Cloud Migration in HCM and ERP: Start with a Strategy

By Jim Lundy

I’ve been in Las Vegas all week at two events and was wondering if this issue would come up and it did. It has to do with Cloud and migrating legacy applications to the Cloud. First, I have covered multiple markets over many years and  have witnessed the migration to the Cloud for a number of those markets. That said, there are always multiple considerations to take into account, particularly when it comes to legacy applications such as ERP and HCM. This post is meant to provide clarity and to be a voice of reason when it comes to the march to the Cloud.

Enterprise Cloud Strategy versus a Vendor Led Strategy

Let’s be clear here. When we hear about some of the deals that are going down, it becomes clear that end-user enterprises are falling victim to what the vendor is pushing. The latest thing that is being pushed is Cloud First. To be very honest, no matter where your apps run, mobile first is the right strategy. Figuring out your strategic and tactical approaches to applications and how they are managed (On-Premise or Cloud) is part of that approach.

At SuccessFactors SuccessConnect event this week, I talked to many participants, that included end-users, partners, as well as Sales Execs and Senior Execs from SuccessFactors. It is important to note that SuccessFactors has always been Cloud first, which is why SAP bought them. With the backing of SAP and the new combined HCM team that goes across SuccessFactors and SAP, they have a powerful set of options to offer to large and small enterprises. The biggest of them is a Hybrid Cloud option.  For enterprises, in particular large enterprises, they now have a larger set of choices than in the past.

This was illustrated in a vivid manner at SuccessConnect. Pepsi was the poster child for why a hybrid approach (SAP HCM and SuccessFactors Employee Central) can work in a large Global Enterprise. It is also important to note that Pepsi deployed the SAP HCM applications with no customizations. Most enterprises customize and that is one of the reasons that it will take them time to go to the Cloud.

Web Conferencing, Learning and Performance went Cloud before HCM

First, many Collaboration and other Applications have gone Cloud over the years. Web Conferencing came first. In HCM, Learning was one of the very first applications to go Hosted and then to a SaaS Cloud. Cornerstone OnDemand and MZinga were early pioneers in Learning Clouds. SuccessFactors was the Pioneer in taking Performance Management to the Cloud.

Email and the Hybrid Cloud

The shift to move Email to the Cloud has taken time, but it is happening. Today, many still use a Hybrid Cloud approach (Executives email accounts stay on-premise, everyone else goes to the Cloud). That said, the comfort level with moving all accounts to a SaaS Cloud is now trending, partially due to lower costs. The key point here was that Hybrid Cloud was used as a migration tactic for many enterprises. The shift to Email in the Cloud has been going on longer and today it is more mature than it was a few years ago. The lessons on the shift to Email in the Cloud can be applied to HCM and ERP.

HCM and ERP Cloud: A Longer March

This brings us to the whole topic of Cloud and HCM and ERP applications. First, the march to the HCM Cloud is trending, partially due to the success of a number of vendors. That said, our figure shows that it is a timing issue. There are many planning considerations that need to be taken into account before making a move.  Because of the complexity of certain HCM applications, we predict that Hybrid Cloud will be one a popular option for large enterprises for the next several years.


Cloud Migration Strategies by market and market readiness.

Some of the issues that business planners need to look at when evaluating HCM and ERP applications for Cloud use include:

1. Countries and Languages supported

2. Locations of Global Data Centers

3. Scalability of Cloud Applications

4. Content Storage and SLAs – Many Application vendors don’t understand rules for Content Storage and as such, moving content out of one hemisphere might violate company or government policies. For example, most European firms will not allow content to be stored in a US Data Center due to the Patriot Act. That is why a large majority of content is still stored on-premise in most enterprises. (See more on Content at Is Your Cloud Vendor Ready for You?)

These are some of the things we discuss with end user enterprises when it comes to moving to the Cloud. There are many others, particularly when it comes to doing due diligence on vendor offerings. Note, that there are advantages for vendors of focusing on the Cloud, but that is different than what the needs of the enterprise are, particularly when it comes to HCM and ERP. Some ERP deployments may never go Cloud.

This all points to the need to understand Cloud both as an overall Strategy and as well as a set of tactics for specific situations. When you overlay Cloud along with the conversation of who your strategic suppliers are going to be in your enterprise, you end up with a clearer picture of where you want to go. The most important point is that no matter what, you need to have a strategy for Cloud BEFORE you start discussing services with your suppliers.

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