Sunsetting Legacy Software with a Forecast for Cloud ERP

legacy-erp-software

We are witnessing a major transformation in the ERP landscape: more and more vendors are sunsetting legacy products in favor of cloud ERP solutions.

To those that are tethered to legacy software and on-premise physical servers, we offer a warning to the wise: your competitors are riding off into the sunset, leaving you behind. And so we would like to extend an invitation to the cloud. It’s better up here, where the skies have no limits.

Lighthearted analogies aside, an exodus from on-prem to cloud-based ERPs has been the inevitable outcome of the always-on, interconnected world we live in. Driven more recently by the Work From Home movement, yes. But the larger impetus has been the increasing demand from ERP customers for more agile and sophisticated feature functionality.

We are witnessing a major transformation in the ERP landscape: more and more vendors are sunsetting legacy products in favor of cloud ERP solutions. With working from home accelerating the demand for cloud ERP, vendors are responding with better software.

It has made for a competitive set of choices — so how do you decide when it is the right time to upgrade? And what if it looks like you need to evaluate a new ERP system? In this edition of The ERP Advisor, we will provide guidance on how to upgrade from a legacy ERP and find the right software for your needs.

Vendors have been getting hammered by clients who want newer and better software. At the same time, the complexity of their requirements meant customizations — and new versions carry the liability of overwriting that custom code. Then there are all the attendant hassles of supporting and maintaining multiple versions of the software, with updates for each new tax code, regulation, ordinance, and so on.

The vendors decided to address these issues by building cloud-based ERP systems that allow them to maintain a central code base on a SaaS platform where they can push updates, patches, and bug fixes without the problem of on-site installs.

Upgrading software is important for many reasons, but some companies have made the unfortunate and difficult decision to forego upgrades for financial reasons. Often, they don’t realize there are risks in taking this step. Without timely upgrades, a company may find themselves left behind when the software vendor has moved on and no longer supports the older version.

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Organizations may also find that the legacy software can’t keep up with a changing business, creating the need for bolt-ons or other tools to help fill the gaps. And if unable to find supporting software, they could end up unable to do basic necessary functions, such as process ACH payments, or run a vital report. Even if the legacy software is working well currently, the lack of support or upgrades can become a risk for an organization — especially if their system is crucial to keeping up with changing regulations within their industry.

If too much time has passed since a software update, it can be expensive to attempt an upgrade – if it’s possible at all. At that point it may be the same price, or more, to look at a new ERP system. This can leave an organization with no choice but to move onto a new ERP on the cloud.

If you need to stay on your legacy software and don’t know where to find support, we here at ERP Advisors Group can help. We have many contacts in multiple fields and we know where to find support for older software products.

What to Look for in a New ERP Vendor

When you make the decision to sunset your legacy software and opt for a new ERP, there are some important things to look for in a new software vendor, including:

  • How much money are they putting into R&D?
  • How big is their partner channel?
  • What is their roadmap for the software you are considering?
  • Are they trying to maintain too many apps?

You want to find a vendor that is constantly improving, as well as one that is prevalent in the market. You don’t want to have any trouble finding support or customization for your chosen product. To find vital data about a vendor, check out their website. Look for their latest press release — was it recent? Was there any data in it that might be a red flag, such as announcements about upper-level executives leaving, or the company being bought by another firm?

Tips for Migrating from Legacy Software to a Cloud ERP

Once you have selected a new software solution and vendor, there are some important steps to take before migrating from your legacy software to the new cloud ERP.

Make Sure You Have Buy-In

Ensure that board members, upper-level executives, and anyone else necessary understands exactly why an upgrade is needed. Do the front-end work to find out how the new product will provide the most bang for the buck, what functionality will be lost or what issues will occur if you stay on the legacy software. Be ready for tough questions about the cloud and security risks. Get data from your software consultant to address any concerns beforehand.

Educate Your Team

Give everyone, from your accounting team all the way across the whole company if necessary, data on what will be occurring with the upgrade and when. If you will be rolling out the updates in phases, ensure those dates are known along with which areas will be affected. Sometimes you will have to be a cheerleader to keep everyone going through the process.

Gather Data

Before stepping into an upgrade situation, you want to know everything that is happening with your current software. Document which departments have access to the current software, how many people are in each section and what data they need to see, as well as determine how many licenses you will need.

Be Ready to Do Some Cleanup

Before moving onto the new software application, it’s crucial to ensure that all your data is clean. Doing this cleanup prior will make the transition smoother and will be one less thing to worry about during the implementation.

Be A Visionary

When implementing a new cloud software application, you need to always be looking ahead. Look one, two, even five years out and make sure you will have the flexibility to be able to match what will be going on with your business in the future.

Ensuring Security in the Cloud

It’s understandable to worry about security issues when moving onto the cloud. How secure is it? Can someone get into your system from the cloud? These are valid concerns and there are ways to mitigate any risks, including:

  • Assess current security and make any changes necessary, such as moving backups off-site. Look at your servers, hardware, even your network and your firewalls and determine how well you can keep viruses and other threats out of your network.
  • Look at your existing internal IT resources on staff. Can those people get your system back up if there’s a problem? Look at continuity planning and disaster recovery.
  • Look at the SaaS space of your new vendor. Make sure they have their SOC 1 and the SOC 2 reports and security statements.
  • Research your new vendor and software online. Do searches for keywords like “security breach.” Check to see if they have an “uptime” website. Most companies will have a place where you can view their uptime for the past 6 months, such as “uptime.companyname.com.” Also, look for any information on what kind of cybersecurity education they are providing to their employees.

Sunsetting your legacy software and updating to a new application can be a tough decision. If you need help migrating to the cloud, contact ERP Advisors Group today for assistance.

Narrator: This is The ERP Advisor. Today’s episode: Sunsetting Legacy Software with a Forecast for Cloud ERP

Juliette Welch: Shawn Windle is one of our speakers for today. Shawn is the founder and Managing Principal of ERP advisors group based in Denver, Colorado. Shawn has over 20 years’ experience in the enterprise software industry.

On our call today we're featuring a special guest, Caroline Romero, who is the Chief Accounting Officer of Gevo, a leading renewable chemicals and advanced biofuels company. Over the past 40 years Ms. Romero has served as Chief Financial Officer, Audit Committee Chair, Audit and Litigation Partner, and Corporate Controller for several high growth companies.

On today's call, we will discuss legacy software and providing guidance on how to upgrade from a legacy ERP as well as how to find the right software for your needs.

Shawn, Carolyn, thank you so much for joining me today.

Shawn: Thank you.

Carolyn: Thank you.

Juliette: Carolyn, we're happy to have you as our special guest, so thank you. So, what we're talking about today is such a big topic. Legacy software upgrades, cloud ERP, just to name a few. We're going to turn this into a multi-part series over the next several months because there's just a lot of material to cover.

So, with that said, I think we're going to jump right in. And Sean, I want to ask you, can you give us an introduction to some of the trends you've been seeing recently with legacy ERPs?

Shawn: Yeah. As you know, I could talk till I'm pink in the face, I guess, today. I'm in Florida so I had to put on some pink for the spring. We've got a little office down here.

But I'm more excited to hear what Carolyn has to say because she is living it as we speak. So, let me set a little bit of context though, for the listeners, for sure. And that is that—how old am I?—in the last couple of decades, there there's been a shift, as we all know, into cloud software.

Okay, well, what does that mean? We try to be practical here and, really there's this sort of evolution that software vendors—it's sort of a couple of different viewpoints that you could look at here.

One of them is the software vendors get hammered because their clients are like, “I can't migrate off your old customer base” or “off your old code base”, pardon me. Because they've customized the heck out of it and they want that take advantage of newer versions, but to get the newer versions, historically, they'd have to do an upgrade. Well, that means writing over all their customizations.

So that was bad. And you know, over the years too, a lot of organizations—big, but even smaller organizations—have wanted enterprise software. I mean, who doesn't? But then you have to have IT resources that are really skilled and have the time to support these things, if it's on-premise software, like the servers and operating systems and the databases and that kind of stuff.

And then the third factor is the cost to the software company, of their service. So, when you're constantly having to create new software applications—and then it used to be you put them on a DVD and then the implementation folks would run out, they would install it into the servers for the clients and then start configuring it. Even just the cost of just maintaining all these different versions of software out there. Because let's say there's two or three versions of the same app and there's a change in, I don't know, the tax law, which happens a lot, or the way 1099s are created specifically, or there's a bug, there's a problem with the code. Now the software vendor has to maintain all these different versions of the code and they have to have fixes for all these different versions of the code.

So, we sort of had these client-side problems and the vendor-side problems. And about 20 years ago, we started to see these vendors say, “I'm just going to put my app available in the cloud.” Net Ledger was one of those, it was called an ASP model back in the day. So, the vendors started putting their software up on in the cloud and then they could maintain it in one place. I mean, it's in a ton of places—virtually in a ton of places—but physically it was in one place. Customers didn't have to have a bunch of IT guys and gals running around supporting the infrastructure tools and all that stuff. And then they could upgrade too, and they can take advantage because the vendors just did it. They just did the upgrade for you and hopefully they didn't break your customizations, which certainly happened along the way.

So, voila, there's the cloud. That's the cloud, that's it, there's a lot more to it. Yada, yada, yada, but that's ultimately sort of the backdrop for what we're talking about today. And that model is so good for everybody. And I have one of my clients talking to me in my head right now saying, “but I don't want cloud.” And he didn't, he really wanted the instance of the code on-premise where he could control it and he could customize and everything else. So, there are instances where it makes sense not to do it, but the vast majority of folks—like even working with Carolyn on her project that she can talk about more—are looking at, “I don't want this responsibility of the technology and this upgrade problem” and everything else. And again, the vendors saying, “wow, we can really deploy a lot more software quicker and faster and cheaper, and we can provide better services so let's go to the cloud.”

So that model—everybody who's listening to this call knows something about the cloud—but with that backdrop, what we're seeing now is that the vendors are really making that transition. We'll talk about a lot of different vendors this summer, specifically on what we're doing, but I think even on this call, we're going to sort of highlight a little bit on Microsoft. And Microsoft is Azure. I mean, billions of dollars of cloud-based revenue that Microsoft gets. But on the ERP side, it really hasn't been until the last several years that their version is more clear on kind of what they're doing and not doing.

But what happens is you have customers that are on an older version and they don't necessarily want to upgrade to that version of the cloud solution. So, then they may look at other software—and again, we'll talk about that a little bit more. So the background—because again, it's a big topic and I'm trying to make sure I'm saying something that's concrete here, Juliette. So keep me honest.

But the back the backdrop is that this is really happening. I mean, there's like 10 vendors that have all had a cloud strategy. But the transition is happening now across all of these vendors. And so the more people understand what is really true, the better the decisions are that they can make. And so that's, again, what—from a high level—is going on. That makes sense?

Juliette: That's a lot. So, Carolyn with that said, from what you've experienced, your company was on Microsoft Dynamics Great Plains.

Carolyn: It still is for a few more months.

Juliette: A few more months, okay. What sort of issues were you running into with GP that made you know that you needed to look for a new ERP?

Carolyn: It's a combination of not only the changing technology, but the fact that we made some poor decisions in the past on some of the maintenance issues. When you have your onsite system, you need to take the responsibility for upgrading and doing all of those upgrades as the new software is put out and unfortunately this company got cash-strapped for a while and they did not upgrade to the latest version of Microsoft Dynamics for a few years.

Juliette: Oh, wow.

Carolyn: So, when I got here a couple of years ago to start taking a look at it, I looked at the cost of doing those upgrades and it was the same price or more than just going out and taking a look at a total new ERP system.

The other issue, I mean, if you talk about just what we're running into, the Microsoft Dynamics software, the company was making a decision that they weren't going to do any more hard copies. They had a cloud-based system, and if you wanted to stay with them, you needed to move to the cloud. They weren't giving you a lot of options on it. So, they weren't supporting not only the version that we were on, but even if I had upgraded to what they were doing currently, in a couple of years, I would have had to go to a cloud anyway. So, it's like, all right, if I've got to make all these changes and get the system up to date, then I've got to look at a cloud solution.

Some of the issues when you don't do the upgrades, or even with a system that's not being monitored or supported as frequently—our business was changing dramatically, the software wasn't staying up with what we needed to do. So, we were going to have to look at bolt-ons or something else to go with it. By the time you put all the pieces together, it wasn't making economic sense. Let alone whether or not all the softwares were going to talk to one another.

And then some of the things people don't realize, when you make those poor decisions—although they’re economic decisions that you're making—but when you make them, what's the long-term ramifications? Well, one of the ones that we happened to run into was ACHs. Because we hadn't upgraded at the right time, we can't do ACH payments. In this day and age, everybody wants an ACH payment. They don't want to wait for the mail to come in with their check. And so then now they're asking for wires. Well, a wire cost is what? 45 bucks a wire? It’s like, this is getting crazy. So, there was total economic process problems with it.

But I will tell you one of the really dangerous things that happened for us was, because of the limited amount of support that we could find, we ended up with only being able to run reports on one computer in the entire company. And if that computer went down or if there was a hiccup on it, then we had to go find a support system. So, we had to go to a third-party support looking for the people. And they had to try and figure out how to put a patch into whatever we were doing so we could do reports again.

So, all of this kind of came together to say, it's time to reevaluate what it is that we're working with. Between the lack of ability to use the software the way we needed it, the fact the vendor was going to go onto the cloud anyway—we just were in a position to say, let's evaluate what's out there and see what fits for us.

Juliette: Right. Well, sometimes your decision is made for you because if there aren't any more supports, or there aren't any more upgrades, like you don't really have much of a choice. Right?

Carolyn: In a couple of years, I would have been out of luck.

Juliette: Yes, exactly. So, Sean, let me ask you that. Regarding these older systems and ERPs that are losing their support, what are some of the concerns that we have for businesses that are still relying on legacy software?

Shawn: Well, Carolyn, you said it perfectly that what happens in a couple of years when that computer—you have to upgrade the operating system of the computer because of security patches—but the old instance of the ERP doesn't support the upgrade. We’re working with another client right now where that's the problem. And now there's security vulnerabilities that come in.

So, we're not doomsdayers and we never, ever, ever, ever will be. There's always a big “but” following something like that, but seriously, you can be put in a situation as a fiduciary to the organization you're working with, that puts a lot of folks at risk and just doesn't need to.

And I think about Carolyn and my other clients that are in a position of creating financial statements for public organizations, you have to be sure that financial statements are materially correct, they're not misstated. There's all these rules and regulations that goes around it. And what happens if the system goes down, we can't get to our financials? We're rebuilding financials in spreadsheets. Although a lot of folks have spreadsheets anyway—but just back up your spreadsheets, please—which is fine. That's a whole other topic from an earlier time where we talked about Excel. But it really is true that there's just a lot of risk that the enterprise organization is exposed to that it just doesn't have to be.

If I think about Carolyn's business and what these guys do, it's a great business and they're moving very quickly and they have to, it's a very competitive market. I think Carolyn's CEO is one of the greatest guys I've ever talked to and he's moving a million miles an hour. Meanwhile, Carolyn's try to keep up and so she needs to system that she can do that, for the entire business and yeah.

It's sort of the conditions of existence you could think of, and what happens is the software vendors start to like, everything's fine. And then it's not going so well and there's a little bit of an emergency, like, “Whoa, our clients are telling us they can't print. They can't do ACHs.” Well, what are we going to do about that? Nothing. Then it goes into danger and then basically non-existence.

So, the scary part to me is that it when I talk to new vendors, we're always looking at, well, how much money are you putting into R and D? How big is your partner channel? What is your roadmap for this software? So, we can make sure that that doesn't happen, that they're constantly improving. That's what we're really looking for.

Some of the vendors that we've worked with—I'm thinking with, like, a lot—I mean, Oracle has situations right now, SAP, all the way down to Deltek, Epicor, Microsoft, like Carolyn talked about. There's several vendors out there where they're stopping support on certain versions with the expectations that their customers are going to upgrade. So, there's a path which is good, thankfully.

Sometimes software vendors buy old software and then they just say, “we're done with the support and you're done with that product, you have to upgrade to this other version,” which is like, come on really? I know there's economics behind it, but.

But there's usually a path there, but just like Carolyn said, “sorry, but I'm at this decision point in the path and believe it or not, one option is to upgrade, I could do these two or three other options too.”

So, it's a good time to look and sort of see, to make sure, with a vendor that you trust is going to go into the future as best as you can.

Juliette: Right. So, Carolyn, you touched on the fact that you weren't able to do ACHs, or you had to print reports off of one computer when being on GP. When you started looking for a new ERP system, what were some of the features and functionalities that you were specifically looking for? Aside from the ones you've mentioned.

Carolyn: Well, the big one was that the software being able to grow with us. Our company is—well, for instance, we went from 15 million market cap to 1.5 billion market cap in nine months.

That's a huge growth in a very short period of time. That growth all by itself requires all kinds of changes in your systems.

So, I needed to ensure that as we were moving forward, the software that I was looking at was going to be able to handle where the company would be two, three, five years from now. Were they thinking ahead, were they moving ahead? If they didn't have a hundred percent of what I needed—which you know, no company really does—did they have relationships with other vendors and were working with other products that could bolt onto their product, that would interface well, and I wouldn't be having hiccups all the time over adding things?

So, the first pass is working on the financial side of things just because it was so archaic. But I've got to upgrade all of the manufacturing side of the business as well. Some of this stuff that I need isn't necessarily what's in the product that we purchased, which was NetSuite, but they have great relationships with other vendors that work well with their software. So, I can now add things like maintenance, so I know what the maintenance schedules are on my equipment. Or the employee safety program, as everybody is being certified for all of their trainings and things like that. So, they're not necessarily directly a part of my reporting package, but there are other ancillary pieces of information I need to run my business that needs to talk to the software that I'm working with.

The other things I was looking at were: Was the software that I was going to purchase, out far enough in the marketplace where I could find employees who had some experience with it? So, it would help minimize my training process? Were there enough consultants out there that could provide support for me as well? Cause I don't have a large IT is a support system here in my company. So, I don't have somebody who specializes in NetSuite that's sitting in my office that can be my SME here and answer my questions. So, I need to make sure that the software I'm working with has a good supply of consultants out there and I'm not having to look like I only have one choice of somebody to work with. Other things I looked at was ease of reporting, what was their training process so that my employees didn't have to go off site for a month to learn the software. And then was I going to feel comfortable on the other end of it, that if I couldn't figure it out, I could either call the company that I worked with in order to implement it or somebody else who would give me some ideas on how to handle a growth process that I hadn't thought about on the front end.

Juliette: So, that's a lot, you got a lot to consider. Certainly with that growth, I mean, that's amazing.

Carolyn: Yeah, it was huge.

Shawn: I think, Juliette, one thing that Helen said that I think is sort of funny, but sort of not, is that then, so like you said, you're on a legacy application, it's going to get sunsetted. So, a lot of the support channel, the implementation people—they know that's happening before it even happens—and so you start to see them take on other software solutions, because it's expensive for them to switch.

But I will offer it to any of the users out there, we know where the people are hidden—behind trees and in buildings and all over—that know almost any app, for support. Because there are some instances where—we have a prospect we’re talking to that’s built out a bunch of stuff on Microsoft Dynamics SL, Solomon, and they've got a great guy, but he wants to retire and they're like, “Oh my gosh, is there anybody that still knows this product?” We can find those people and just offer connections.

But I think Carolyn, it's such a good point that the risk on just having a person—a gal or a guy, that's it—for your app, it's just risky. So having a vendor that is more prevalent in the market, where you can basically throw a rock, almost, and hit somebody that says, “Oh yeah, I know that product” that can come in and help is huge. I think that's a great risk mitigation point.

Juliette: Shawn, can you speak to the organizations that are on currently on legacy software? When is it worth it for them to just do the upgrade or, honestly, just begin the search for a whole new ERP system?

Shawn: Right, right. You really do ask the best questions. Again, I don't look at these things. Like, I don't know. When does it make sense? But there are probably a couple indicators that somebody should look for.

We just had a conversation with yet another company literally yesterday on this, and they did decide to go look. So, one thing is, we're going to split the software vendor from the implementation or support resources. Sometimes they're one in the same, like Epicor has a professional services group, they do the software, they do the services. But then there's some great Epicor partners in the market too, that's separate.

So, the things to look for with the implementation partner are: How much R and D are they really putting into their product? And most of these folks are public. So, you can actually go look. But those that aren't—because we see this all the time, where they maybe get bought by a private equity and then that private equity firm buys a whole bunch of other software solutions.

If you look at the software vendor and you're starting to realize, “Oh my gosh, they have four or five, six, ten, fifty apps that they now have to maintain.” That's a bad indicator. So, you look at these indicators, things that point to things. So, look at the software vendor and look for those bad indicators, go to their website. When was the last time they did a press release? What did they say on what the press release was? If it's, “Oh, this executive’s leaving and this executive’s leaving and this executive’s leaving,” or they're going to get bought by a private equity firm. Okay. Well, what does that private equity firm specialize in? Go to that private equity firm’s site—I do this, every day—and click on the portfolio and see what kind of companies they hold on to.

We just did this with a vendor in the real estate industry and the private equity firm is actually owned by one of our clients that's in the data center industry. So, they own a real estate software solution and then a data center. Okay, that sort of, kind of makes sense. Recurring revenue, similar business models. Okay. But we did this recently and we had a private equity that had nothing in technology and they had the software solution.

So, look at the software vendor and really be willing to just look and see what you see. No matter how good or bad it is. That's the first thing. And look for yourself, don't just rely on the analyst reports, actually go look for yourself.

Then the next thing is implementation partners. Google, just as an example, “Deltek Vision implementation partners,” “Deltek Vision support partners.” There are actually some great firms in Colorado that still do that. But there's a few of them, versus like in Carolyn's examples for NetSuite, there's a ton of folks doing NetSuite.

So, especially if you've been working with a vendor, get to know that vendor really well, ask them how their business is going. Oh, “When did you hire somebody last?” “Oh, about 15 years ago.” Look for the red flags, for sure. But even the yellow flags.

So those are the two things to look at. But then also you really do need to look at the organization, the business, the non-profit, the government agency that you're a part of. And you really have to be willing to say, “You know, we're running into some major problems with a software solution.” We can't do things like pay people by bank, we have to write a check instead of ACH. Or those kinds of pain points, we call them, or limitations to growth in the future.

And we do sort of a yellow or a green. What is it? There's a phrase for it and now I forget it, but basically a green, yellow, red, we also put in an orange across the business, just high level: Accounting, Production, HR, Sales. Fine. How are we doing with our existing solutions across those areas? Sales is dying. It takes them forever to enter an order. They can't find information on our existing customers. They have no idea how much our existing customers are—what we're charging them today. So, they have no idea what to upsell. RED.

Okay. We know that. So, there's going to be some benefits then of getting new solutions that can help with those problems. So really look at your businesses, the third part, and say, where is there real pain where isn't there and can we solve that with new software?

So, if those three things—there's more—but if just those three things are like, ugh, you really want the “ugh” factor or anybody—you could be talking to your dog walker’s cousin’s aunt, who knows nothing about software. And you could say, “Well, the software vendor put about, you know, a 2% of their revenue into the product and the implementation partner actually—I'll be nice and say, “just hit the lottery and the one guy who does it is gone now. Not because he was so old or whatever, just that was it. He just is gone.” And then the third thing is the vendor, our company is dying in these areas. That person would say, “Oh, ugh, It makes perfect sense to switch.”

So super simple things there. If people are listening to this, rewind, because I kind of went through that fast. But seriously, it really needs to be that obvious. And sometimes, clients need our help to look and see what's out there for real. But I think most people can get those indicators. And then if they're still just not sure, that's where we come in, for sure, to just help get that business case solid.

But you don't have to go through all these pains and risks, you really don't. The deployments of these cloud solutions are usually a little cheaper. The ongoing cost is a little more sometimes, usually always, but there's reasons for that. We don't have to have the IT people in that. Still, something to think about, for sure. Those three things.

Juliette: Well, again, it's almost a carry-over from our last call. It's knowing your business and knowing what you do and what your needs are. And it seems simple, but it's a lot of work to determine that.

Shawn: It is. Yeah, I think you're right.

Juliette: So, Carolyn, from your experience, you've been through it all. You've been doing your Needs Analysis, your selection, and now, in the midst of your implementation, what advice would you be able to provide to other CFOs that are looking at evaluating a new ERP system?

Carolyn: Well, get some good resources behind you. It was wonderful that I was able to connect with Shawn and he helped me developed a business case. Because I needed to educate my C-suite to look beyond what they—I mean, a lot of them would think only about what they do for their own personal accounting and say, “I'm sorry, we're not in QuickBooks.”

Let's educate them about how all of that has to talk to one another. They hadn't even thought about the fact that the financial system had to correlate and intertwine with whatever was going out on manufacturing. They had all these compartments going on. So, Sean's team helped me understand, or helped me to educate my C-suite on how all of this works together and where the weaknesses in one would impact something else and just drag the whole system down.

So, getting good people as part of the process. Be a visionary, look out five years out, even though everybody tells you don't do a five-year projection. When you're talking about implementing a software, you’ve got to think about five years out so that you have the flexibility to be able to match what's going on with your business.

Definitely make sure you're getting buy-in. We spent a lot of time, and thank goodness people were patient with me, but it was a lot of time getting people's input into what they really needed and thinking beyond what they had, because they were so used to having nothing. When you asked them “So, what do you need?” “I don't know.” You have to start throwing ideas at them. You need people that have the experience that can come back and say, well, do you need this? Do you need that? And that would trigger more conversations.

So, a lot of front-end work to ensure that what we were going after was going to get the biggest bang for the time—of course, for the money—and that we were going to have a solution that could grow with us over that amount of time.

The other thing I have had to do is to stress with everybody—from my own accounting team all the way across the company—is that this takes time. We actually broke this process down into three phases, so that everybody didn't hear that we were going live on May 1 and they thought the entire problem was resolved. And it's like, “No, we're in three phases and yours will be on this phase and yours will be on this phase.” And that way people were a little more patient. But we shared where we were in the process with everybody across the board so they could see that we were moving. Just because we weren't doing their section, they could see that everything was moving along.

We also educated our board of directors so that they knew what we were doing. It wasn't just an internal problem, we were also explaining to the board—with the solution that we were proposing—how it would also protect us on the SOC side.

The question that is coming back now is, “All right, since you're on the cloud, is that going to give us more problems with people being able to access our information? Are we going to have more security risks?” And all of those were great questions and I didn't have the immediate solution or the answer when they asked, so I had to come back around and say, all right, what are the extra controls that we're going to have to put in place? Because our data now is in the cloud as opposed to sitting on our hard drive over here in the corner, type of thing.

But a lot of it is just telling my team to be patient and letting them know that, yes, we have a little extra work right now, but the solution—give it two more months, guys, and your life will be totally upside down and you're going to say, “Oh my God, how come it took us so long to make this decision?”

I’m a big cheerleader around here, so I have to keep telling everybody all the positives. “We're getting past the pain.” All the positives. “This is what you're seeing.”

And already, just little pieces that we've done—even during the cleanup phase of the old software—just by forcing ourselves to clean up that we've made it a little bit easier on the current software, while we're doing it. And we already know that that's one less thing we have to do going down the path, when we're done here in two more weeks. We’re getting close. Two more weeks!

Juliette: The countdown is on.

Carolyn: Anyway, that’s it in a nutshell. You’ve got to have a great team all the way around, internal and external.

Juliette: Right. Well, the ERP is now being supported, but then you are supporting your team, right? So honestly, it’s a whole group effort, right?

Carolyn: Yes, it is.

Shawn: I think what Carolyn just said, write down those notes guys, because that is so important. Those are things we don't think about sometimes as your consultants, frankly. Like what is the positioning with the board and what are the concerns that the board is going to have? We don't know. So, to find out what they are and then just address them now, sets you up for, if there are challenges, or it does push a little bit or whatever, they trust you going into the process.

So, I think Carolyn, those are great points that everybody should—we should do a textbook on exactly what she just said there, seriously. Because if you don’t, you set yourself up for more pain.

Juliette: Yeah. Right. Ensure success. It's in the details as they say, right?

So Caroline, this question just came in I'm not sure if you can answer it. You briefly touched on it and I'm not sure if you can answer it yet, because you weren't fully implemented. But it says, “What were some of the issues that you have encountered in transitioning to the cloud?” So, have you had any experience with that yet?

Carolyn: Okay, so you're right. I'm not totally there yet. But while we're not totally transitioned, there's things that you're doing getting ready for the cloud. One was asking the security question. Everybody wants to know whether or not your stuff's still secure when it's in the cloud.

We're going through and documenting—we have to even document more than a lot of companies do just because we are a publicly traded company—but it's documenting what are all of the controls. Whether they're access controls from within our company, to people being able to access the data, and what are all of the security issues there.

We've probably had a lot more investigation on that. It was one of the biggest questions we got from the board of directors over—"Okay, so now you've got patents, you've got all this other kind of stuff. Does that mean all of a sudden that somebody can crawl inside our system?” It really was a question that they asked, “If they can get in through our financial system, does it hop over to another hard drive so they could access our patents?”

Juliette: Oh, wow.

Carolyn: Those are not silly questions, but those are the questions we were getting was, “Can somebody go through the cloud back into the company, over to another computer and then get into another whole set of systems that we have?”

I assumed no, but I still had to go find the research on it. So, a lot of it is security issues over will data be supported? What happens is if somebody has a hiccup somewhere? Of course, all of the backup problems you're going to have, don't make a difference whether they're there in-house or not, you got to deal with all of those.

The other questions that arose were educating people about the push-out of upgrades. And does that mean that my IT team here had to become experts on NetSuite in order to be able to handle any upgrades? And so that worked out. Of course the answer is “No, they don't have to.”

But those are the common questions, because when your system is in-house you have to have a group of people who can handle all of those upgrades. And when it's on the cloud, it's actually one of the benefits that comes with the cloud process. I don't know whether it's something to point out specific to the cloud. I think it's just one of those things that happens when you’re doing a conversion, it forces you to do things that you knew you should have done. Something as simple as cleaning up your vendor list or your customer list.

You’re got this long database sitting in there, depending on how long you've been in business. We've been in business for 15 years We have a lot of vendors that we don't do business with anymore, but there's still taking up space in my system. Well, guess what? They're gone now.

So it's an opportunity. Yeah, it was a little bit of a pain in the process, but that's not cloud-specific. That's just something that's good business to do. Doing an ERP really pushes you to clean things up that you didn't necessarily want to do. And then just figuring out how to take advantage of being in the cloud.

I guess the other thing was, how many licenses was I going to need? Because I found out that I actually needed more licenses than I anticipated. Because now everybody who has rights to approve a check or approve an invoice or something, has to have a license. When it was here, I didn't have to worry about that.

So, I think that was a little bit of a surprise. When I stopped to think about it, okay, but then when we push back and said, “But does everybody have to have the same level of license? Can they group things together when the person's only accessing because there are approving a vendor or approving an invoice or something? But they're not doing anything else in the system, do they have to pay the same price as somebody like me who's crawling all over the system?”

We’re still working out that last one. We're doing a little negotiation on that one. Can five people who only approve invoices be qualified the same person as one person who crawls through the system? We're trying to get creative. We haven't been turned down.

Shawn: Right, but don't you think, Carolyn, that is a big difference with the cloud software? I mean, to me, I think they there's a little more leeway in the negotiations. Have you seen that a little bit? Or what do you think?

Carolyn: I think a little bit. I'm thinking back, I've done a couple of other ERP implementations that were not cloud-based. And because you didn't have the same issues with multiple people going through the process, they were a little more stingy on how many licenses you had to have and how that process was going to work. But I liked the creativity. They're not, like I said, they're not turning me down.

But that also comes with the support team that I'm working with. When we brought up that issue, they started to coming up with creative ways that they could approach NetSuite to redo the license. So, it wasn't just me. Everybody's just kind of working all together, trying to come up with options on it.

I've really enjoyed that part of the process. I've got four different groups of people working with me on this project. Not just Shawn’s team, but people who are keeping me on the straight and narrow and helping me think through, because I don't know all the solutions. Even though I've done some of this before, things are changing too fast and I've got good groups that are asking me great questions and together we're coming up with what I think is a very good solution for the company.

Shawn: That's awesome.

Juliette: That sounds great. Sean, kind of on this related topic, another question came in. “When making the case for improved security in the cloud versus on-premise solutions, what points do you like to make for the cloud?” Can you speak to that?

Shawn: Definitely. Maybe four things come to mind very quickly.

The first one is, you assess the security for on-premise solutions and look at what the risks are there. That’s the first thing. Because, like Carolyn said, most clients have a server in the corner, under a fire sprinkler, next to a window, in Kansas where there's weather, or whatever it is. If you really look at what you're doing with the physical servers that the software is on currently for on-prem… ugh. That's that “ugh” moment again.

The second thing is you really have to look at your existing resources that are on staff. I mean, Carolyn you're like all of our clients, practically. Where very few have specialists to support virtual machines and all these other sort of operating system issues that are going to come out, or app servers, or database servers. What really do we have for internal IT resources? And can those people get us back up if there's a problem? We're talking business continuity planning and disaster recovery.

One of our clients right now, they said, “Yeah, we do backup—they're in the room next to the server.” And I said, what happens if something happens to the building? Like, no, you can't do that, take it home with you or something, at least. Whereas if they're in the cloud, that just magically happens. You pay for that. You pay for it. So that's the second thing.

So, the servers, the hardware, those devices, even your network and your firewalls and everything, how well can we keep viruses and other sort of threats out of our network.

Two, the actual resources that we have, do they know how to—if something happens, can they bring us back up very quickly?

We had a client that got hit on their legacy system with a horrific ransomware and they were shut down. So, they're doing their business in paper as a manufacturer.

Both of those are really important. I'd say the third thing is you want to look at the SAS space, the software as a service-based vendors. Make sure they have the SOC 1 and the SOC 2 reports, which are specific audit reports where an auditing firm has gone in, a specialist has said, “Hey, we've done penetration testing. We've looked at the security to the data center where the software is.”

Because a lot of these folks, they're running their apps in somebody else's data center. So now you have to look at what the data center’s doing to make sure that their server’s—your software, that runs on their servers—is secure.

Looking at the software vendor in detail, they usually have good security statements, security reports—again, SOC 1, SOC 2—that organizations are required to do if they run financial statements for other organizations, or service to that.

And then the last thing is look online. I know that sounds a little silly, but if you look at a certain nonprofit that we talked about last time and you look at “security breach,” you're going to find when they're last security breaches were. So, look at the history of security and just what the actual performance has been from the software vendor.

Almost every vendor offers an uptime website that you can go to, like “uptime.whatever.com” and you go to it and it shows their uptime for the last six months. So, you can see when the software was down and when it was up. But definitely look and do the research on what's happening with uptime and security vulnerability and testing.

I think one of the companies that comes to mind that's pretty interesting out there, too is a company called KnowBe4 that does this training for employees. So, you want to see that companies, these software vendors are using these kinds of tools to enhance their employees’ understanding of what security threats could be.

We're not going to talk about cybersecurity too much here, but you want to make sure that the software vendor is training their people to do the right thing, even on the security side.

There was a lot there, but those are four things I'd say to keep in mind, for sure.

Juliette: Okay. That's great.

I mean, it's a lot. As Carolyn knows firsthand, it's a big investment: Time, energy, staff, financially, trying to protect it.

Shawn: I'm so sorry to say this, and I know we're running late, but there's one really, really, really, really, really important thing that I have to say that I think will help everybody, which is: You are right.

What you said, you are right. All of these considerations we've spent 45 minutes going through. We spent months and months going through it, Carolyn, for your project.

But when you talk to the software salesperson, they're not going to get into all of this. “Oh, it's going to be easy! You just turn on the software and it's there.”

It's kind of true, but it's kind of not, too. So just know that moving to the cloud doesn't eliminate all the risk by any means. Just like Carolyn had to handle with the board of directors for Gevo—very, very bright savvy business people and other kinds of organizational people. There's a reason why they're asking those questions, because probably they were at an organization that did suffer from those problems. And the virus did go from the cloud-based app to somebody downloaded something onto their computer and then through the network, it went to the other computer and blah.

So just because you move to the cloud, doesn't mean all your problems go away. To exactly what you're saying. You really do have to look at those considerations.

Juliette: We covered a lot today in a good amount of time. So, thank you, Sean for all the great information. Carolyn, thank you for your time and your experience and sharing that with us. Fingers, toes, arms, legs cross for a successful implementation and go-live.

Carolyn: Thank you. Well, thank you very much.

Juliette: All right, everyone. Thank you so much for joining us for today's call. Please let us know if you have any questions about anything that we covered today, you can reach out to us by email, give us a call, whatever works best. Our next call is scheduled for Thursday, April 28th when we continue our discussion on legacy software and cloud ERP options, specifically focusing on Oracle e-business Suite. Please go to our website, erpadvisorsgroup.com, for more details and to register.

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