When you talk about a finding a solution to a situation or a problem, some will answer, “There is an app for that!” Can the same be said of enterprise software solutions? The amount of software applications destined for the enterprise market is staggering. The ERP (Enterprise Resource Planning) software is the cash cow of many big names in technology. That said, like with every good thing, there comes a time when you have to admit that your product is coming to the end of its life cycle. That is when most software houses start to look for ways to open up new market for their ERP. What about moving to the cloud? That is a good question but you will first need to consider what companies do with their on-premise ERP solutions.
Large corporations will use ERP solutions to monitor their core business and gather real-time information for business analysis. This is often seen in bigger companies and that can also explain the cost of purchasing these software. On the other hand, what about small to medium size enterprise? Often small entities do not see the benefit of spending thousand of dollars in resource planning because a lot of things can still be done manually and the amount of data available is limited. It is also easier to pay an external party to come in and perform an ad-hoc analysis as required. Microsoft Dynamics tend to market their ERP towards those small and medium enterprise users. The difficult task for most vendors is convincing potential customers that they actually do need the software and that the information gathered can lead to greater Return On Investment. Large enterprise do see the need for a company wide resource planning solution but they also have to deal with the cost of implementing a SAP or Oracle based solution. This is a dilemma that most software vendors are now facing and that is one of the many reasons why the cloud is appearing to be a better place to do business.
ERP in the Cloud
Why would you want to offer ERP in the cloud in the first place? If customers cannot afford it on-premise would the cloud change their mind about SaaS? What is the added value of implementing an ERP solution in the cloud? What about security?
With the US government accused of spying, security is a big issue for big companies who might want to keep sensitive information from prying eyes. The biggest players in the ERP world are American companies, ranging from Infor, SAP, Oracle and Microsoft. Security considerations are a big concern and the big vendors will need to convince potential customers that their data is safe.
Another consideration to take into account is cost. Will buying an all in one SaaS solution be more cost effective? Yes and no. Like most people running a cloud solution, the initial price is often attractive but as your traffic grows and you require more processing power, you might find that the expected savings will quickly dry up. That said, for those who want to give ERP a test drive to see if it fits their needs before going down the road of a full implementation, the cloud is a stepping stone. If you don’t like what you see or you are not impressed, all you have to do is stop your subscription and move on.
Finally, ERP in the cloud will not replace on-premise solutions but it will give those still standing on the fence a choice that might lead to better things.
Chuck Romano
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