Still Running your ERP on Premise? Microsoft Azure to the Rescue
The digital economy is transforming organizations in new ways we could not imagine a few years ago, and this transformation can touch every process and every area inside companies and outside towards customers, suppliers, and every stakeholder. Many organizations have already embraced this transformation and are executing a formal Digital Transformation program, whereas others are in the process of evaluating and some are still thinking about it. In any of the stages, embracing the digital transformation will require resources and effort that mostly aren’t available inside companies because they’re all busy operating the business.
If your company, as the majority of the current ones in the market, belongs to the pre-digital age, probably you have spent money, effort, infrastructure, and human resources to manage an on-premise ERP that usually or generally supports business capabilities considered as a business necessity, which usually means the Back Office: Finance, Accounting, Controllership, etc. These types of business capabilities are rarely the ones that make the difference, or as we call them, almost never are your competitive advantages.
Before moving your ERP to Azure, you will need a general Cloud strategy as discussed in every cloud adoption paper
Managing, operating and supporting ERPs internally and on-premise, most of the times, means having specialized resources for supporting the infrastructure, the application and the end users on their issues and doubts, and in some cases, this means, spending important resources and focus again, on non-competitive business capabilities.
With the maturity being reached by cloud providers, running your ERP in the cloud is becoming a common scenario, releasing important resources to focus on more important topics for the organization. Following this rational, Microsoft and SAP have spent significant amounts of capital to enable their customers to run the ERP and other modules in Azure, being supported by, and offering the managed services by third party professional services organizations. In this scenario, the company does not have to manage hardware and data center space anymore, neither it has to have specialized SAP Basis resources or even a call center for ERP support.
Before moving your ERP to Azure, you will need a general Cloud strategy as discussed in every cloud adoption paper. But, for sure, you can find tangible benefits and cost savings in specific scenarios in the midterm that have demonstrated that the Cloud is a better alternative. In the end, your business is to produce something or sell something, unless you are in the high-tech industry—managing data centers and servers are usually not in the core of your business.
If you haven’t started moving your ERP to the cloud, I suggest you start evaluating moving your DEV / QAS environments to Azure; another important value brought by Azure to this scenario is to have your ERP, DRP environment in Azure. In these two cases, the ability you have to shut down the virtual machines when not in use, or only having turned on the minimum number of machines required for the DRP, will give you important savings due to the fact that the cloud will be billed only for the used resources along with a little fee for the storage, resulting in a definitely cheaper solution for running these environments. In general terms, in these scenarios, we have seen as much as 40-65 percent TCO savings by moving to Azure.
For production environments, which are available 24 x 7, the business case might not be that different from the on-premise scenario, but there are important Azure capabilities that will enable better service levels for the same investment. Things like Elasticity, Site Recovery, Backup, Protection & Recovery, and Geo-redundant storage are important features for SAP related landscapes, not to mention that additional cloud services like Office 365 or PowerBI are powerful tools that can enhance the ERP’s user experience in important and innovative ways.
The cloud has come to change the IT landscape in a radical way, and it’s here to stay. The major advantage we see in leveraging the cloud is to have our teams focused on what matters for the company and, in many cases, managing a technological infrastructure is not at the core of what we do. While for Microsoft and specially the Azure team, managing data centers, communication links, servers, and storage is their core services, and they are evolving and maturing their services every day. If the TCO they can offer is what we have on premise, I cannot find a reason why you should keep managing the infrastructure yourself. Instead, your organization will need to manage and deal with cloud providers and cloud solution providers in the context of your cloud strategy.
It might hurt at the beginning, for sure, since you’ve been doing infrastructure work, operations, and support for quite some time. But you will, for sure, find a better way to focus those resources to give the company more value, especially in those business capabilities which are considered competitive advantages or strategic support, where innovation and digital technologies will help enhance your value proposition and reinvent your business model, while maintaining stable operations on business capabilities considered essential or business necessities. Many of these last capabilities, automated with an ERP could very well run in Azure and be managed by a third party.