Photo copyright 2012 Michael Krigsman. Professional Services in Cloud ERP Prepared by Michael Krigsman February 2012 NetSuite sponsored this independent white paper; Asuret does not endorse any vendor s product or service.
Cloud computing and software as a service (SaaS) are powerful forces to help organizations improve operations and achieve greater business agility. To make informed decisions and leverage your ERP investment, it is important to understand the impact of cloud computing and the role of professional services in this new world. Table of Contents»» The Cloud Difference 2»» Preparing for a Cloud Implementation 4»» Final Thoughts 5 This white paper is part two of a series sponsored by NetSuite and written by Michael Krigsman, a well-known cloud and ERP thought leader. The first white paper discusses transforming your business using cloud-based ERP. This second white paper explores the important role of professional services when implementing cloud ERP. And the third white paper offers suggestions to encourage ERP adoption, an important foundation to create business transformation that endures. These white papers present an independent view to help you understand ERPrelated professional services in the cloud. The Cloud Difference Cloud-based ERP systems, delivered using the software as a service (SaaS) model, are an important part of today s enterprise technology environment. Differences between cloud solutions and traditional on-premise software products have significant implications for professional services and the implementation process. Given the importance of implementation in achieving ERP success, buyers should understand these differences to take best advantage of the opportunities presented by the cloud. Why cloud is different To understand why cloud implementations and professional services are different from on-premise deployments, we must examine the nature of cloud computing itself. Cloud-based vendors deliver their software strictly through a web browser, with key advantages arising because the software, and all data, is stored remotely (in the cloud). For example, users access the software remotely through an ordinary web browser, regardless of where the actual servers and software are located. With cloud products, the vendor provides and maintains the entire software delivery infrastructure including all hardware and servers, software installation, patches, and upgrades. Unlike on-premise software, buyers of ERP delivered as a service need no additional hardware or other equipment aside from the computer already on their desk. Since cloud deployments require no infrastructure aside from desktop computers and an Internet connection, implementation efforts can focus on business needs rather than IT infrastructure. Cloud implementations typically involve only configuration, with no additional programming, as the means to adapt the system to your company s needs; to configure the system, consultants (or even power users) choose options by clicking buttons on the screen. Choosing software options is simpler and quicker than writing code and tends to encourage greater dialog between IT experts and line of business users during the implementation process. Copyright 2012 by Asuret, Inc. All rights reserved. Page 2
Cloud ERP reduces infrastructure costs while improving collaboration between IT and lines of business. The importance of configuration over programming A significant weakness of traditional on-premise ERP implementations is the separation between those performing the technical implementation and end users. This gap between technologists and line of business users is widened by the waterfall methodology of software development that is often used with on-premise ERP projects. The waterfall method emphasizes discrete phases of requirements gathering followed by periods of software development that takes place in isolation from users. In practice, the lack of collaboration inherent in this approach tends to make implementations relatively lengthy and frustrating for participants. In contrast, the point-and-click configuration of cloud products facilitates a culture of rapid prototyping based on strong collaboration with users, which makes for a more responsive implementation effort. Users and technologists working closely together in short, agile cycles lets all parties see results more quickly. After seeing results, users can then offer feedback, letting consultants refine the configuration. Such iterative approaches tend to be faster and more efficient than the long waterfall cycles that give on-premise ERP implementations a reputation for long, expensive projects. It is worth noting that some on-premise projects now use an iterative approach, hoping to achieve the rapid implementation benefits offered by cloud deployments. Collaboration, agility, and upgrades. Beyond the initial implementation, configuration changes can be made any time in the future to accommodate business change. Every ERP buyer should consider the technology impact of changes such as making an acquisition, adding a new location, or responding to new government regulations. No discussion of cloud and configuration is complete without explaining two impacts on upgrades. First, because users access cloud ERP over the Web, there is no local software to install or upgrade. The cloud vendor therefore performs all upgrades behind the scenes new features simply show up, without any technical upgrade process or software installation. Second, configuration changes typically survive the vendor upgrade process intact, because they do not change the underlying software code. In contrast, on-premise customers that customize code typically must undertake a reprogramming effort as part of the upgrade, which makes on-premise upgrades expensive. However, avoiding upgrades can make the system outdated and therefore less capable over time. In addition, when an on-premise vendor terminates support for a particular product version, customers may face a difficult choice: either accept the forced upgrade or risk no support for a mission-critical application. Copyright 2012 by Asuret, Inc. All rights reserved. Page 3
Preparing for a Cloud Implementation ERP implementations usually involve line of business stakeholders, IT experts, external consultants, and other related parties. Without sufficient communication among these various groups, information silos can interfere with a productive implementation process. Your implementation team is key to success. Choose both partners and internal resources carefully. Although these silos tend to occur more intensely in traditional waterfall-style implementations, they remain a concern on cloud deployments. However, the iterative approach to cloud implementation, discussed in the previous section, creates interactive working relationships across departmental lines and organizational boundaries, which of course reduces information silos. Cloud ERP customers can deepen this collaboration by using the implementation as an opportunity to break down communication barriers across the company. For example, consider a team-building event for people working in different departments to encourage positive communication. Using the ERP implementation as a vehicle to improve collaboration is an excellent way to create success with the software and with your organization as a whole. Implementation roles Successful implementation involves partnership between personnel from the lines of business and system experts who typically work for a thirdparty provider of professional services. ERP selection and deployment is an occasional activity for most organizations, yet it requires great expertise. For this reason, most companies hire a professional services firm to help configure and implement the software. A professional services team can guide your implementation from the time of software purchase until you successfully go live with the new system. Beyond configuring the software to meet your organization s specific needs, experienced consultants can serve as a trusted advisor, offering advice regarding the entire strategy for setting up and using an ERP system. The implementation team should include several important roles: Experts inside the company who know the business processes that the ERP system will automate. Select these power users from departments that will directly use the system. External software experts, who understand the ERP software and how it functions, and can apply best practices for configuration and integration with existing systems. Eventually, you will train super users, internal staff who can learn the system well and then assist other users and answer their questions Someone responsible for training and change management, to help users understand the new software and its impact on their work A project manager to oversee the implementation on behalf of your company Copyright 2012 by Asuret, Inc. All rights reserved. Page 4
Final Thoughts The right implementation partner adds tremendous value to any cloud ERP project. Implementing cloud ERP is sufficiently different from on-premise that it makes sense to find a professional services partner with the right experience. The ease of cloud-based software may tempt some organizations to avoid engaging a services partner and go it alone. Unless your company has substantial ERP implementation experience, this approach will likely create inefficiency and disruption while the in-house team learns the new software. Far better to select an experienced and trustworthy partner to help you get up and running in the shortest time and least amount of hassle. When choosing an implementation partner, always focus on two points: technical competence and judgment. The success of your implementation relies on a professional services team that is capable of configuring the software based on your particular business needs. Doing so requires core technical competence and sufficient business judgment to make the right configuration decisions. A well-implemented ERP system can help your organization gain competitive advantage. Spend the time necessary to define your goals and be sure to engage stakeholders at every step of the process. Early in the implementation process, fully explain the business rationale behind your initiative to the professional services partner. As the implementation nears the go-live point, be sure to train users so they can be effective with the new system right from the start. Always remember that ERP success is ultimately a function of communication, collaboration, and knowledge sharing between your organization and the services partner you select. Copyright 2012 by Asuret, Inc. All rights reserved. Page 5
About the Author Michael Krigsman, CEO of consulting and research firm Asuret, wrote this document. Michael is a recognized, international authority on creating IT project success and related CIO issues. One of the most respected enterprise software bloggers, he has written almost 1000 posts enterprise software, cloud, CRM, ERP and alignment between IT and lines of business. In addition, he has written thought leadership reports for major analyst firm, IDC, on project portfolio management, CRM, social business, and cloud computing. Michael has been quoted or mentioned over 500 times in important blogs, newspapers, television, trade publications, presentations, academic dissertations, and other media. He has also been quoted in almost 20 books. Michael has worked with companies such as SAP, IBM, Lotus, and many others to create consulting tools, methodologies, and implementation strategies related to project and business transformation success. He has presented to Harvard, University College London, Babson College, Boston University, and Suffolk University. Michael is a social media expert who has almost 10,000 followers on Twitter; he frequently speaks at industry conferences and events and often receives VIP invitations to enterprise software vendor events. Lisbeth Shaw, Vice President of Asuret, contributed to research and editing of this document. Copyright 2012 by Asuret, Inc. All rights reserved. Page 6