ERP and Cloud Based Computing - Ready for Prime Time?

Cloud Based ERP solutions and integrated Cloud based business applications using solutions like Netsuite are so tantalizing. Imagine seamless integration across platforms, business locations and continents without the hassle and expense of having everything in-house. Imagine effortless and customizable ERP selection and upgrade. Management provided with the latest data for the entire company instantly and effortlessly at all times. The ideas behind Cloud based ERP are fantastic but are they real? Do they work? What about security?

Unfortunately Cloud based ERP solutions are a lot like all ERP solutions, they are real and they do work but how well they work depends on a variety of factors. If you’re looking for a panacea to solve all your problems Cloud probably isn’t yet ready to meet that challenge. What Cloud based ERP can do today is get you and your company started down a path to thinking and working differently.

Luckily Cloud based ERP solutions like Netsuite have learned from the mistakes made over the last 20 years in ERP systems. Netsuite uses advanced interfaces to make their products user friendly and it is designed around modularity- the idea being that the product can grow and develop with your company’s needs. With CRM, Accounting, ERP and E-commerce software Netsuite makes it possible to integrate every facet of your business and it is the acknowledged leader in Cloud ERP.

Plan the Project: Clouds are not FLUFFY

Correct ERP selection and upgrade management is critical as is IT Governance, careful planning and project management for Cloud based ERP solutions to be effective. Depending on the nature of your business using Cloud to some extent can be more convenient and better especially for things like data backup. Using Cloud will also encourage your business to grow naturally in ways that a single site based system will not.

ADC, one of the largest medical supply companies in the world, is a good example of a company that has effectively used ERP systems to grow. In the process of extensively using overseas suppliers it made sense for ADC to expand into growing world markets. The agile nature of their business made it possible for ADC to make the most out of opportunities and contacts overseas. In business only since 1984, ADC currently is one of the world’s largest suppliers of medical diagnostic supplies and a good example of correct ERP Selection and upgrade management.

Despite the obvious attractions of Cloud, are Cloud based ERP systems ready for prime time? Many of the industry experts think not. For example, Armada’s Haresh Parekh writes,“cloud computing is still immature; it will take another five years or so to be truly ready for prime time to an extent.” According to Parekh Cloud will need to become more cost effective and overcome technical integration issues as well as security and reliability problems before Cloud based systems take over. Parekh and Brad Vaughan both point to the Gartner IT Hype Cycle suggesting that ‘cloud computing currently is at the peak of the inflated expectations and is just about to get a dose of reality.”
No one wants to be that dose of reality.

The security and reliability issues related to the integrated nature of Cloud ERP systems are real. The Department of Defense among others has commissioned several studies dealing particularly with these issues related to the use of both Cloud and non-Cloud ERP systems. However, security issues exist with any type of system and many of the large Cloud providers have proven themselves very adept at managing both security and reliability.

Companies interested in Cloud based ERP systems should be comforted in knowing that these solutions have years of development and implementation to draw upon and this will probably result in better ERP selection and upgrade management for most Cloud based solutions.

ERP Selection and Upgrade Management, The Sky Better be the Limit

Moreover, many of the world’s historic information disasters like the burning of the great library in Alexandria were the result of static masses of important information in one place. From this perspective Cloud can provide a company with very valuable insurance.

For example back to the ADC example. Since it’s establishment in 1984 ADC has managed to establish itself as the worldwide leader in selling Stethoscopes. ADC hasn’t yet ousted Welch Allyn, the leading company in the United States for the last hundred years but they might eventually… ADC has done this largely by applying very efficient ERP and software systems that keep track of all their products, quality controls, costs and suppliers. ADC is agile and both Welch Allyn and Heine, the two leading makers of Stethoscopes in Europe and the United States have lost business to ADC. ADC naturally grew their worldwide business because from inception ADC was sourcing from Asia. Computers and ERP systems allowed them to grow and develop quickly. Sourcing from thousands of suppliers means that ADC can build what the market wants quickly and efficiently. ADC medical devices incorporate multiple elements from ten thousand different overseas manufactures. All the additional product construction and assembly occurs at the onsite factory. A good Cloud based ERP system can track every portion of product development and sales. If a batch of faulty products are incorporated into a batch of stethoscopes this can be tracked almost instantly back to the manufacturer. The system can estimate the cost of recall and quickly facilitate worldwide customer relations. The speed that a good ERP system can perform tasks like this is invaluable.

The Take Away

Cloud ERP can absolutely help a small business quickly turn into a big business. These are tools that every business should look at to reduce waste and increase ROI. However, like all new solutions, Cloud ERP isn’t without it’s limitations. Concerns related to security, upgrade management and system flexibility means that the initial planning and selection of the system is critical for the best long term success.

Lisa Pluth, PhD, is a researcher for, Australia’s premiere source for promotional products.

Featured image on home page provided courtesy of theaucitron.

Filed in: Cloud, Technology
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