Viewpoint on ‘ERP as a Service’

Recently Sandhill has published an article called  ERP as a Service: A Discussion of Cloud-Based ERP Considerations by Martin Browne from Skyline Consulting. Primarily, the article mentions about the various factors to consider to enable ERP as a service and consume it in an ondemand model.

While this is an interesting article, I think there is more to getting ERP as a Service practically. I would like to add some of my opinions/viewpoints about ERP on the Cloud adding to the points described in the Sandhill.com article.

Firstly, various considerations of ‘ERP as a service’ has to be mapped to the nuances of the market and the respective target end user. Primarily the targets would be Large Enterprises and SMBs(Small & Medium businesses).

My opinion is considering ERP as a service in its true sense of on-demand may not really apply to large enterprise users because of the following

  • Typical ERP implementations in an enterprise are pretty complex and intertwined with a number of other IT systems of other internal businesses flows and processes .
  • There is a huge number of ERP implementations already in place and migration to an ondemand model in its true sense is difficult to implement.
  • Hetrogeneous integrations and business processes for an enterprise which plays a key role in the cohesive operations of mission critical business will be very difficult to realise connecting the ondemand to onpremise world.
  • ERPs are silos in many enterprises . A number of business critical operations may be  contained in a single ERP system (HR, Procurement,Financials etc) . So a piecemeal ondemand service may not be viable either to migrate or to implement newly. However, I donot rule out the possibility of an enterprise choosing to go with an ondemand service catering to internal business volumes that can help optimise the TCO/ROI of an enterprise (example : workday)
  • The change management in the ITIL operations pertaining to implementing or re-engineering an ERP service ondemand is pretty complex and may not fit well in to the overall plans. The risks of change may be higher.
  • TCO/ROI models may have to be established against higher risks
  • Mission critical nature may impede the process of moving an ERP to be made available as a service.

Small & Medium businesses (SMB)

  • ERP as a Service has the potential to shine for Small and Medium businesses. Why?
  • Existing small to mid scale ERP implementations may be migrated on an IaaS cloud as an ondemand service
  • SMBs typically having lower Businesses processes and integration complexity can use a number of prebuilt and customisable ERP services from vendors (e.g. Zoho)
  • SMBs may not have large-scale single ERP implementations catering to all their business needs internallly, they may flexibly choose ERP services pertaining to differnt business functions from multiple vendors ( to reduce the risk?) or may choose one vendor who offers a number of integrated modules as a PaaS (e.g. Ramco ERP ondemand, Oracle ondemand)
  • Reduced Customisation and integration complexities in an SMB lends well for ERPs ondemand to be embraced.
  • The TCO and ROI models for SMBs will be attractive when using an ondemand ERP and hence the adoption in this sector may grow.
  • SMBs have less issues with regulatory and compliance policies when compared to large enterprises and hence may be better positioned to leverage ERP as a service.

Summary

ERP as a Service may play well in the SMB market.  High QOS,Ready to use or Low complexity customization and integration combined with attractive TCO/ROI benefits to offer may fuel the adoption and proliferation of ERP as a Service in this market.

ERP as a Service for Enterprises may not be fully viable given various factors that are complex in an enterprise’ business operations. However, certain Ondemand ERP related services may get embedded as a part of of Private and Hybrid clouds for ERPs internal to the enterprises ,for instance as a part of IT Consolidation or sunset initiatives.

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