Sky's the Limit for Cloud-Savvy Distributors

BROUGHT TO YOU BY: PAGE 2 | EPICOR In today’s demanding and highly competitive business environment, most distributors realize that an ERP system can help streamline their business processes, meet trading partner requirements, and improve operational effi ciency. However, many of them still operate without a well-functioning ERP system, fearing high initial costs for software, hardware, and supporting infrastructure; lengthy and complex implementation projects; and the staffi ng necessary to implement and maintain the systems. But, in recent years, an increasing number of distributors have embraced a cost-effective option that eliminates the need to purchase, install, manage, and maintain ERP software systems and the supporting hardware in-house. SERVICE IN THE CLOUD Today, distributors have become more confi dent than ever in the security, cost-effectiveness, speed, and effi ciency provided by cloud computing. When cloud computing fi rst began to surface in a big way for the industrial community during the latter part of the last decade, distributors were among the skeptics who viewed it as yet another technological incursion into their proprietary businesses. An early fear was that using the Internet to move proprietary company fi les, data, and customer records into a cloud-based ERP potentially could expose the information to hackers or even to direct competitors in the event of some computer glitch. Yet, backed by heavy hitters like Amazon, Microsoft, and Google, who were banking on the success of the Internet-based pathway as the next step in the development of data collection, information sharing, and technology, such fears have mostly subsided as distributors increasingly view cloud-based ERP as a huge competitive advantage that offers the fastest and most sustainable way to turn modern technology innovation into tangible business benefi ts with a powerful boost to the bottom line. In a cloud deployment, customers can license Software-as- a-Service (SaaS) on a subscription basis, usually per user, per month, or by number of transactions. Ongoing maintenance, upgrades, and support for the software and infrastructure are all the responsibility of the software vendor and are typically included in the subscription fee. Cloud computing removes upfront hardware costs, and the pay-as-you-go SaaS model eliminates large initial layouts, an attractive option for distributors seeking a cost-effective alternative to on-premises technology maintained by internal staff and updated by outside software providers. It also provides a much more secure route for data protection by maintaining a redundant set of fi les on the cloud to make sure that, if tragedy strikes, all is not lost. Backing them up on site or at an off-site physical location offers a false sense of security since data fi les still are vulnerable to loss from fi re or natural disaster. Cloud business software deployments typically can cost 25 to 40 percent less than in-house deployments, according to estimates by Epicor Software Corp., a company that offers both cloud and on-premises ERP options. While on-premises ERP solutions offer a familiar and comforting approach to a business-critical technology requirement, this is a case where distributors that choose the status quo are, in reality, exposing themselves to far more risk—and sacrifi cing much bigger opportunities—than those that make the leap to cloud-based ERP. In a nutshell, through the cloud, distributors have less to do, and more security and reliability to gain, giving them extra time to focus on customers, employees, and other priorities. A DOUBLE WIN Not only have distributors begun to grasp the cost, speed, and management benefi ts available with the cloud, they’ve also placed much higher marks on ERP systems in general. While not specifi cally mentioning the cloud by name, a brand new study released in January 2019 showed that 67 percent of 315 distributors and manufacturers surveyed rate their ERP implementations as successful or very successful, with only one characterizing their effort as a failure. The study was commissioned by Ultra Consultants and conducted by Mint Jutras in November. A part of that success has to do with the growing use of SaaS, a key element in cloud-based ERP since it removes the cost of purchasing and continually upgrading software, thus taking pressure off internal IT staff while maintaining a competitive edge in the marketplace by always using the most up-to- date technology. That’s a win-win for both ERP in streamlining and building effi ciency into operations and for cloud computing as the most cost-effective, secure, and reliable platform. PAGE 3 | EPICOR It’s also a huge reversal from the early days of cloud development when distributors and others, still wary over new competition from e-commerce, considered the cloud to be additional uncharted territory. Although using software for decades to reduce labor costs, manage data, monitor inventory, process transactions, and arrange shipments, many B2B distributors—especially those in the mid-size and smaller categories—often had been reluctant to incorporate change into business processes that were working well. THE POWER OF SIMPLICITY AND MOBILITY While on-premises deployments allow for storage of data on servers located down the hall, it comes at the expense of the local IT team and other resources. With cloud deployments, IT could spend more time working on what’s next for the business and the customers instead of trying to keep up with hardware and software problems and upgrades. Mobility also is a key advantage of cloud- based ERP. In-house ERP systems often are limited to individual facilities, whereas cloud-based ERP is seamlessly connected across a company’s entire network. Everyone sees the same information and operates according to one version of the data. Collaboration is faster and free of confusion, which reduces complexity, while improving business performance. What’s more, moving ERP to the cloud allows distributors to increase capacity without additional software, hardware, or IT personnel, and to easily pull back if less is needed. The positive ripple effect can be evidenced right down to collaboration at the department levels. According to Aberdeen research, 20 percent of best- in-class organizations have seen a marked improvement in collaboration between departments after adopting a cloud solution. Mark Barry, then marketing content manager at Aberdeen, in February 2017 identified cloud computing as one of the “technology influencers” for the supply chain of 2030 with its impact on how companies rethink IT strategies, calling it “the tool driving businesses back to standard processes” and enabling “integration and connectivity as well as a migration path for additional functionality, without a complete ‘rip and replace’ approach that often meant trouble for many enterprise software initiatives.” FINDING THE RIGHT ERP PROVIDER Once the decision has been made to implement a cloud- based ERP system, the next— and perhaps most important step—is to find and secure a software service provider familiar with the distribution business, the distributor’s individual challenges and markets, integration of business processes, databases, and customer needs. That’s especially important because, as with all relatively new and successful technology, cloud ERP has drawn a host of new vendors to the industry, some much more skilled than others. If the distributor is moving from an existing format, it’s also helpful to locate a vendor with knowledge of both cloud and locally maintained ERP systems, so the move is handled without any business disruption. Traditional ERP integration involving a variety of operating software can cause numerous headaches. Cloud-based ERP helps break down technology silos within a business, like the management for orders placed over the phone, via eCommerce, and orders placed via mobile devices. Epicor Prophet 21, a specialized distribution management system, brings together the broad range of functionality that distributors require into one integrated solution, eliminating the need for separate applications, spreadsheets, and workarounds. It also helps guide users through new software technology to experience the benefits of cloud-based ERP while avoiding the headaches of a traditional upgrade or installation process. Prophet 21 in the cloud is powered by Microsoft Azure, an open, flexible, and enterprise-grade public cloud computing platform noted for reliability, security, and scalability. With hundreds of data centers around the world and millions of servers, Microsoft Azure is the leading, most trusted public cloud platform for the enterprise. Epicor is on the cusp of launching this full cloud solution with Azure in order to leverage this proven foundation to build and deploy enterprise business applications that enable distribution businesses to adapt and grow. Currently utilized customization or functionality also can be retained, helping simplify the introduction for newcomers and the transition for veteran staff, including sales personnel, who 9 Reasons to Retire Homegrown ERP Software The top reasons to weigh the advantages of an outside ERP solution over a homegrown system: 1. What happens if your IT director or programmers leave the company? 2. Homegrown systems often lack real-time and advanced data capabilities and tend to contain limited transactional history. 3. Legacy systems and data warehouses may produce data discrepancies, resulting in duplicate work and potential compatibility issues. 4. ERP companies conduct extensive testing in real-life scenarios. A homegrown system may work, but competitors may be using much better processes. 5. Technology is evolving at a rapid pace, making it nearly impossible for small IT shops to keep up with competitive business needs. 6. Custom IT shops often don’t understand systems architecture leading employees to create various workarounds. 7. In-house development can be much more costly than it appears—far more so than partnering with a leading distribution management system. 8. A legacy system may be familiar to longtime employees, but foreign to new hires, which may affect utilization. 9. The homegrown option may not “play well with others,” requiring duplicate data entry or custom development for eCommerce. 9 Questions for a Potential ERP Vendor To ensure the vendor has a strategic vision for distribution-specific technology, ask these questions: 1. What’s the roadmap for this product? 2. How is development split between innovation versus fixing bugs or making incremental improvements? 3. What’s their cadence for releasing new versions of the software you’re considering? 4. What’s the vision for business mobility? 5. Are you able to access business information in systems outside of the ERP? 6. Do they have business applications that run on mobile devices? 7. How malleable is the software to your users’ specific needs? 8. Are they in the cloud? If not, do they have a vision for moving applications to the cloud? 9. How are they addressing the changes brought on by the Internet of Things (IoT) or artificial intelligence (AI)? PAGE 4 | EPICOR are used to working with an on-premises ERP system and doing things the same way for a long time. Another benefit of cloud-based ERP is open access to employees whenever and wherever they need it. Cloud’s mobility advantage connects across a company’s entire network. NOT AN ALL-OR-NOTHING LEAP Still not convinced? The good news for distributors on the fence about a full jump into a cloud system is that the mission can be handled in stages and at a pace of their choosing, an option offered exclusively by Epicor. Thus, those using an on-premises ERP system can have the unique flexibility to decide how much of their present software they want to transfer to the cloud at a given time, beginning slowly and moving forward only when comfortable and ready to do so. It also can ease distributor concerns over staff acceptance and help bring around longtime employees who may be reluctant to embrace change. While major cost-savings, higher efficiency, improved productivity, better inventory management, and significant boosts in bottom line performance are common with cloud ERP, every company faces unique business challenges. To that end, engaging a provider like Epicor that offers both on-premises and cloud ERP systems may present an easier escape hatch since cloud-based ERP with SaaS is offered on a subscription basis. Like turning in a leased vehicle at the end of term, the distributor has an option to change, renew, or exit at end of the cloud deal. If a distributor is unsatisfied and chooses to revert to its former ERP method, a provider handling both types of deployments might ease the transition back within the framework of a single software management company rather than searching for a different provider not familiar with the original project. The bottom line is that cloud-based ERP, which integrates a multitude of complicated and diverse systems for instant access by all users within a cost-effective, single shared framework, not only boosts efficiency, productivity, and ultimately profit, it appears to be a no-lose proposition. In the highly competitive distribution sector, that’s money in the bank.