Cloud services accelerate digital transformation

**How SaaS has completely changed the way organizations use software**

Organizations across the world are on a journey of digitalization, using cloud-native, tailor-made solutions that meet their individual needs.

But many businesses are still relying on legacy systems that are often not fit for purpose.

Forward-thinking organizations are using cloud-based tools to streamline workflows, improve collaboration, increase efficiency and productivity, and ultimately increase profitability.

72% of IT decision-makers say that their organization is defaulting to cloud-based services when upgrading or purchasing new technical capabilities.

2022 Cloud Computing Survey from Foundry

The majority (69%) of companies have accelerated their cloud migration over the past 12 months, and the percentage of companies with most or all IT infrastructure in the cloud is expected to leap from 41% today to 63% in the next 18 months. In addition, with 60% agreeing that cloud capabilities helped them achieve increased and sustainable revenue in the last year, it is no surprise that next year, organizations plan to allocate an average of 32% of their IT budgets to cloud strategy.

It’s obvious why these IT leaders are jumping at the opportunities cloud-based solutions provide – organizations that are still using legacy on-premises ERP systems are likely to face massive challenges in balancing low-quality software design decisions and short-term business requirements.

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As digital transformation strategies evolve, research and advisory firm, Constellation tells us that choosing a software vendor you can trust will be the most important decision you can make. In Constellation’s ERP conversations with more than 300 technology leaders over the past nine months, 10 significant market trends have emerged:

1. Reduction in cost of ownership

Executives are seeking to consolidate vendors, modernize systems, and reduce the cost of ownership.

2. Regulatory relief as a service

ERP providers (and AI) keep users up to date on regulations, compliance requirements, and legislative burdens.

3. Digital monetization models

New models enable post-sale revenue opportunities such as installation, warranty, and vendor-managed inventory. Subscriptions also require regulatory compliance for revenue recognition rules such as ASC 606.

4. Collapsing value chains

Classic mega processes such as invoice to close, procure to pay, hire to retire, and order to cash have crossed functional domains, and the convergence of these mega processes makes way for multiparty value chains.

5. Journey orchestration

ERP users expect to design, execute, and automate end-to-end business processes. Organizations would like to be able to orchestrate external and internal processes and enable key business leaders to craft their own cross-functional capabilities.

6. Autonomous enterprises and AI

Natural-language processing and video intelligence enable large quantities of unstructured data such as documents, chats, log files, and transactions to be ingested and organized into logical categories using techniques such as topological data analysis.

7. Cloud ERP platforms

Users need to extend and expand ERP footprints to accommodate changing business models and new requirements.

8. Analytics first

The ERP market landscape has shrunk from hundreds of vendors to a dozen core providers. With a refresh cycle ahead, customers have increased their expectations for obtaining both stability and innovation from one core vendor.

9. Verticalization shifts to micro-verticalization and platform ecosystems

Customers expect their cloud-based ERP solution to deliver on deep industry-vertical functionality, and they need a platform that they can extend as well as one that is part of a larger ecosystem.

10. Elastic pricing

Customers have become accustomed to cloud-based pricing models based on the number of users. As the complexity of cloud products grows, customers expect to see flexible pricing models based on users, usage, and platforms.

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Digital transformation plans are pushing ahead at full steam across all sectors, but it is clear there are challenges along the way, and business leaders need help to successfully achieve their cloud migration goals. The number one priority for organizations embarking on a cloud journey is to set out a clear strategy based on clear business objectives.

Organizations are defaulting to cloud-based solutions when upgrading or purchasing new technical capabilities, so they must have very clear requirements in mind when selecting the right vendor.

Despite there being challenges to navigate on the journey, the benefits far outweigh them, which is why Foundry found that 69% of IT decision-makers agreed that their organization had accelerated its migration to the cloud over the past 12 months.