When Two is Better than One: the Value of a Two-tier Application Strategy
“I get that the cloud offers value. But I can’t afford the disruption to my business. It’s just not worth it.”
This is a common refrain of executives striving to improve the bottom line. Horror stories of endless and exorbitant ERP implementations still echo in their ears. Even with the cloud’s vastly better track record of shorter, more cost-effective, and successful migration, they are understandably reluctant. But, as is so often the case, there is a middle path. For enterprises looking to get the best of both worlds – take advantage of new services in a cloud-based model while keeping their core systems in place – a two-tier strategy represents a stepping stone solution, especially for large enterprises that require a lengthy due diligence process and internal testing before committing to a new solution.
A two-tier strategy basically means that the enterprise has part of its operations running on the cloud, and part still running traditional ERP. Typically this is to accommodate expansion – when, for example, an organization makes an acquisition or otherwise creates a new business unit.
Take the scenario of a business that’s expanding operations to a new geography. There may not be a desire to set up a data center in that region, making a cloud solution an attractive option. The new system links back to the legacy software at the business’ headquarters, but does not require the IT management and upkeep that on-premises systems do, which simplifies rollout. In a two-tier strategy, a subsidiary placed on a cloud ERP solution can provide the speed required by shortening the time it takes to deploy from years to a matter of months.
Here’s a real-world example. Big Heart Pet Brands (formerly Del Monte, and now a division of the JM Smucker Co.) is a $2.3 billion consumer goods business. The company acquired Natural Balance Pet Foods and wanted an ERP system deployed and connected back with its legacy system by the time the acquisition went live – just a few months. By implementing a two-tier approach, Big Heart was able to quickly get a solution in place that got the entire business up and running much faster than if it had opted for a traditional on-premises approach. To date, Big Heart Pet Brands has realized approximately 45 percent total IT savings and consolidated some 90 applications on the Kenandy ERP cloud and the Salesforce1 Platform. Learn more about Big Heart Pet Brands’ move to the cloud.
While adding a second, cloud-based tier can be much more economical and valuable, the principles of good IT project management still apply.
- Identify your core needs
- Review existing business processes to identify opportunities to streamline
- Ensure full input and collaboration across all impacted departments
- Iterate and incorporate feedback as you go
As more and more businesses adopt this strategy to start moving to the cloud, more and more you’re going to hear their executives move their refrain from “It’s just not worth it” to “Holy #%)&#&$ — that was SO worth it!”
For more details on the two-tier strategy, read this IT Briefcase interview, The Value of a Two-tier Application Strategy, with Kenandy senior director of product marketing Rahul Asthana.