According to Gartner, worldwide public cloud service revenue will reach $364 billion by 2022, which represents a compound annual growth rate of 12.6% since 2018. And the reason is simple: More and more enterprises are embarking on their digitalisation journey and migrating their infrastructure and applications into the cloud. In fact, cloud adoption has become the default choice for many CIOs planning strategic digital transformation.
But for enterprise resource planning (ERP) systems, which have been vital for all kinds of businesses for decades, cloud adoption has been much slower. For some companies, ERP systems are so important that they are reluctant to tinker with them; for others, the attitude is along the lines of “if it’s not broke, don’t fix it.” In many cases, however, ERP systems and their underlying infrastructure have decayed into the legacy systems. And ERP systems are costly in terms on-premise hosting and application maintenance.
Cloud can help, and ERP systems are finally starting to embrace cloud computing. In fact, Gartner predicts that business intelligence, supply chain management, project and portfolio management and ERP will see the fastest growth in end-user spending on SaaS applications over the next few years, reaching $143 billion by next year.
Traditional, on-premise ERPs offered CIOs the freedom to adapt these powerful solutions to suit their enterprise’s needs, offering differentiation and competitive advantage. But insight from Gartner – its Pace-layered Application Strategy – highlights the fact that there is no real advantage in heavily customizing systems of records used primarily for operational efficiencies (a layer within which almost all ERPs fail).
Some enterprises may require a unique, differentiated approach for their systems of engagement or systems of innovation. One consequence of this idea is that adopting standard processes for systems of records, hosted by a SaaS ERP provider, can ensure world-class processes that are tested and proven and can be used in many industries. Small- and medium-sized companies are already moving to a SaaS ERP, but even large multinational enterprises are finding it safe to adopt SaaS ERPs for their systems of records.
CIOs are increasingly keen to move ERP systems to the cloud – not just their custom-built, on-premise cloud-based ERPs but also SaaS-based ERPs. They want to take advantage of the many benefits of cloud computing: lower total cost of ownership, much greater scalability, reduced risk of deployment, access to innovation (via continual upgrades), and enabling accessibility to critical enterprise applications for global users.
The CIO dilemma: From strategy to implementation
This trend begs the question: What’s the best approach to successfully putting ERP systems on the cloud? Wipro believes that modern program transformation practices can help organisations improve efficiency and ensure success in their SaaS-based ERP implementations. The right program management approach helps ensure effective alignment, integration, and control. It requires strategies for prioritising and sequencing a series of multiple projects, managing their interdependencies, implementation methodologies, benefits, stakeholder management, establishing and implementing governance, and orchestrating organizational change management.
In fact, the decision about how to proceed with a SaaS implementation may be as important as the decision to proceed. SaaS-based ERP transformations do entail risks, at the implementation phase or in the long run, that may negatively impact the initial business case. A truly informed decision will reflect many factors and challenges:
Methodologies: Waterfall, Agile Fusion, and “WAgile”
Traditionally, ERP applications have been implemented using the highly structured waterfall approach: requirements, design, coding, and testing. Gartner’s Pace-layered Application Strategy suggests that this highly structured implementation method is ideal for implementing systems of records. Take conventional ERP implementations as an example of the waterfall approach. Typically, this involves these steps:
Each of these steps is discrete and distinct; each is completed before moving onto the next. But waterfall is not an ideal methodology. For example, a waterfall approach can make it very challenging to visualize the application from the requirements documentation, one of the most difficult parts of software development. This can lead to dissatisfaction with the delivered product. Also, the waterfall approach is not change-friendly. Changes are often difficult and costly to implement. And, finally, waterfall approach is not fast, which means it could take months or even years before the customer sees the final product and starts to see results.
However, the rise of SaaS ERP providers has tilted the balance more towards the agile development process, an iterative, team-based approach that emphasizes rapid delivery of complete functional components. Tasks and schedules are broken into sprints or iterations. Completed work can be reviewed and evaluated by the project team and customer through daily builds and end-of-sprint demos. These benefits are why agile is so popular, but it’s not a silver bullet that can address every implementation challenge:
On the plus side, agile shortens the delivery time and makes it easy to gather feedback in the early stages to better suit customer requirements.
Agile is good, but many development and implementation projects today use the WAgile – the phrase combines “waterfall” with “agile” – approach that dismantles the siloed approach. In WAgile, planning, design, and requirements definition are done using the waterfall methodology, but development and modular tests are conducted in in short sprints using the agile (scrum) methodology.
Some other key points about WAgile:
The WAgile implementation model for SaaS ERP applications uses the minimum viable product (MVP) approach, which starts with the premise that end-users have a minimum fundamental need and the application chosen for implementation satisfies that need. The project team then delivers a MVP – essentially a subset of the desired end-goal application (in this case, a SaaS ERP system) – with enough features for a reasonable sampling of users to try out and provide feedback for further development, fine tuning, or for the phased rollout.
MVPs are valuable in that they help developers avoid lengthy and potentially unnecessary work. Instead, they iterate on working versions, responding to feedback and challenging and validating assumptions about meeting the application requirements. This approach helps avoid application configuration that customers do not want or seek, avoiding unnecessary costs and delays. A MVP also becomes a quick win in and of itself because it helps the business become familiar with the application.
Essentially, a MVP entails independent development of some modules or components while the planning phase is still underway along with some activities – such as setting up the cloud infrastructure or planning for data migration – are being tackled as separate workstreams. The diagram below illustrates a WAgile process flow for end-to-end delivery.
o During daily scrums, the team shares what has been done, discusses what is to be done, and raises flags on potential blockers.
o At the end of the first sprint, the team conducts a sprint review during which the first iteration — a fully functional iteration — is presented.
o Then, testing and feedback of the first iteration by stakeholders is begun and gaps on initial assumptions are identified.
Under the WAgile methodology, the MVP approach is split first into small modules, which are then broken down into components, features, or user stories that can be delivered incrementally. Ultimately, the components will cover the entire business need and, eventually, the broader rollout. Adopting a hybrid model like WAgile, which combines the best aspects of both waterfall and agile, can be a win-win for business units and the implementation program team.
Implications for Organisation Change Management
Organisation change management (OCM) is an essential component of large IT ERP transformations, and covers a wide set of activities: new organisation design, roles and responsibilities; skill sets required for the new technology; understanding change impacts on processes, users, and roles; designing and delivering training programs; and communications management.
A conventional waterfall project will experience intense support demands at the beginning of the program, tapering off during code development and configuration, followed by a spurt in support requirements during user acceptance testing and training. In a WAgile scenario, OCM tends to move towards more of an agile approach. OCM will be required throughout the project lifecycle, from the introduction of the MVP all the way to the realisation of full business objectives. OCM demands will vary from project to project based on the volume of business change and the organisation’s maturity to accept and adopt change.
As ERPs continue to move from on-premise configurations to SaaS cloud-based solutions, implementation delivery methodologies will also evolve in order to achieve the desired timeline and business benefits associated with a cloud strategy. The WAgile approach combines the best of both agile and waterfall methodologies, and it can be easily adjusted to the size and complexities of each SaaS ERP implementation and the inherent business transformation.
Sr. Partner, leading Program Transformation Practice within CIO Advisory Consulting.
Shripad has over 25 years of progressive experience in multiple roles and has successfully executed some large Programs Wipro has delivered globally. Spanning across multiple industry sectors these programs include ERP transformations of strategic importance as well as Merger, Acquisition and Divestiture scenarios.
Partner at the Program Transformation Practice within Wipro’s CIO Advisory Consulting.
Jesus has over 20 years experience across industries, Jesus has helped organisations to implement their ERP based driven transformation programmes as part of their digital and cloud migration journeys. With strong roots in manufacturing and engineering, Jesus has actively led the development of the digital agenda in the supply chain while leading global project delivery teams for implementing latest SaaS ERP solutions.
Partner in Program Transformation Practice within WIPRO’s CIO advisory Consulting
He has 25plus years of experience. Vijay Venkat has successfully delivered many largescale ERP transformation & Consulting projects in Retail, Energy (Oil & Gas), manufacturing and Utility Sectors. Have extensive experience in managing Enterprise Architecture solutions around PaaS, IaaS, SaaS, TaaS and Hybrid solutions. With a strong domain knowledge in Supply Chain, has extensively worked on New Dimension products of SAP like S/4, BW4HANA, SAC, Ariba, Concur, GRC, IBP and also other technologies like Hyperion, MES, Workday, FIS-QUANTUM in various project implementation methodologies like Waterfall, Agile and also the proposed WAgile methodology.