ERP: Silver in the clouds
Bringing together enterprise resource planning (ERP) and cloud computing is proving to be a game changer for software vendors and their customers.
Although ERP platforms have been a staple for large enterprises since the 1990s, their ability to give executives a bird's eye view of what's happening in their organisation, by drawing information from a diverse range of functions like logistics and finance, does not come hassle-free.
They can be costly and tricky to implement. There's also the real danger that an organisation will be stuck with it for a while, as they will not be able to replace even if better technology comes along.
"The challenge is ERP often requires expensive and lengthy reimplementation to upgrade. This means that the organisation enjoys the benefit of upgraded software only every two to five years, or more," notes Sarah George, business development manager and product leader, Oracle ERP/EPM Cloud Applications.
Cloud changes this. It means that companies no longer have to make a large investment upfront, as in many cases, a cloud-based ERP service will be provided through a web browser. "Moving to the cloud means that you no longer need to invest in IT hardware and you can make use of Infrastructure as a Service (IaaS). You no longer need to invest in the skill set required to manage the hardware," says Heath Huxtable, executive head at Braintree, the consulting and integration division at Vox.
Nikki Isherwood, chief sales officer at Decision Inc., backs this view. It not only reduces costs, it also allows businesses to access the latest technology. This is especially true when it comes to IT security software.
"The security platforms provided by a service provider like Microsoft exceed any capability that a single customer can afford to implement entirely on their own. The resources available allow for improved security, 'single sign-on' and the ever looming compliance that need continuous updating," she says.
Besides having access to the latest security, companies also benefit by not having to make a conscious effort to back up their data. "Gone are the days where someone comes in once a week to replace the cassettes with your backups, which could end up anywhere," says Isherwood.
Although security and storage are some of the more notable benefits from moving into the cloud, they are not the only ones. While it's still early days, combing cloud ERP and other emerging technologies is showing some promising results.
An example of this is a local logistics company reducing drive time by using a cloud based ERP with artificial intelligence (AI) to find a more efficient route for deliveries, says Shiraz Khota, sales director at S/4 HANA Cloud, SAP.
Khota says doing this reduces the distance travelled, wear-and-tear on the vehicles, and idle time for their drivers. "This gives the organisation the ability to offer their customers an improved service at a potentially lower cost."
It frees people up to be more productive.Grant Bennett, SUSE South Africa & Sub-Saharan Africa
Logistics are not the only function that will benefit from the merging of cloud-based ERP applications with a machine-learning tool. Those in charge of finance stand to benefit from insights gained from machines doing `labour-intensive tasks in the background', while continually finding new ways to improve efficiency, says Oracle's George.
The future cloud-based ERP looks promising, but for it to be attractive, it needs reliable networks, something that is still a work in progress. Metacom CEO R'ean van Niekerk puts it bluntly: "Traditional networks are not ideal for ERP in the cloud, or, in fact, any cloud service."
He says for cloud-based ERP platforms to operate effectively, they need access to high-speed broadband, as well as being able to cope with the specific issues required from them. "Ideally, cloud computing needs network technology that allows for local breakout, edge computing, application level onsite routing, and centralised one-touch policy management with support for multiple last mile connections, including broadband."
However, he points out that things are changing for the better. The 'exploding availability of bandwidth', along with solutions that address these other issues, are making it easier to run cloud-based ERP platforms.
Pros and cons
But is the business case for an ERP still strong enough to justify the investment - even with the benefits cloud computing brings?
Stephen Corrigan, CEO of Palladium Business Solutions, is not sold on the idea that ERP is the answer to every question. "ERP has been oversold. It's an acronym that allows people to charge a lot of money for basic functionality."
Corrigan says ERP at most only changes five functions in a business, but if you ask business leaders what they want to change, they will only give you three at most.
Grant Bennett, country manager, SUSE South Africa & Sub-Saharan Africa, disagrees. "I think it's a requirement." He argues that as it allows a company to automate some processes, better use can be made of their resources. "It frees people up to be more productive."
Gone are the days where someone comes in once a week to replace the cassettes with your backups, which could end up anywhere.Nikki Isherwood, Decision Inc
Bennett is not alone. Matthew Kibby, VP, Sage Enterprise & Middle East, also believes ERP platforms are an essential business tool. "Today's business management systems still offer traditional ERP benefits such as integration of processes and systems across the enterprise, a single view of corporate data, and the ability to improve process discipline."
Although Bennett argues that an organisation gains from ERP, he also notes that providing ERP through the cloud means it's no longer business as usual for the vendors. Previously, vendors would install the software and not have much to do with it afterwards. Now it's in their interest to see that it gets installed properly, as they will be responsible in large part for running it.
"They can't hide anymore. It's in their interest that they see it succeed," he says.
Being more involved in their customers' operations is not the only thing that's changed for vendors. Bennett points out that the cloud cuts two ways for them. It expands their potential customer base but also exposes them, as having their data in the cloud allows them to swop vendors a lot easier.
"Customers can easily switch within a few months," he says.
This article was first published in the November 2018 edition of ITWeb Brainstorm magazine. To read more, go to the Brainstorm website.