ERP · To cloud or not to cloud: the future of the ERP. Eli Black, Senior Manager, Deloitte & Touche LLP

2019 Deloitte Power & Utilities ConferencePower is not staticDecember 3-4, 2019

Bits, Bytes & Barrels” webinar

To cloud or not to cloud: the future of the

ERP

Eli Black, Senior Manager, Deloitte & Touche LLP

Copyright © 2019 Deloitte Development LLC. All rights reserved. 3

Contents

The journey is now more desirable 5

Understanding the journey 10

Preparing for the journey 15


The journey is now more desirable


Many organizations take advantage of trends underway, but being reactive is not enough to power your organization’s future!

What is the Finance Department’s role?

Cloud is dominating enterprise information technology

• Why is this important?

• When will we see the full potential?

Conventional analytics are insufficient

• Is your organization capable of evolving?

• What will help drive new questions?

Digital experiences are the foundation of the future

• What is the digital world of tomorrow?

• What does it take to engage customers and employees?

The Cloud, analytics, and digital accelerators are driving innovationThe future of business transformation is here


Disruptive shifts are prompting executives to ask fundamental questionsCompanies should work methodically to stay ahead of new innovations

Cloud is changing how to build, procure, and maintain and support functions

Agile is increasing collaboration between the business and IT

Rapid advances continue in process automation and cognitive / AI / ML

Talent is increasingly sourced from the open economy

Exponential proliferation of technologies are requiring greater tech fluency

Disruptive shifts

How will the workforce be reimagined and recomposed?

How will leadership enable the culture to embrace new ways of working truly digital?

How will work shift as process automation and cognitive rebalance the workforce?

How should the workplace change in order to improve collaboration?

What will the future operating model look like to better integrate with the business?

Org & talent implications


Cloud is the fabric underpinning how technology services will be consumedA mindset shift is already underway transforming organizations

NEW NORMAL…

$206B Estimated 2019 global spend on cloud services1

NOT JUST IN IT…

>50% IT spend occurring outside of the IT department2

ROOM TO GROW…

By 202580% of enterprises will have shut down their traditional data center3

Data Center & Cloud workload comparison

Sources: 1: Gartner press release Sept. 2018, https://www.gartner.com/en/newsroom/press-releases/2018-09-12-gartner-forecasts-worldwide-public-cloud-revenue-to-grow-17-percent-in-20192: IDC, April 2018, https://www.idc.com/getdoc.jsp?containerId=prUS437224183: Gartner ‘Prepare for the Death of the Data Center”, May 2018

0%

50%

100%

2006 2016 2021

https://www.gartner.com/en/newsroom/press-releases/2018-09-12-gartner-forecasts-worldwide-public-cloud-revenue-to-grow-17-percent-in-2019


More Cloud implementation costs can be capitalized under new accounting guidanceCapitalization guidance on Cloud computing arrangements has changed

The rules are changing with new accounting guidelines for capitalization of Cloud implementation costs under a service arrangement effective January 1, 2020. Companies can now follow the same guidelines as capitalizing costs for developing or obtaining internal-use software. Thus, capitalizing more costs allows the spreading of these costs over a longer horizon, making the move to Cloud more desirable.


Understanding the journey


The cybersecurity focus needs to shift as new risks are introduced by the CloudOrganizations are moving to the Cloud whether they are ready or not

Users became mobile but the perimeter remained the same

Organizations struggle as Cloud technologies increase the attack surface

The crown jewels remained safe if the perimeter remains intact


Organizations are challenged managing their Cloud migration journeyMoving to the Cloud needs to go beyond lift and shift

123

Traditional controls for managing security and compliance are not sufficient in Cloud environments

Misconfiguration and mismanagement of Cloud infrastructure is a leading threat

Cloud-native controls are needed to address Cloud specific threats and proactively protect data


Cloud adoption comes with cyber risk challenges that should be addressedImplementing an effective strategy will enhance governance and reduce risks

Risks and controls may not be aligned to industry standards and leading

practices

To address these challenges organizations need to

understand their responsibilities vs. the Cloud provider

Many organizations face significant challenges when migrating to the Cloud

Sophisticated threats may not be adequately modeled

to thwart well-funded skilled adversaries

Data proliferation of confidential information in the Cloud and on premises

may increase risk

Incorporation of Cloud into existing governance processes and operational workflows may be disruptive

Complex user profiles may be used by employees and contractors adding to the risk

A complex regulatory environment may hinder mapping data residency

requirements


Understand your Cloud governance and controls across cyber security domainsManaging cyber risk is a shared responsibility

Security in Cloud is the Company’s responsibility

Security of Cloud is Provider’s responsibility


Preparing for the journey


There are certain milestones to track in the journey to secure the CloudThe path to a secure Cloud is not straightforward

Assess Cloud risk & current capabilities

Establish broad Cloud governance

Prioritize security capabilities

Implement security capabilities

Automate security operations


Focus on Cloud complexities and develop a continuous monitoring strategyCloud transformation can begin with focusing on a few important areas

Increased Security

Agility

Visibility & ControlStrong Cloud governance will

enhance oversight and organizational education

Cost-Monitoring

Metrics

Managing cost is essential, identify solutions to help control

spending and monitor budgets

Clearly defined policies and controls are needed to decrease security failure

Increased agility requires a means to perform integrity checks without delaying advances

Measure quality and speed of deployments to attain the desired

benefits


The fundamentals remain the same, assess your people, processes, and technologiesPreparation for 2025 means addressing Cloud cyber risk trends

Notable Cloud cyber risk trends What does this mean for your organization?

Data protectionAs cloud services become common the risk of sensitive data being exposed increases.

• Develop appropriate data classification schemas• Implement effective controls to protect data• Be aware of regulatory environment changes

Application securityApplication development is outpacing organization’s ability to properly secure the data.

• Incorporate security throughout development• Implement native or third party security controls• Evaluate ability to comply established controls

Infrastructure securityIncreasing use of multi-cloud environments results in control complexities.

• Obtain visibility into services and assets deployed• Create secure default configurations• Automate provisioning of security controls

ResiliencyIncreased use of cloud to support the business is driving higher uptime but 100% availability is not guaranteed.

• Architect solutions for desired uptime• Monitor for cloud denial of service attacks• Develop incident response plan for cloud threats


A round of questions and answers

This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.

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ERP · To cloud or not to cloud: the future of the ERP. Eli Black, Senior Manager, Deloitte & Touche LLP