Businesses around the globe are facing fierce competition – no matter the country, industry, or customer. Digitalization, sophisticated consumers with increasing demands, and lower margins are causing organizations to adapt their businesses, products, and services in response. These companies are looking high and low for new growth opportunities, better business models, cost-cutting options, and increased efficiencies in ways that standardize and simply their businesses from one end to the other.
For many, the cloud is an answer – and for a brave few companies, a “cloud-only” strategy for non-differentiating applications, such as financing, procurement, sales administration, and project management is the way to go. They’ve explored a hybrid cloud solution, but found out that it most likely will be more costly, with not only the fixed cost of on-premise applications but also the additional costs of a cloud migration.
And for these companies, a cloud-only solution promises to provide greater IT cost flexibility, easy access to applications, cost reductions, and better integration with customers and partners. In addition, non-core applications like the ones mentioned above can be standardized easily across multiple business units, for even greater simplicity, consistency, and cost savings.
A transformation framework for better migrations
As companies choose cloud-only migrations, they are often opting to use a Cloud Transformation Framework. With standardized best practices, this framework provides a significant reduction in variances in processes across different business lines, with steps that include:
- A Cloud Maturity Model that enables organizations to self-assess their readiness for moving towards the cloud.
- A Cloud Business Solution Selector which assesses cloud deployment suitability and rates each component regarding its appropriateness for the cloud, the deployment model (public, or private), and potential dependencies. This step also determines the fitness for the cloud at the component level and the use case level.
- A Cloud Reference Architecture where the future architecture is developed using existing reference models provided by software vendors.
- A Cloud Business Case Calculator where the total cost of ownership (TCO) and the total cost of investment (TCI) reduction lever are investigated and quantified, and expected business benefits are calculated.
- A Cloud Business Transformation Methodology which is used to build a Cloud Transformation Roadmap with a suitable methodology for the implementation.
A transformation that is both business and IT
When undertaking a significant cloud migration, particularly one that spans multiple business units, it’s important to recognize that it is really a business transformation, not an IT one.
Consequently, it’s important to adopt a top-down approach that guarantees a commitment throughout the organization. To achieve this, it’s wise to set up a team of project members that includes analytical business users and business process consultants as well as the appropriate IT people. This will help maintain a focus on process knowledge while encouraging employees that are affected throughout the organization to be open to change.
When initiating the cloud transformation, the team should look for innovative best practices (rather than existing ones) that can frequently be evaluated and validated with demos and use cases. A scope verification and solution acceptance phase are also critical steps in a smooth implementation and will require consultants with a broad background and experience. In addition, the quality of master data is a critical success factor, so a migration will be faster when tasks like master data cleansing and harmonization are planned at the beginning of the project. Testing with actual business data early is important as well.
And of course, organizational change management is an integral part of the implementation strategy so that end users can be guided to new ways of working once the migration is completed.
To learn how a company in the Netherlands is successfully implementing a cloud-only strategy following these guidelines, you can read this article, “PostNL's Journey to the Cloud,” in 360° – the Business Transformation Journal. This four-year project is well underway, and two pilot projects across five legal entities within the company successfully went live in mid-2014.
360° – the Business Transformation Journal is produced by the Business Transformation Academy, a thought leadership network devoted to providing cutting-edge insights on innovation and business transformation. For more business transformation articles on the SAP Community Network, please visit the 360° – the Business Transformation Journal library.
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