Changing attitudes to ERP How cloud is disrupting traditional approaches to ERP deployment Introduction Cloud is fast becoming a viable option for businesses looking to implement a new enterprise resource planning (ERP) system, as organisations are increasingly finding that cloud can deliver on both their enterprise and flexibility requirements. This has resulted in traditional approaches to implementing ERP systems becoming less attractive when compared to the flexibility that cloud options can bring. This paper is going to explore a number of key ways in which cloud is disrupting the traditional approach to ERP deployment and delivering benefits to organisations of all sizes. Flexibility is finally meeting the demands of mission criticality Flexibility of Cloud Mission Critical Design Cloud was once the domain of web server hosting and low-criticality workloads, however it is now commonly accepted that cloud can deliver so much more functionality over a range of service levels. Yet ERP hosting is still fairly new in the enterprise resource planning market. In a report from Panorama Consulting, the split between on-premise ERP and hosted ERP is still prominent: on-premise ERP accounts for 61% of the ERP market, whilst cloud ERP (hosted and managed off-site) is responsible for just 12% of the market. However, when we combine the cloud ERP figures with the percentage of organisations that have implemented a Software-as-a-Service ERP system (14%), the figures quickly creep up to represent 26% of the market showing a steady progression towards more flexible approaches to ERP (Panorama Consulting, 2013). In turn, more and more cloud providers are bringing mission-critical hosting propositions to market as solution offerings mature and the ability to control
each part of the cloud process increases. This means that the overlap between cloud flexibility and the security and resiliency needed to host ERP applications is growing steadily. This is in part due to the general adoption across all organisations of cloud services according to a report from ComputerWorld, 42% of IT decision makers are planning to increase their spending on cloud in 2015; demonstrating how prominent cloud will be for IT departments (Forbes, 2015). As cloud continues on its path towards becoming an accepted and standard model for IT infrastructure deployment, more and more business critical applications will transition to cloud platforms, in the quest for more flexible and cost effective IT. In terms of the benefits for organisations looking at deploying a cloud-hosted ERP solution, cloud can accelerate mission critical project deployment due to its standardised infrastructure approach and the ability to procure services and expand as demand increases. This enables businesses to introduce a phased approach to ERP deployment, in place of traditional transformative migration projects. Ageing legacy technology cannot keep pace with cloud services One of the main benefits that cloud brings to all businesses, regardless of the application they are implementing, is the ability for organisations to access enterprise technology that is regularly upgraded and refreshed (depending on your service provider and contract), rather than relying on legacy technology investments delivered in-house. Many companies will have saved money across their ERP estate by refraining from refreshing legacy infrastructure. This can result in many different IT systems scattered across the organisation, creating a complex web of legacy IT that must be constantly monitored and supported often outside of warranty depending on the age of IT systems. Cloud instead offers an approach that relies on the cloud service provider making regular investments in the technology layer, and consistently maintaining it and refreshing it throughout the contract lifecycle, whilst the consumer of the cloud service pays for their solution on a monthly, quarterly or annual basis. This means that the cloud provider focuses on what they do best: delivering hosted infrastructure solutions, and the customer focuses on their own application and how it is used and delivered internally. Legacy infrastructure usually requires IT departments to dedicate large amounts of time to maintaining the existing IT through activities such as patching, upgrading and supporting the systems. Cloud can remove these time sinks, and also provide extra technical and support resource by drawing on a cloud service provider s team of experts and consultants removing the need to make long term investments in new staffing.
Cloud brings full ERP solutions and functionality to the SMB Cloud is a technology democratiser bringing the capabilities of enterprise ERP systems to small and mid-market companies. As there is more flexibility in the way technology services are paid for compared with traditional ERP infrastructure options, SMBs can access technology that they otherwise would not have been able to afford, especially as many services can be paid for on a per-user basis; directly linking costs back to the number of users and size of the business. Certain cloud ERP solutions enable organisations to just pay for the ERP functionality they need at that point in time for instance, they may only need a few elements of an overall solution so can pick and choose functionality, user numbers and contract lengths to suit, depending on the services offered. This makes it much easier for SMBs to move away from multiple software systems and spreadsheets to a comprehensive ERP solution that is more attuned to the needs (and wallet) of a growing SMB organisation. Many suppliers also provide the option to integrate software licencing and infrastructure hosting into one overall solution and contract, making the commercials very compelling for smaller organisations that require enterprise functionality. Due to this pay-as-you-go approach, organisations are in a better position when it comes to trialling and testing a cloud service before a live deployment. With traditional ERP implementations, it can often be an all or nothing scenario, as the success of the solution is only realised once a large amount of time, resource and cost has been invested. With cloud solutions, service providers may be able to offer Proof of Concepts (POCs) or free trials to test hosting services before they commit. Many ERP solutions are now developed firstly (and primarily) for the cloud Software companies are increasingly utilising the cloud to develop new software propositions; leveraging its low upfront costs for their own business models and then pass on savings to clients through software-as-a-service (SAAS) solutions. Many traditional software vendors are also developing SAAS offerings in parallel with their standard software licencing options to appeal to a broader range of consumers. This is particularly important as organisations are increasingly reducing their hardware estates in favour of more flexible cloudenabled IT environments. SAAS solutions can often be accessed through web browsers; taking businesses away from the usual location and desktop constraints. This has the added benefit of increasing desktop security as the user can still log into their systems from another device if their desktop is stolen or lost.
Web-based solutions also enable the global delivery of applications to users particularly useful for multinational organisations whose users are dispersed across the world. SAAS or hosted ERP offers a consistent and standardised approach to the organisation s application estate ensuring everyone, regardless of their location, sees the same version of the application. Conclusion In conclusion, cloud has enabled a flexible, new approach to ERP for companies of all sizes taking away the common barriers to entry that ERP deployments are usually associated with; namely time, resourcing and funding. Whilst cloud or hosted ERP can be a great enabler for organisations, it is still important to chose the appropriate service, which is not always straightforward to identify. Here are a few key focus areas that are critical to consider when selecting a cloud ERP provider: - What information governance regulations does your organisation adhere to? Where will your data be located? - Where do your users need to access the ERP application from (I.e. are they based in one office, multiple offices or include homeworkers?) - What level of integration is required between your cloud provider and the ERP software vendor? Do you prefer IT providers to work together to deliver a pre-integrated solution or do you prefer to integrate your different solutions in-house for greater control? - Who has responsibility for which part of the overall solution? It is important to understand the responsibilities held by each party across the cloud hosting provider and the ERP vendor. - How will risk be managed throughout the entire process? Do your suppliers have a strategic and standardised approach to risk management for client ERP solutions? In summary, you need an experienced provider who has experience of implementing complex, hosted ERP solutions whilst working hand in hand with ERP vendors to minimise the risk, disruption and complexity surrounding ERP deployments. About C24 C24 Ltd is one of the UK s leading privately owned specialist managed service and hosting providers, based in the Midlands, UK. Working with businesses all over the globe, the company manages, secures and delivers critical business applications to over 100 countries, with a particular focus on complex ERP hosting, the legal sector and business intelligence.
References ComputerWorld (2015) Forecast Study [Online]. Available from: http://www.idgenterprise.com/report/computerworldforecast-study-2015 Accessed on 13/4/2015 Forbes (2015) Roundup Of Cloud Computing Forecasts And Market Estimates, 2015 [Online]. Available from: http://www.forbes.com/sites/louiscolumbus/2015/01/24/roundup-of-cloud-computing-forecasts-and-market-estimates-2015/ Accessed on 13/4/2015 Panorama Consulting (2013) 2013 ERP Report [Online]. Available from: http://go.panorama- consulting.com/rs/panoramaconsulting/images/2013-erp- Report.pdf?mkt_tok=3RkMMJWWfF9wsRonuq%2FBZKXonjHpfsX56uwuUaK0lMI%2F0ER3fOvrPUfGjI4ATMZqI%2BSLDwEYGJlv6 SgFTLDGMbVqwrgMWxY%3D Accessed on 13/4/15