According to PwC research, by 2020, hybrid ERP environments – combining on premise and cloud solutions, will be the norm. It’s true that many IT chiefs across Australia have begun to move their core, often legacy applications from on-premise to public cloud infrastructure with varying levels of success.
Most want to free up valuable staff resources and are looking to cloud services such as Microsoft Azure, to provide the scale they need. But some organisations have been slow to move big enterprise apps to the cloud largely due to perceived issues around security of data as well as regulatory requirements in their industry sectors.
IT execs gathered in Sydney and Melbourne recently to discuss the key challenges they are facing when it comes to deciding which core ERP apps can be moved to the cloud.
Linton Burling, enterprise lead at Rackspace A/NZ, there are two things enterprises should consider when selecting ERP apps to move to the public cloud: risk and transformation.
“From a risk perspective, many organisations understand the opportunities public cloud could present but maintaining core systems is critical to business success. The move would require demonstrable results while creating the lowest impact on the business. With this in mind, businesses should consider if they are ready for core functions to be hosted in the public cloud,” Burling says.
Meanwhile, organisations with digital transformation agendas are driving significant change to adapt their business to an evolving economic and competitive landscape, he says.
“Recently, we’ve seen leading ERP vendors such as Oracle and SAP promoting a renewed ‘platform-focused solution’, driving a greater opportunity for organisations to leverage public cloud services.
“Public cloud vendors such as Microsoft and AWS have reset the level of service quality now available for platform-as-a-service offerings, providing peripheral ERP application services for analytics and reporting,” says Burling.
“Organisations considering how to use public cloud to transform their business should firstly check if the new demands on their operating structures or principles are enough to require a move to the cloud,” he says.
Tom Leyden, IT director at Woods Bagot, says cloud infrastructure is an essential part of the architecture firm’s underlying IT infrastructure and third-party service providers offer the agility and availability the company is looking for.
Woods Bagot’s ERP apps have been moved to cloud infrastructure and the organisation is already seeing scalability and availability benefits, Leyden says.
“Our roadmap points to exploiting ERP software services as they become more mature,” he says. “The primary driver behind this is that these platforms can evolve much faster with less internal resourcing. Ultimately, this means we access better software and focus on process improvement.”
Jonathon Chaitow, the former GM, architecture, design and innovation, at Broadspectrum, says the organisation is ‘well progressed’ along its journey and is almost exclusively in the public cloud through software-as-a-service offerings and hosted infrastructure.
At the moment, Broadspectrum’s core ERP system is in a private cloud but over the next 3 to 5 years, the company hopes to transition this environment to a public cloud offering and “better integrate the various SaaS products with an iPaaS product,” says Chaitow.
Chaitow says the company has already moved its user-facing mobile apps to the public cloud as they were ‘low hanging fruit’ as they offered native cloud capabilities and wouldn’t require any additional integration, migration or data transformation.
“Usually the decisions to move certain apps to the public cloud are commercially-driven or motivated by a business need that is not being met like uptime or security in the existing environment,” says Chaitow.
Woods Bagot’s Leyden says with core ERP apps in the cloud, the organisation is now looking at exploiting ERP software services as they become more mature.
“The primary driver behind this is that these platforms can evolve much faster with less internal resourcing. Ultimately, this means we can access better software and focus on process improvement,” Leyden says.
“Transitioning from infrastructure-as-a-service (IaaS) to software-as-service (SaaS) infrastructure seems to be the big question for us at the moment,” Leyden says. “The key driver seems to be driven by upgrades – the question we are asking is, ‘instead of upgrading to new software on our IaaS platform, should we transition to SaaS?' Software-as-a-service must then tick the right boxes in terms of performance, security, data access, and cost for it to be a viable solution.”
Meanwhile, Christopher Topp, director of IT at Luther College, says the organisation has a ‘serious focus’ on using cloud architecture when it makes sense to do so.
“We are still very much hybrid with hyperconverged hardware, which is augmented by cloud infrastructure. This is a form of failover should we need it. We also have a number of apps solely based in the cloud and hybrid still has its place given our capacity and bandwidth limitations.”
Topp adds that there “has to be a serious value proposition” for the organisation to move core ERP apps to the cloud.
“For example, using emerging advanced threat protection technologies harnessed and squarely located within the cloud makes perfect sense but re-engineering on-premise apps is not a good value proposition,” he says.
Some still reluctant to move
Some organisations across multiple industries are still reluctant to move apps to the public cloud and as attractive as IaaS is from an availability and scalability point of view, it still needs the pass the CFO’s tests, says Woods Bagot’s Leyden.
“Typically, it will come down to the cost of moving from a capital to an operational expenditure model,” he says.
Chaitow adds that a move to the public cloud is a paradigmatic shift for many but IT groups need to let go of the need to ‘hug servers’ and realise the market has moved in a way that means Amazon and Microsoft are doing a much better job of hosting infrastructure that they could ever hope to.
“[Saying a service is] ‘public’ is really terrible branding for the offering – people think of public as being somehow inferior because it’s open to all like a public pool instead of realising the cost efficiency or scale like public transport,” he says.
Still, Rackspace is seeing a lot more activity from companies looking to move big enterprise apps into the public cloud – even across highly regulated industry verticals such as financial services and government, says Burling.
“Core systems are secured and compliant to regulatory demands and it’s paving the way for more open consideration from organisations to use cloud technologies,” he says.
“Rackspace also predicts that the market will engage more aggressively to drive transformation with better understanding of the compliance requirements for data breach and GDPR reporting due in early 2018. We are working with our customers to mitigate any concerns regarding the impact of data breach legislation,” he says.