The adoption of ‘third platform’ technologies, such as cloud, mobility, social, and big data/data analytics has accelerated as more manufacturers commit to digital transformation (DX). In fact, research from IDC reveals that 34% of Malaysian organisations are currently undergoing DX projects. IDC also reported that spending on DX solutions encompassing cloud, mobility and the Internet of Things (IoT) in Malaysia is expected to grow by an average of 13% per year through 2020.
At a recent event supported by the Federation of Malaysian Manufacturers (FMM), a key topic for discussion was the benefits of migrating enterprise resource planning (ERP) workflows into the cloud. Manufacturers who have made the move towards cloud have seen major improvements in terms of operational excellence and cost-effectiveness. Affordability of cloud solutions now allows SMEs and family-run businesses to deploy IT infrastructure and reap its productivity benefits without maintaining a full IT department as an additional overhead.
Moving to the cloud also provides employees with constant access to data from their ERP system at any time, from any location, enabling them to work more collaboratively. This is imperative for organisations looking to grow and become more geographically dispersed. However, while Malaysian manufacturers at the FMM event were well aware of the benefits of moving to the cloud, many expressed their concerns regarding privacy—a sentiment echoed in a recent Intel survey, where almost half of IT professionals across the globe stated they had slowed their cloud adoption due to a lack of cybersecurity skills.
Security has long been a major barrier to cloud adoption. With concerns about data sovereignty, data privacy and control issues surrounding migration, Malaysian organisations are understandably weary of implementing this solution. Cloud applications continue to be a vector for cyber-attacks, with 52% of enterprises tracking a malware infection to every Software-as-a-Service (SaaS) application. Apart from the impact on customer operations and business reputation, it’s a company’s own legal responsibility to ensure that data is properly secured, encrypted and protected. If organisations don’t take this seriously, they run the risk of receiving some hefty legal fines for non-compliance.
The reality is that security must be a primary consideration for any ERP deployment option, whether it’s cloud, hosted or on-premises. With an ERP solution being the operational backbone of an organisation, vendors entrusted with business information from ERP systems maintain highly secure data centres which are protected 24 hours a day, 365 days a year. These organisations invest in the latest intrusion detection systems, have fully trained expert staff, and take on the responsibility of keeping data secure, encrypted and protected.
Before making the decision to move to the cloud, organisations should consider the following three points:
- Determine the pros and cons of remaining on-premises or moving to the cloud. It may be that your business is comfortable with the security measures, back-up, patching and upgrades programme it currently employs, and that fixed and mobile security are both equally considered
- Keep an objective and open mind in determining your choice. The time value of money with lower total cost of ownership, and faster return on investment is often one of the most important considerations, outweighing the perceived risk of security breaches
- Understand that this is uncharted territory. Digital transformation is relevelling how risk is being assessed and the opportunities available
Cloud-user organisations need to balance supporting innovation in the cloud with having a risk-based governance structure that includes policies, procedures and personnel. If organisations are confident that the above points have been taken into consideration and all preparatory steps have been taken, then relocation of ERP systems to the cloud is recommended. At the same time, this also provides a strategic opportunity for organisations for business process reengineering to improve operational efficiency. Striking a balance between keeping your existing or familiar business processes and embracing what the cloud has to offer is critical for businesses standing at the edge of digital transformation.
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