Top Five Important Facts About ERP in 2017


(In the digital age, companies need to make sure that all the different parts of their business can share information and create strategic plans from their data. This is where enterprise resource planning software(ERP) comes into play.

Whether in a small firm that is looking to grow or a huge corporation that needs to take control of its resources, ERP is a way of making sure that people at every level have the access they need to the same information. The right ERP solution can transform every area of a business, from inventory management and human resources right through to sales.

For some time the big names in this market have been SAP, Oracle and Microsoft, but the landscape is changing as cloud ERP offerings become more prominent. Adoption is high, and the signs point towards ERP being a central factor in most enterprise IT environments and IT strategies from now on.

Here are five important facts about ERP, how its adoption is growing and how new technologies are making it easier than ever to migrate to a new ERP solution.

ERP is a huge area of growth

The worldwide market for ERP is now worth over $25.4B (1), and is increasing year on year. New innovations in business IT are resulting in an increasing demand for software that meets the needs of the companies using it.

This growth is a part of the wider expansion of the global enterprise software market which is predicted to exceed $500B by 2022 (2). Within the enterprise software market, there are two segments which are outperforming all others when it comes to expansion; customer relationship management and ERP.

Everyone’s using it

ERP is hugely popular, with a majority of firms making use of it. In research conducted throughout 2016, Panorama Consulting found that 81% of organisations have implemented ERP software or are in the process of doing so (3). A further 14% are looking at which ERP software will suit their needs. The sector has moved beyond being a niche for large organisations with complex needs and has become the mainstream and accepted way of meeting the challenges a company faces.

It’s all in the cloud

The cloud is the future when it comes to ERP, as it is with many other areas of IT. The agility of cloud-based systems allows companies to move with the needs of their customers, and this versatility is driving growth in the sector and making it much more attractive. Eric Kimberling, of Panorama Consulting, points out that between 2015 and 2016 cloud ERP rose from an 11% market share to 27% (3). This rise is set to continue throughout 2017 as companies invest more in the development of cloud-based ERP software.

Saving cash

With the increase in agility that comes with the adoption of cloud-based ERP comes a reduction in costs. Research published by market analyst firm IDC asked a variety of companies for their top five reasons for moving to cloud ERP, and 40% of them said that reducing the total size of their IT budget was the major factor (4). Another 40% said that an improvement in the way in which their resources are utilised was the prime motivator for them.

Safety is still key

When companies in IDC’s recent CloudTrack Survey (4) were asked about the use of specific applications in the public cloud, they reported increased use across several application types, including ERP.

But when these firms were asked if they have any issues with using such software, security still came up as a major concern, something which points towards this being a problem that could affect the growth of cloud-based ERP. IDC’s research found that almost half (49%) of the businesses it spoke to cited security as their biggest concern when considering a move to a cloud-based system. Other worries included the way in which such a move will fit in with regulatory and compliance issues and whether or not cloud-based systems can deliver the kind of performance that each company needs.

In terms of the growth of ERP, the facts speak for themselves. A large majority of companies already have ERP deployments in place and nearly all others are looking at their options. The future is now not a decision about whether or not to make use of ERP, but simply how to go about it.

There are understandable concerns amongst some adopters, but these seem to be based more on the wider use of cloud technology and general security issues that are applicable across many areas of IT. ERP has firmly staked its claim as the central software stack in the business world and has become integral to any company that wants to take control of its resources and improve operations.

References

(1) https://www.forbes.com/sites/louiscolumbus/2014/05/12/gartners-erp-market-share-update-shows-the-future-of-cloud-erp-is-now/#53ecaec51fae

(2) https://www.wiseguyreports.com/reports/1127298-global-enterprise-software-market-by-segment-industry-verticals-geography-and-vendors

(3) http://diginomica.com/2017/01/25/cloud-erp-adoption-eric-kimberling-reveals-surprising-data-and-misconceptions/

(4) http://resources.idgenterprise.com/original/AST-0111292_ERP_US_EN_WP_IDCERPInTheCloud.pdf

ERP Industry News Roundup


We thought we would do a roundup of a few of the top ERP news stories over the past few weeks that caught our eye.  Here is our ERP news roundup.

C24 News ERP

 

Cloud or nothing

Firstly, Forbes reported that many people find the headache of upgrading or implementing newer versions of their ERP systems (and the associated customizations that go with it) so painful that they decide to remain with their existing software rather than change.

However despite this reticence to change, Gartner reports that alternative procurement models to on-premise licence purchases now account for more than half of new software deployments.  Maybe this suggests that when companies are electing for change on their ERP systems, they are moving to cloud or SAAS platforms.

Read the full article here.

 

 

Oracle’s Cloud Solutions for Manufacturers

Oracle has announced that it has released the industry’s first new software as a service product for the manufacturing industry in years with the introduction of its Manufacturing Cloud solution.

Oracle has said its new solution will enable the design of manufacturing processes and standards, management of work orders and the monitoring of shop-floor status – all delivered as a service rather than an on-premise licence.  Manufacturing and warehouse management solutions have traditionally involved large scale purchases of expensive onsite software licences that require chunky hardware to maintain and run the applications.  Oracle’s plan to deliver more of these enterprise applications within the cloud mean that companies can start to diversify how they pay for and consume their applications depending on what makes the most sense for their business.

Despite the new announcement, analysts highlighted the fact that changing applications in this sector is usually triggered by a change in overall manufacturing equipment, which then requires a software upgrade.  This suggests the market is led more by the underlying manufacturing hardware systems rather than by the vendors bringing new and improved functionality to market.

Read more here.

 

 

Microsoft reorganising its ERP division

Microsoft has recently made changes to its Cloud and Enterprise business unit, bringing enterprise software teams closer to the cloud division.  It has moved around teams in order to bring its Windows Server, SQL Server, Dynamics CRM and ERP teams into the vendor’s cloud organisation, to hopefully encourage more cross-divisional sales of enterprise applications into the Microsoft cloud.

Microsoft is betting on its commercial cloud revenues soaring, which includes Azure and Office365, so is trying to better integrate the range of enterprise applications that businesses can purchase through its cloud solution.

Are companies ready to put all of their enterprise app eggs into the Microsoft cloud basket?

Read the article in full here.

 

 

ERP: Departmental or just IT?

A recent study has found that despite ERP affecting many different departments and often sitting within the control of the manufacturing and production teams, 80 percent of business leaders deferred to their CIO or IT leaders for advice and strategy about moving ERP functions to the cloud.

This is perhaps the opposite of what can be seen in other departments where cloud often enables departments to circumvent IT in order to deploy a new application or service.

In reality, changing such a business-critical application such as ERP should involve all stakeholders, especially if the ERP system is highly integrated into other periphery tools and data vaults across the organisation.

The research also highlighted that 60% of companies are concerned about their dependence on an external vendor when choosing a cloud solution, yet 53% recognise that the scalability offered by cloud solutions is one of the key benefits for ERP deployments.

Read the full press release here.

 

 

Highly sensitive: Highly cloudable?

Verizon have published their State of the Market: Enterprise Cloud 2016 report which suggests that companies are now becoming more open to transitioning ‘highly sensitive’ workloads to the private cloud (which Verizon terms as a private cloud within a hosted datacentre, not on premise).

The report goes against Gartner’s wider prediction that hybrid cloud was still some way off being a mainstream method of IT resource consumption for enterprises.

The full article in Computer Weekly is available here.

 

 

 

Image courtesy of Mick Baker Rooster.

Cloud ERP Trends *infographic*


C24 ERP Infographic by C24
C24 ERP Infographic by C24

Enterprise Apps Are Upwardly Mobile


C24 Ent Apps Blog 4 - Mobility

 

As employees demand more from their corporate IT systems, mobility will inevitably increase in importance as mobile or remote working becomes the norm in most workplaces.  Users will expect to access their applications from wherever they are, whether that is at a coffee shop using public Wi-Fi or in a branch office.  Additionally, users will want to dictate the device they use – in the same way that they would access their own personal applications (mobile banking, shopping, TV streaming services) via a range of devices to suit location and accessibility.  A recent IDC survey revealed that 40% of devices used to access business applications were personally owned by the user – and this is an increase of 10% from 2010, so we can only assume this will increase.

 

Mismatch in expectations

Despite the evident trend, this expectation from the user is not matched by the enterprise.  In fact, 75% of organisations in the survey have no business applications – or plans to create these applications – designed for smart mobile devices which highlights the disconnect between user expectation and business reality.

The reason for developing mobile versions of enterprise applications is not just to keep the user happy, but is a way for the enterprise to keep its employees connected to customers for 24/7 support and also to reduce the costs associated with purchasing devices.  After all, if the user is happy to bring their personal tablet that they know and love to work for certain tasks, then that is one more device that does not have to be purchased by the company.  It is important that corporate IT teams are not left behind on this issue, as their lack of involvement could lead to serious security breaches if not managed correctly.  According to Gartner, 64% of enterprises said mobility projects forged ahead without the full involvement of the IT teams, with many employees utilising a range of consumer applications, personal data storage accounts and their own devices.  Employees were even starting to develop their own applications on cloud infrastructure in order to do their jobs more efficiently.  This is a valuable resource that organisations should harness rather than prevent.

 

Mobility for the sales force

Furthermore, sales and marketing teams are encouraged to spend more face to face time with clients; on the shop floor, in meetings or travelling – and mobile devices better lend themselves to this flexible approach to information delivery.  Enterprise software vendors are now having to think about how they can make their apps more consumer-like in a bid to make them more attractive to organisations who are recognising that desktop based applications are not going to work within a flexible and collaborative sales environment.

 

If you are interested in knowing more about the consumerisation of enterprise applications then read our whitepaper on “The Consumerisation of Enterprise Applications”.

 

 

Image provided courtesy of Terren In Viriginia.

Open and Integrated – The Future for Enterprise Applications?


C24 Ent Apps Blog 3 - Open

 

Open Source in the Enterprise Space

Many consumer or freemium apps take advantage of the cost benefits that Open Source platforms offer, building on previous development work carried out by online communities to offer bespoke functionality for their applications.

Whilst Open Source apps still have very low market share (as little as 1 or 2 percent in the ERP market), software vendors are recognising that in order to integrate effectively into organisations’ IT environments, it is crucial that new as-a-service applications are developed on industry standards.  The rise in the use of common public cloud services will mean that many established software vendors are pushed to ensure that they deliver services that can be delivered across these public cloud offerings, by following industry recognised standards for maximum interoperability with other applications.

It is expected that the increased popularity in Open Source development will further penetrate the enterprise application market, and one suggested way cited in Enterprise Apps Today is for Open Source app developers to build on an Open Source core, but develop safer, bespoke software around this that can be supported and commercialised for better security and steadiness.

 

Integration

A key feature of many consumer apps is their ability to integrate into popular application ecosystems.  For instance, many SAAS CRM systems (even free versions) come ready with the ability to integrate into mainstream email clients.

Within the enterprise application space, this level of integration is limited.  Companies such as Salesforce are looking to create their own standards by creating the Salesforce App Exchange where developers of products that are complimentary to Salesforce’s CRM can develop, integrate and publish apps that work in conjunction with Salesforce.

Outside of initiatives such as this, integration is mainly limited to integration within a vendor’s portfolio set according to a Forrester report.  For instance, you can purchase an analytics tool from the same vendor that created the ERP software and integrate the two solutions.  Outside of the vendor portfolio, the level of integration is low and adherence to standards is mainly limited to a hardware and infrastructure level.

 

Data integration

Improving integration is an obvious objective, however it is not a simple task as enterprise applications consume, produce and store huge amounts of data, and integration between not only different applications, but on premise and cloud services, means that real-time reconciliation of data is critical for the integration work to be deemed a success.

Furthermore, integration work on the part of the software vendor across a number of different applications also ignores the fact that many enterprises have legacy IT infrastructures that do not adhere to the standards warranted by most modern application sets.  Consumers are used to the flexibility and agility experienced when accessing web applications across the internet and understandably expect their work applications to meet those same high thresholds of agility and integration.

 

If you are interested in knowing more about the consumerisation of enterprise applications then read our whitepaper on “The Consumerisation of Enterprise Applications”.

 

 

Image provided courtesy of Nicholas Boullosa.

The effect of pay-as-you-go pricing on the Enterprise Application market


C24 Ent Apps Blog 2 - Pricing

Subscription pricing is becoming a standard feature of many modern cloud based enterprise applications, further narrowing the gap between enterprise and consumer applications.  Whilst companies may investigate a range of options about where to house their IT for maximum cost savings, most agree that software-as-a-service offerings reduce time, money and resources when it comes to managing the ongoing application upgrades and underlying hardware.  For instance, Toyota brought a large amount of IT infrastructure back in house, but chose to capitalise on the savings offered by many software-as-a-service applications that enable the delegation of the software and hardware upgrades to the SAAS vendor.

The availability of enterprise applications under a pay-as-you-go model means that the playing field has been levelled for many smaller companies who previously could not afford the upfront licence costs – now startups and SMBs have the ability to access enterprise functionality and change perceptions about how applications should work for them.

As cloud technology matures and becomes more accepted at the corporate and enterprise level, larger businesses are also experimenting with non-traditional approaches that enable them to access subscription based pricing – without needing to go through layers of finance sign offs that may be required for high-cost capital purchases.  Many are now utilising cloud based services such as Amazon Web Services or Microsoft Azure Cloud to deliver reliable infrastructure services on demand with lower costs of entry than would be available years ago.  This also delivers a benefit for software developers who may not have previously had the capital available to build expensive infrastructure platforms on which to house their software; they can now enter the market at a lower developmental cost and bring products to consumers faster.

But it isn’t just startups and disruptors who are delivering their solutions via subscription models.  The majority of the mature enterprise application vendors all have their own software-as-a-service offerings to meet the demands of a changing consumer market.  Oracle has reported that revenues from new software licences have dropped by 17% whilst at the same time revenues from their cloud services have increased by 29% in the same period, showing the shift in the market as vendors pivot to match client demand.

 

 

If you are interested in knowing more about the consumerisation of enterprise applications then read our whitepaper on “The Consumerisation of Enterprise Applications”.

 

 

Image provided courtesy of Mighty Travels.

Want people to use your enterprise apps? Make the user interface friendly!


C24 Consumer Apps Post 1

User adoption for enterprise applications is critical, especially in an era of BYOD (Bring Your Own Device) or even BYOA (Bring Your Own Application), and the main way of improving satisfaction and adoption of enterprise applications is to improve the user interface.

Increasingly, enterprise app vendors are recognising that in order to increase user satisfaction with their solutions, interfaces need to be as user friendly and intuitive as possible; on a level with the types of user interfaces seen in the consumer sector (i.e. Facebook, Twitter or online booking platforms).  Nobody would expect to be trained on how to use the functionality in Facebook or Twitter, however many enterprise applications require hours or even days of training before a user can be deemed ‘fully functional’.  Analysts have even cited that 80% of enterprise apps succeed due to their ease of use, hence it is of critical importance that new products and functionality upgrades are developed with immediate use in mind.

Users expect to be able to sit down and immediately use an application, with little to no training.  A founder of a CRM app called CRMNext found that the main reason that 50% of CRM application deployments failed was due to difficulty and complexity experienced by users.  Additionally, employees expect to connect to services from a range of devices, in the same way they would access their consumer applications from a web browser on a desktop or via their tablet or smartphone with minimal effort.  Compare that with a traditional desktop application that has no mobile functionality, and the gap between the consumer world and the enterprise world becomes glaringly obvious.  Combined with the fact that many of these consumer applications are free or low-cost, employees quickly lose patience with applications that can sometimes have cost millions to purchase, implement and manage, but which still do not work and adapt to their evolving expectations.

Research cited in a recent article by Forbes highlighted that well designed software interfaces are proven to lead to higher productivity levels as users spend less time figuring out how to use unintuitive applications and more time interacting with the tool.  As PC Advisor put it, “the difference is customer experience”.  Users must be able to install and be up and running immediately, without reading a manual on how to operate the application.

Vendors are therefore looking to make their applications slicker, simpler and low on bandwidth requirements so that apps can be accessed quickly and easily online and through mobile devices.

Despite this progress, the cost of simplicity is high – as simplicity for the user is often a result of lots of backend technical work performed by the central IT team to ensure that all tools integrate seamlessly.  Instead, IT teams should steer away from the speeds and feeds of IT and instead look at developing valuable ‘business partnerships’ with their application users to ensure more productive and optimised usage of apps across the workplace in the beginning, rather than trying to retrospectively integrate disparate systems.

 

If you are interested in knowing more about the consumerisation of enterprise applications then read our whitepaper on “The Consumerisation of Enterprise Applications”.

 

 

Image provided courtesy of Cristiano Betta.

5 Reasons to Ditch Traditional ERP Today


The traditional ERP model is broken, and new suppliers are rushing in from all sides (hybrid, hosted, public cloud and SAAS vendors) to fill the gap once inhabited by the monolithic ERP software vendors.

Consumers of ERP products want something different nowadays; a solution scales and fits with their business without costing an arm and a leg to deploy.

Here are 5 reasons why we believe that traditional ERP is dead.

 

1) Choice in the ERP market has contracted dramatically.c24 ERP

The number of ERP vendors offering traditional licenced software products is reducing and very few new vendors are coming into the space offering new ERP software solutions; creating a contraction in the market.  Less suppliers mean less innovation taking place, and even traditional vendors such as Sage and Microsoft are now pushing their cloud ERP versions over and above their traditional on-premise products.

Without innovation in the market, consumers will be attracted by the newer feature sets and capabilities of cloud-developed ERP solutions, and will gradually decommission their on-premise central ERP infrastructures as the features struggle to keep pace with client expectations.

Conversely, in the cloud ERP space, there are many more vendors developing straight onto public cloud platforms and the market is buoyant as app developers recognise the huge opportunity for cost-effective, cloud-based ERP services for organisations facing complex ERP challenges.

 

2) The ROI for on-premise ERP deployments is often longer than most people’s job roles.

The average worker is said to stay at each of his or her jobs for 4.4 years, and may have a number of job roles within that period.  ERP implementations often take between 18 months to 2 years, and sometimes longer when the projects run into difficulties (see our post on the 6 Most Shocking ERP Failures), therefore it can often be over 5 years before the return on investment for an ERP deployment is realised.

This timescale is often too long for many managers (who want to see an ROI within their tenure) and many Finance Directors are now expecting IT projects to deliver savings within the first year.  The reason for the extended timescale for on-premise ERP deployments compared with cloud ERP is largely due to the deployment costs involved in integrating a complex software system across all of your existing operations, and the cost and time impact on each business department as the solution is integrated into departmental apps.

One of the main features touted by cloud and hosted ERP solutions is the relatively short ROI timescales due to lower upfront deployment costs and pre-integration work already done by the vendor during the development stage.

 

3) Skilled ERP workers are retiring

IT specialists who were skilled in deploying and managing complex, traditional ERP systems are on the road to retiring in the next 10 years as the software specialists working around the mid-1990’s reach retirement age.  And, as cloud based ERP solutions grow in popularity, the skillsets associated with traditional ERP deployments will gradually decline; especially as many newer ERP cloud services are intuitive to use and based on familiar web user interfaces.

How companies continue to enhance their in-house ERP skills will be critical for determining whether they remain with on-premise ERP deployments or jump into hybrid Cloud ERP for simpler ongoing management and lower staffing costs.

 

4) Death by a thousand cuts – line of business apps

Traditional ERP is struggling due to the sheer volume of line of business apps that are being released into the market daily, due to the ease of developing and distributing via public cloud services.  Where once the central ERP system would have handled all facets of a company’s operations, now cloud and hosted payroll apps (such as Iris’ KashFlow Payroll) are being run alongside cloud CRM (for example, OpenCRM) and web-based warehouse management systems (such as Accello’s Cloud Warehouse Management).

As developers are just focusing on solving one issue in each app, integration is critical, however the cost differences between standalone, cloud, SAAS solutions seem to be outweighing the benefits of deploying an organisation-wide ERP solution.  Even more so when many developers are operating a freemium model in order to entice new B2B buyers…

If organisations continue to purchase standalone apps for line of business and departmental requirements, then this could be a death by a thousand cut for the traditional ERP platform.

 

5) On-premise ERP makes no financial sense for the modern business.

Deploying on-premise ERP requires infrastructure and people.  People and infrastructure require space.  And space costs a lot.

As many businesses are decommissioning their own server rooms in favour of hosting services from data centre providers, adding large infrastructure environments to their space-confined office locations in order to house a new ERP system is often commercially impossible.

Added to the space costs are the hardware, licences, support, consultancy and deployment expenses – all before the ongoing maintenance and management costs are incorporated.  This means that large scale ERP deployments on-premise are no longer commercially viable, and in a bid to reduce IT spend organisations are now choosing to host their ERP externally or purchase hybrid ERP services which remove the specialist consultancy and deployment costs from the sale.

 

 

Traditional ERP systems are still very much in place in many organisations across the world, but as many industry outlets (and ourselves at C24) are seeing, newer purchases tend to be hybrid or cloud ERP services which are then integrated into existing, legacy ERP applications in a bid to keep the lights on for a few more years.  Fewer companies are choosing on-premise ERP deployments as their number 1 strategy, and are instead looking at how on-premise legacy ERP can be complimented with hosted or cloud-based services to deliver a more modern, and complete, solution.

 

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If you liked this post then please read our other posts on ERP in the cloud:

6 Most Shocking ERP Failures

Can the cloud deliver for large scale ERP deployments?

Should You Risk Your ERP With The Cloud?

The Top 5 Things Not To Do When Deploying ERP in the Cloud

 

 

About C24 Ltd

C24 is a specialist applications hosting provider, with particular expertise in hosting and analytics for the manufacturing, legal and hospitality sector.

 

Image provided courtesy of Jes.

ERP: Stuck in a web of unstructured data


Files

Enterprise Resource Planning (ERP) platforms have traditionally been home to structured data feeds; informing users about manufacturing and operational performance across the business.  However, unstructured data is becoming a blessing (and a pain point) for many ERP managers who are looking to incorporate these new, disparate feeds into their reporting systems for increased visibility.

A report highlighted that complex supply chains can have up to 52 different sources of big data, generated from the supply chain alone.  The unstructured data that is providing new insights (and making up these additional streams) within a complex network of relationships involved in each supply chain, includes:

  • Web traffic statistics
  • Customer loyalty programs
  • Blogs and news feeds
  • Twitter feeds
  • User generated reviews and forums
  • Facebook statuses
  • Geoanalytics
  • Mobile application data

By mining these sources of data which are a relatively new addition to any supply chain, and not inherently catered for in any legacy ERP systems developed over ten years ago, companies highlighted the top areas of improvements from big data activities, namely:

  • Improvement in customer service levels
  • Effective reaction to supply chain issues
  • Increased efficiency
  • Better customer and supplier relationships

For instance, by reviewing geoanalytics data of delivery paths, organisations can start to layer historic detail with real-time analysis to optimise delivery networks for greater efficiency and reduced travel time.

Overall, unstructured data feeds now help supply chain managers to achieve better ‘contextual intelligence’ about how their supply chain strategies perform – an outcome which would not be possible with structure, traditional ERP feeds alone.

Additional to these unstructured feeds already in existence, the Internet of Things phenomenon means that there will be more data-generating components within each supply chain, as sensors are put in manufacturing production lines, and geo-data collectors are installed onto delivery vans – all of which will transmit information and data back into the central supply chain reporting tools.

 

ERP Data in Real-Time

As traditional supply chain is historically slow at responding to changes in demand or supply due to data being historic, unstructured data collection can help organisations to see their operations in real-time.  Social media feeds and geo-data can provide visibility into operational activities as developments occur rather than waiting to see a trend develop over a period of time, prior to taking action.

This move to unstructured data is helping to reduce some of the top pains experienced within supply chain management, such as:

  • Cross-functional alignment between departments
  • Demand and supply volatility
  • Supply chain visibility
  • Ability to use data

Effective control of unstructured data enables organisations to now take into account the wider context around their operational data, and use it to make better business decisions.  Real-time information can help manufacturers to better plan for supply and demand fluctuations during busy periods, or business analytics tools can be employed to drill down into supply chain processes for better visibility.

 

Top 4 Supply Chain Tech Trends

Based on these key pain points, there are 4 top technology trends that organisations are looking to utilise to help with their supply chain challenges:

  • Data visualisation
  • Demand sensing
  • Increased visibility into supply chain
  • Big data

Organisations are then looking to employ these technologies in order to create actionable insights, which can tangibly impact their business.  Targeted marketing also becomes possible, as sentiment analysis can be assessed in realtime and access to consumers’ information is easier than ever. Inventory management becomes more accurate as an array of unstructured data feeds can help to provide context to existing supply chain information. And finally, as insights do become more actionable, businesses can start to automate activities based on data feeds (i.e. increasing IT hosting allowance on website when traffic peaks, creating alerts for workers when staffing resources are constrained or warning managers when inventory is running dangerously low).

Overall, ERP systems are being flooded with new information as technology developments mean that data is being created at every touch point that a product has within an organisation – from concept, through to production, through to being used by a consumer.  A report from Information Week highlighted that organisations only analyse 12% of their data, and that the challenge was dealing with the remaining 88% of data left.  We think that, in fact, the challenge is incorporating disparate and unstructured feeds into existing data streams to create more valuable, actionable insights within ERP platforms.

 

Find out more about C24’s activities within ERP hosting and analytics at http://www.c24.co.uk/erp/

 

 

 

Image courtesy of Ilamont.

 

60% cheaper to deploy ERP in the cloud than on-premise


The advent of cloud ERP solutions means that organisations have more choice than ever about how and where they deploy their ERP system, whether that’s on-premise, privately hosted or on a cloud platform.

Sale sign

A report from PWC has looked at how to assess which model is the right fit for your ERP deployment, based on complexity and project size.

Typically, on-premise deployments for ERP have the following attributes:

  • Large implementation
  • Highly complex solution
  • High initial capital costs invested
  • Low to medium ongoing operational costs
  • Implementation time: 12 – 36 months

And Cloud based ERP deployments tend to take pretty much the opposite position:

  • Small to medium implementation
  • Low solution complexity
  • Low capital costs
  • Medium ongoing operational costs
  • Implementation time: 4 – 8 months

So for solutions that are relatively low in complexity, it often makes perfect sense for organisations to consider the cloud, even just for elements of the overall ERP requirement (such as payroll, or workforce management systems) – especially if timescales are tight.

Cloud based ERP solutions often take into account all of the backend services and processes that an organisation would usually have to complete themselves in an on-premise ERP deployment, a fact that is often overlooked when assessing costs.  Many companies do their due diligence about subtracting hardware and infrastructure management costs when selecting a cloud service, but many SAAS solutions also come with backup, upgrades, patching and ongoing development services built into the product, which would be an additional outlay for an IT team deploying an on-premise ERP solution.

This is in part why PWC have calculated that over a 10 year period, the total cost of ownership of a cloud-based ERP solution can be 50 to 60% less expensive than a traditional on-premise system.

However, there are compromises that have to be made.

Cloud-based ERP solutions and SAAS applications usually have reduced capabilities for customisation across the platform; it is a model that works at scale and if you fit into the 80% of businesses who probably have a standardised ERP requirement then cloud based ERP can be a great cost-saving solution.  If, however, you regularly need to customise your ERP tools to suit your organisation’s processes, then a cloud based ERP system is probably not going to be able to solve all of your problems.  A hybrid approach, where standardised systems are deployed in the cloud for simpler applications whilst the more complex, central ERP tool is deployed on-premise or within a private hosting environment can be a way to overcome the cost challenges of a complex ERP deployment.

Another point to consider when choosing the right model for your organisation, is how an ERP application will integrate with other applications and tools across your business.

An on-premise deployment could mean that your IT team is responsible for linking applications together, whereas for many cloud-based services, applications are built on standardised platforms that often have pre-built APIs to plug different apps together and integrate solutions.  An example of this is how Twitter or Facebook can be used as a login tool to other applications or websites.

PWC also use a simple, yet effective, framework to assess the likelihood of success for deploying your ERP onto a cloud platform or on-premise.

 

For a cloud-based SAAS ERP deployment the likelihood of success is high if:

Size of implementation is small + complexity of solution is low.

The solution is estimated to be relatively successful still if:

Size of implementation is large + complexity of solution is low.

 

The likelihood of success drops dramatically once complex ERP solutions are being considered that require in-depth customisation.

The critical factor is the complexity and ability to scale a standardised solution across many different users, locations and processes.  For complex deployments that don’t fit the standardised model, yet where an organisation could still reap cost and efficiency benefits of cloud, then a private, dedicated hosting environment could be the perfect solution that marries the benefits of both ERP models.

We also highlighted in a recent article how Hybrid ERP is becoming a popular solution for businesses who need the flexibility of cloud in some areas, combined with traditional, centralised ERP infrastructures for business critical processes.

 

Image courtesy of Tim Parkinson.