ARE WE THERE YET?

Series: ERPs in New Zealand

Close to 60% of Kiwi businesses we surveyed still run their ERP on-premises. (For now, anyway!)

Why are over half of Kiwi businesses still not running their ERP from the cloud?

Perception is a funny thing. In a world where cloud is the new norm, you may be forgiven for thinking that most companies have already embraced it.

However, there seems to be a disconnect between where businesses want to be in terms of cloud strategy, and where they actually are.

While IDC’s CSuite Study from 2016 found the majority 90% of New Zealand organisations already believed they consume some form of cloud-based service, our survey found that as of late 2020, 60% of the Kiwi businesses and organisations we had surveyed reported still running their ERP or financial system on an on-premises server. Go figure.

But it does beg the question: Why are they not using what is usually considered a key business application in the cloud? (Hint: There’s no one right answer.)

  1. Simply, the ERP they’re using is too old. It was not built for the cloud, and there has never been a cloud version available. So, nothing short of a total start-from-new strategy or a substantial investment in an integration platform to achieve a default cloud presence will do – and that’s daunting.

  2. While there’s a cloud version available, they’re still sitting on the 2012 version with no easy upgrade path left open, and probably no formal support agreement. A lift-and-shift strategy is an option (although not one we’d generally recommend), but given how out of date their application is, a reimplementation - and all it involves - is a more likely scenario.

  3. They have a bespoke in-house solution that they’re locked in to. No-one really understands how and why it works, but the developer is long gone, and they’re scared of breaking it. (And as is may not ‘cost’ them anything to run, they are happy to ignore the potential risks to security, data and more.)

  4. Yes, 2020 was a financial nightmare for many. So, a move to the cloud isn’t in this or probably next year’s budget either. They just need to hope their $30,000+ servers last a bit longer. 

  5. Implementing a new cloud-based financial system requires time, effort, and an investment in change management that they feel they can’t commit to right now. 

  6. Job security. Cloud reduces infrastructure complexity and automated upgrades and fixes, so old IT support roles and tasks can disappear (which is pretty reluctance inducing for those nervous about their career and livelihood).

  7. They’ve taken an initial stab at working out the cost of cloud by simply duplicating their physical infrastructure environment, and are seriously worried by the cost. 

These are all reasons we understand, and (mostly) empathise with. However, the reality is that moving your FMIS or ERP solution to the cloud will reduce your total operating costs, give you access to real-time analytics for better decision making, scale as you do, reduce your reliance in your IT department and more. 

If you need some ‘where to start’ directions, you can check out our Navigating Change Checklist.

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