ERP transformation and migration to the cloud are lucrative, yet highly risky. This is because it is more than an update, adding a new module, or implementing extra features to a system. The process creates a companywide disruption and ultimately results in improvements.
Taking the leap and migrating to the cloud with ERP solutions like SAP S/4HANA Cloud streamlines your processes, reduces human error, and gathers data for analysis. It all contributes to improving efficiency and profitability.
Advantages of ERP Transformation to the Cloud
ERP transformation is usually driven by a variety of factors; for example that the current ERP system doesn’t align with the company’s objectives, different departments running disparate software systems, no real-time visibility of data and failure to conduct meaningful analysis and cross-enterprise visibility. Other reasons could be using legacy ERPs that are no longer updated and the need to transition to new technologies. Whatever the motivation transforming your ERP system and moving to SAP S/4HANA Cloud comes with a set of advantages that include:
- Facilitating smarter use and processing of data to evaluate and accelerate change
- Improving strategic planning
- Supporting insightful decision making
- Improving the company’s culture
- Harness the capabilities of your workforce
Altivate has created a set of 7 steps to successfully plan and implement a cloud ERP implementation.
Identifying the Scope of Work and Goals
Determine the goals and scope of your ERP migration to the cloud is the initial step in the planning cycle. In this step, the aim is to map out exactly the business requirements and expectations of the cloud ERP. As you move on to budgeting, you need to define your budget, set a timeframe, and plan what you hope to accomplish.
Once these foundational aspects have been defined internally, the next step would be hiring an ERP partner like Altivate to help establish the higher-level aspects of the transformation and prioritize initiatives. This is the stage where you define which core processes will be affected and how you contemplate their optimization through system change. You should also specify the modules your business needs, making strategic decisions about organizational matters. For example, if aspects of your organization operate through a shared service or if you want to offshore certain initiatives, these crucial decisions need to be made before you move to the next step.
Process Mining
Process mining will help you collect solid, accurate data about your process framework, giving you a strong foundation to identify the transformational changes you plan. When organizations do not use process mining tools, they gather data via surveys, site visits, and team knowledge. Although this is certainly helpful, in isolation it holds a potential for human error and factual weakness. Solutions like SAP Signavio can provide lucrative data already existing in your current systems, on which you can confidently base your project plan. Integrating this with the human intelligence you have gathered is the most effective way to form an accurate snapshot of how the business operates.
In this step, you will identify the core reasons for inadequately performing processes, detect compliance violations, and monitor process performance while acting on critical cases and performance bottlenecks.
You can uncover hidden scenarios, query decisions and rules applied, and further define your project plans by identifying variances between the desired state that you defined in step 1 and the existing state that you uncover through process mining in this step.
Shaping and Targeting
In this step, you collect initial feedback on the plans you created in previous steps from significant stakeholders from various company locations and different process areas; bringing them together for a blueprint workshop. In this step, functional experts, procurement managers, and core process owners meet with your ERP consultant and head of the supply chain to define exactly how the processes they have a stake in will operate. This usually takes about three to four months. To ensure that processes function properly in the new cloud ERP system, this is where decisions about process changes or feature customizations are made. These decisions are then processed by the consulting partner. They can configure the system accordingly – for example, by enhancing the given system through customized reporting or interfaces to other systems.
Defining scenarios
After initial planning has been scoped out at both lower and higher levels, and system customizations have been agreed upon, it is time to generate test scenarios and cases. This will increase commitment to the proposed solutions. This is the most significant milestone at the end of the blueprint phase.
The team should report back to stakeholders and the people impacted, and secure their buy-in and support. This step will be much easier with a software tool that allows visibility and collaboration across departmental boundaries. SAP Signavio provides this. Once you have everyone aligned, you can generate test scenarios in the next step. These scenarios are sufficient to test the strength of the structures defined in previous stages.
Implementation and Testing
In this step, your consulting partner processes the information they have accumulated and starts implementing the new cloud ERP system and working on its configuration. They will build the interfaces you need with other systems and create your process and decision models and workflows. In this step creating and setting up user accounts and ensuring that everyone is ready to use the system is a must.
Next is the testing phase, to ensure you run a proper sequence of tests, testing individual units to find out if they are operating as intended and also conducting integration tests to check how well the system integrations planned actually operate in practice.
End-to-end process testing and simulation will enable you to uncover any discrepancies or issues you are dissatisfied with, which can then be addressed at an early stage to mitigate larger issues down the line.
The next crucial test is a user acceptance test. Involve people from various departments within your organization to test the system, adjusting to any problems they encounter. This is also necessary to engage with people out in the field who will eventually have to use the system.
Training and Coaching
This is one of the most critical steps. Training end users in the new system will guarantee buy-in and solidify the project. Training sessions should be conducted in large deployments. They should harness the knowledge of those who have been closely involved in the previous steps. They should be leveraged as trainers or to inform your training staff.
Change management plays a hugely influential role in this step. Employees need to understand what the new system does, and what the new processes are. They also need to comprehend why things are changing, their role in the change, and the support available to them.
It is also vital to take localization into account because despite having defined a general target, there will be variation at various sites. As an example, if you are deploying to 200 warehouses across the world, different locations will have different requirements. There might be the need for a unique interface to a system at one site but not at another. It is imperative to test, adjust, and refine across the board and in line with end-user requirements as part of change management and deployment efforts.
Review and refine.
This is when the project goes live and the review starts. Your team is off and running with the new system and processes, and the majority of the effort has been completed. There may still be bugs and issues with the system itself. As a consulting partner at Altivate, we usually anticipate all the possible issues, so we can recover quickly, with zero downtime. We conduct an ongoing review system, and we believe it is a vital part of the change management element of the transformation process.
We create various channels with our clients which are vital in cases where something isn’t working well or in the way you intended it to. We ensure the issue is communicated quickly and easily, so we can take corrective action. By continuously monitoring whether processes work the way they were designed, you can make adjustments as you progress, and make sure your new system runs at optimal levels.
Upgrading to cloud ERP systems, promoting best practices, and consolidating other IT systems into one ERP system is the best way to become more efficient. By combining this exercise with a process transformation initiative, your organization will also become more effective.
