n
  5. You can\u2019t take advantage of new Industry 4.0 and SmartFactory technologies like the Internet of Things (IoT), and your manufacturing plants remain stuck in the \u201clast century.\u201d<\/li>\n
  6. You struggle with not enough \u201chuman intelligence\u201d, let alone artificial intelligence.<\/li>\n
  7. You\u2019re drowning in old customizations, and most of the time, you don\u2019t even know who wanted them in the first place.<\/li>\n
  8. Your user interface (UI\/UX) is from 1999 when Prince was singing. Yes, the \u201890s called, and they want their ERP system back!<\/li>\n
  9. After COVID, your supply chain is riddled with disruptions, and you can\u2019t get materials in time. Even worse, you can\u2019t see the shocks coming until it\u2019s too late!<\/li>\n
  10. You\u2019ve 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).<\/li>\n<\/ol>\n

    Do any of these \u201cpain points\u201d exist at your company? If they do, then the ERP Doctor (yours truly) might have just the remedy to heal you!<\/p>\n

    In this article, I will explain how my company<\/a> 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.<\/p>\n

    ERP software selection and digital transformation firm Panorama Consulting Group coined the phrase \u201cERP Titans\u201d 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 \u201chosted\u201d solutions that are not up to date. Many of these ERP systems are like the \u201cWalking Dead\u201d, either end-of-life (i.e., sunset) or near death!<\/p>\n

    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 \u201creimplementation\u201d anyway. No matter what the vendor or systems integrator (SI) tells you!<\/p>\n

    Justifying the move to the cloud<\/strong><\/h3>\n

    The big ERP vendors and SI\u2019s have generally used a carrot and stick approach to get customers to move to the cloud, but it\u2019s 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.<\/p>\n

    Basically, the message is to move to S\/4HANA NOW or risk losing your health insurance (maintenance and support)!\u00a0Maybe a carrot approach would have been better. For example, here are some good reasons\u00a0why you should move to the cloud courtesy of Oracle NetSuite.<\/a><\/p>\n

    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\u2019re in a world of hurt. So, bottom line: you want to root out those geriatrics while you still can!<\/p>\n

    Who is PCG, and how can we upgrade you to the cloud?<\/strong><\/h3>\n

    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 \u201clift and shift\u201d or \u201cbrownfield\u201d, is possible, to me it\u2019s a wasted opportunity because you\u2019re not reengineering old business processes or cleaning up dirty data.<\/p>\n

    It\u2019s like changing your surroundings and recreating the same problems in a new environment. Hardly a recipe for a healthy cloud ERP! Instead, I\u2019m a fan of business transformation in a measured or hybrid fashion, sometimes called \u201cbluefield\u201d.<\/p>\n

    Contrary to popular belief, \u201creimplementation\u201d is not necessarily a dirty word. You don\u2019t have to reinvent the wheel (ha, see what I did there?). It\u2019s simply taking a fresh look and reimagining a system that could be 5, 10, or even 20 years old. Believe me, you don\u2019t want to recreate the process and system mistakes of the past.<\/strong>\u00a0Instead, you want to:<\/p>\n

      \n
    1. Thoroughly assess the readiness of your culture for the project<\/strong>. We have automated tools for this.<\/li>\n
    2. Secure executive and key user sponsorship for the project<\/strong>. This is #1 on McKinsey\u2019s list of key success factors for a transformation project.<\/li>\n
    3. Develop an organizational change management (OCM) plan<\/strong>\u00a0and perform the assessments throughout the upgrade project. Many projects fail here because customers devalue this step.<\/li>\n
    4. Rethink Key Performance Indicators (KPIs) to align with business metrics<\/strong> 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.<\/li>\n
    5. Do a gap analysis against the new system\u2019s functionality.<\/strong> 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!<\/li>\n
    6. Use Business Process Management (BPM) to develop \u201cto be\u201d processes in the ERP system itself<\/strong>, rationalize customizations, and produce a \u201ccore business model\u201d that will make it much easier to speed up the rollout of the upgrade to new sites.<\/li>\n<\/ol>\n

      PCG uses a Cloud ERP upgrade project methodology, which was built using the Infor Deployment Method<\/strong>\u00a0and enhanced by us with many new templates and best practices. This is described in the following sections.<\/p>\n

      The Cloud ERP upgrade project<\/strong><\/h3>\n

      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.<\/p>\n

      Although the CEDM and Velocity were built with Infor CloudSuite and Oracle NetSuite in mind, and they work especially well for those solutions, they\u2019re also great for upgrading your end-of-life or near-death solutions from other ERP vendors! We don\u2019t want any zombies roaming around in your \u201cback office\u201d.<\/p>\n

      Here\u2019s the graphic explaining the CEDM. Each phase of the project is explained in the sections below.<\/p>\n

      \"\"<\/p>\n

      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).<\/p>\n

      These are the\u00a0ERP Doctor\u2019s orders<\/strong>, and I\u2019ve got a PhD from the school of hard knocks!<\/p>\n

      Phase 0\/Engage Phase<\/strong><\/h3>\n

      In our methodology, the first phase is called \u201cEngage,\u201d but I often hear it called \u201cPhase 0.\u201d Here, we assess readiness for the upgrade project, including cultural fit and the all-important executive sponsorship.<\/p>\n

      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. \u00a0Some 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.<\/p>\n

      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.<\/p>\n

      Actualize<\/a> is very versatile because it works with Birst Analytics (Infor), Microsoft Power BI, and Tableau.<\/p>\n

      Deliverables of this phase:<\/p>\n