Many manufacturing firms are seriously kicking the tires on ERP options delivered as a Cloud service. This may make a lot of financial sense if the business is in the market for a new ERP. Cloud ERP systems have favorable payment structures and easily expand/contract with today’s business needs.
ERP vendors are heavily investing in Cloud options as the big companies (Microsoft, Oracle, IBM etc.) have jumped in with both feet. The allure for the vendor is to avoid the headaches of software distribution/updating and go direct to the consumer with a “one size fits all” model. Cloud based ERP systems offer the vendor greater control over quality, updating and security issues.
A Cloud ERP system offers several key advantages:
- Faster implementation and operation
- Reduction in purchasing, updating and operational costs
- Full mobility with anytime, anywhere access
- Improved security and reliability
- No large upfront spend required
- Rich features and interactive help
- Flexibility to adjust ERP licensing with minimal costs
Recent studies show that 47% of organizations said they would move the majority of their core ERP systems to the cloud within five years, although only 2% had already done so. For the smaller manufacturing firm, there appears to be little difference whether it’s hosted in the Cloud or on their own servers.
Or is it?
In the ERP Cloud model, businesses still need to consider several pieces of infrastructure reliability:
Sufficient support staff
No matter how it is delivered, software still just supports the people running the actual business. Staff can often require assistance that automated systems are not yet fully suited to provide. New systems automate many functions, but it is still necessary to retain qualified people to handle outlier problems as swiftly as possible.
By traversing the Internet for all access, Cloud-based applications can add new vulnerabilities. Old existing infrastructure vulnerabilities (bad wiring, poorly configured switches, poorly secured firewalls etc.) continue and may even be more disruptive as they compound latency and security problems.
One of the strengths of the Cloud is greater redundancy and protection systems (fire suppression, power protection, environmental controls, physical security etc.) that improve uptime. In theory, by moving to the Cloud there is a lower chance of an outage. However, not all Cloud vendors are as reliable as you might assume and can be prone to disruption when they make changes or just don’t watch the server farm well enough.
In theory the data is already offsite, but responsible businesses know they still need to get their data away from the ERP Cloud location to ensure there will be no loss of data due to a major event. Cloud ERP systems drive the need to do a Cloud-to-Cloud backup for full protection.
Another consideration is the increased security risk when operating on the Internet. No matter how secure the Cloud vendor makes their systems, there is still a risk of hacking or a catastrophic event outside the company’s control. Cloud vendors are coming under increasing attack due to the treasure trove of data they contain.
Simply lifting and shifting an ERP system to the Cloud will rarely bring sufficient benefits, especially when factoring in the cost and disruption of migration. A Cloud ERP system needs to provide something other than replication of on-premise functionality. The real benefits come from the flexibility and reduced infrastructure and hardware costs. To ensure successful business operations, knowledgeable business owners and managers will move forward into a Cloud-based ERP system with caution and perform their due diligence around key infrastructure foundational elements in advance of the change.