Oil price shocks, geopolitical conflict and volatile markets are today’s daily news. In the business world, unpredictability may be the only constant, and the current headwinds are plentiful. But are things any different this time around? Consider this fact: according to Macrotrends, the last time U.S. inflation rates pushed past 7%, most of today’s C-level executives were probably in high school, or even younger. Meanwhile, Euro area annual inflation soared to 9.1 % in August 2022 (Eurostat). Add in accelerated global digitization due to pandemic shifts, intensified regulatory pressure and ongoing supply chain woes – and yes – it just might be a unique moment in history after all.

For manufacturers that still operate a legacy, on-premise ERP solution, will those systems allow them to navigate market turbulence and keep up with competitors? Or will the ERP anchor of past stability turn out to be a ball and chain that inhibits forward growth? How will these companies compete with others who are adopting next generation ERP solutions – robust Digital Operations Platforms (DOP) – which enable more agile, informed, and integrated business decision-making. These issues are especially critical for organizations involved in mergers or divestitures in which underlying technologies can make or break the deal.

Many leaders in the manufacturing sector who haven’t yet done so, feel an urgent need to pivot to the cloud. But too many remain frozen in place. In this post, we will review some strategies, tactics, and examples regarding how manufacturing companies can successfully transition to cloud-based solutions. While evolving beyond legacy ERP certainly poses a challenge, the hurdles are more surmountable than one might think.

What stands in the way of change?
Just the thought of shifting away from legacy, on-premise ERP can make a CIO’s palms sweat. Key indicators, such as cost, complexity, capability, capacity all exert intense pressure on decision making. On one hand, the benefits of the cloud are well known. The improved adaptability, efficiency, connectivity, and data visibility are undeniable. Nevertheless, the move may seem overwhelming, especially when faced with the fear of business disruption or stakeholder reluctance.

Despite their numerous useful benefits, legacy solutions also have limitations which are revealed in the SAP ERP Gartner Peer Reviews. While overall ratings are favorable, some users experienced cumbersome integration and interoperability issues which could lead to data silo formation. Others noted a high resource burn due to mass data load limitations. Customization was described as “tedious”. Due to drawbacks like these, a legacy, on-premise ERP system like this can severely limit business agility and future adaptability.

For comparison’s sake, consider the die casting component maker DGS. Avanade assisted in harmonizing their business processes – including finance, supply chain and automotive tasks – onto a single platform, Microsoft Dynamics 365, using a hybrid agile approach. Among other benefits, the new full cloud ERP solution has made DGS’s processes much more efficient and accelerated the delivery of information so that the company’s financial managers get the information they need more quickly to make better, more informed decisions.

Nobody can claim the move to the cloud will be effortless. But what if the shift could be simplified? Rather than attempting a massive system rip and replace, what might incremental functionality improvements look like? What if a road map was available that could guide the integration of the best cloud-based tools in the fastest and least disruptive manner? According to Accenture, 90% of executives agree that to be agile and resilient, their organizations need to fast forward their digital transformation with cloud at its core.

The hesitation to shift to the cloud is largely based on knowledge and experience gaps. But today, businesses can partner with industry experts that fully grasp the nuances of manufacturing and carry a lengthy track record of successful cloud transitions.

Proven tools, tactics & partners
Successful digital transformation largely depends on selecting the right tools for your business requirements. Microsoft Dynamics 365 is a set of intelligent business applications (CRM and ERP) that leverages predictive, AI-driven insights to improve outcomes. When properly integrated, Dynamics 365 allows organizations to visualize their data and seamlessly share it across all lines of business. By improving business agility, these applications enable companies to reach their goals at a faster rate of change.

Furthermore, when companies face a major business event – such as a merger, acquisition, or divestiture – the right technological tools can ease these transitions significantly. Since companies can be operational on a cloud-based platform faster than traditional on-premises solutions, this facilitates a faster exit from the Transition Service Agreements.

Along with our parent Accenture, Avanade is the world’s largest Microsoft Dynamics 365 partner, and the combination represents three decades of expertise with both legacy ERP platforms and on modern cloud-based digital operations platforms. Together, our deep technical expertise and manufacturing sector experience includes working often enough with legacy solutions from other major software providers like SAP to understand first-hand the challenges in transitioning away from those technologies to a modern cloud DOP solution like Dynamics 365. Our size, strength and services provide manufacturers a predictable, high-quality methodology to empower teams, remove data barriers and connect the entire customer experience. Avanade’s industry-specific business process modeling and implementation methodology enable faster time to value and lower total cost of ownership.

Let’s look at a real-world example of how the move to the cloud can provide significant business advantages.

BMZ Group: A successful cloud transition story

The BMZ Group is a leading manufacturer of high-tech battery systems with locations in the US, Europe and Asia. Through its acquisitive growth efforts, BMZ had accumulated several disconnected legacy enterprise technology systems. Production suffered as these systems provided limited visibility of shop floor materials and capacities.

BMZ needed to overhaul its ERP performance before it could truly improve production and customer satisfaction. Given Avanade’s global presence and experience as a leading manufacturing systems integrator, BMZ partnered with us to implement Microsoft Dynamics 365 for Finance & Operations. In this shift to the cloud, nearly 100% of the new end-to-end processes and functionality came right out of the box.

Results:

• More consistent material planning and improved product quality
• Increased transparency into material flow and production resource planning
• More reliable delivery for better customer service
• Greater flexibility to adapt processes and structures

With Avanade’s expert guidance, BMZ Group’s new-found visibility into warehouse and production transactions lets them scale more nimbly to meet growing demand.

Transition to the cloud, now or never?
Given intense competition and market uncertainty, manufacturers that delay the move to the cloud face rising barriers to growth and risk falling behind more agile competitors. The capacity to make wholesale change – from organization structure and strategy to business processes and underlying technologies – is more urgent than ever.

Why wait for ERP cloud migration? With our depth of cloud ERP experience, deep vertical and micro-vertical industry expertise backed by 30 years of Accenture industry experience, Avanade facilitates a smooth upgrade and transition from limited, on-premise, legacy ERP to agile, cloud-based Dynamics 365 for Finance & Operations.

Want to know how your company can benefit from moving your ERP to the cloud with Microsoft Dynamics 365? Find out how you can start your cloud journey with Avanade today.