The current state of ERP cloud migration: part 1

Investments in cloud technology, including ERP cloud solutions, drive a wealth of positive outcomes. A Deloitte survey of 500 U.S.-based senior cloud decision-makers shows that cloud investments deliver improvements related to mitigating business and regulatory risk, generating additional revenue and expanding into new markets. Deloitte’s survey report also indicates that most organizations are not leveraging cloud investments as effectively as they could be. With this improvement opportunity in mind, we sat down with Oracle Group Vice President, ISV & Cloud Native Strategy and Business Development David Hicks and Vertex Global Director, Oracle & NetSuite Global Partnership, Marc Duclos to get their insights on the current state of ERP and tax engine cloud migrations as well as the Vertex-Oracle relationship. 

What should tax, finance and IT leaders know about the current state of ERP cloud migrations? 

David Hicks: We’re seeing tremendous growth in the cloud ERP market, which shows that organizations are comfortable with cloud solutions. The Cloud ERP Market size is estimated to grow from $68.4 Billion USD in 2022 to reach $157.2 Billion by 2030, growing at a compound annual growth rate of 15.7% during the forecast period from 2023 to 2030. Cloud is revolutionizing the back office, and we’re excited to be part of the revolution. 

What are some of the primary business drivers of cloud adoption? 

David Hicks: There are numerous reasons to migrate to the cloud. Companies are often looking to lower costs, gain access to more advanced technology, perform more frequent system updates, customize or scale their solutions more easily and/or to perform faster, more streamlined implementations. Modern cloud systems often update on a quarterly basis, which equips companies with new functionality and robust cybersecurity features. 

Marc Duclos: I agree with David. The scalability and flexibility benefits he mentions are especially valuable. Businesses need to change more rapidly in the face of external disruptions and competitive challenges. Software-as-a-Service systems let businesses make strategic adjustments with greater speed and agility. When a company starts operating globally, tax groups need to support that move by quickly establishing global tax compliance. A cloud-based tax engine provides this capability.  

How and why do advanced tax automation solutions (e.g., a tax engine) fit with a cloud-based ERP system? 

David Hicks: They’re pivotal. Flexibility and scalability are vitally important in an ERP system, and the same holds for tax solutions. The mind-boggling number of state and local tax jurisdictions in the U.S. and the complexity of VAT compliance requirements in Europe and other parts of the world can be overwhelming to address without advanced tax automation. Plus, indirect tax rules and rates change constantly, and many compliance requirements are becoming real-time in nature. It’s difficult to sustain compliance in this environment, and there are real penalties – stiff fees and even credibility risks – associated with noncompliance. Most companies are on board with a modern, cloud-based ERP approach. They should also embrace a modern tax approach. 

Marc Duclos: David’s point on VAT compliance complexity is important. I’d also point out that a tax engine reduces the amount of manual work – including monthly research and updates to tax codes – that tax groups perform. This enables tax leaders to assign those resources to higher-valued activities, such as tax planning and tax data analysis. 

In Part 2 of this discussion, David and Marc address cloud migration success factors, and the value of a strong, long-term partnership.