Post on 13-Apr-2018
7/26/2019 ERP on a Cloud
http://slidepdf.com/reader/full/erp-on-a-cloud 1/12
T forManagement
7/26/2019 ERP on a Cloud
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CONTENTS
WHAT IS ERP (ENTERPRISE RESOURCE PLANNING)?
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ERP SOFTWARE MODULES
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………2
WHAT IS CLOUD?
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.….…....3
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What is ERP (enterprise resource planning)?
Enterprise resource planning (ERP) is an industry term for the broad set of
activities that helps an organization to manage its business.
One important goal of ERP is to facilitate the o of information so that business
decisions can be made data!driven. ERP softare suites are built to collect andorganize the data from various levels of an organization to provide managers
ith insight into "ey performance indicators (#P$s) in real time.
ERP softare modules can help an organization%s administrators monitor and
manage inventory& supply chain& procurement& 'nance& product lifecycle&
proects& human resources and other mission!critical components of a business
through a series of interconnected eecutive dashboards. $n order for an ERP
softare deployment to be useful& hoever& it needs to be integrated ith other
softare systems the organization uses. *or this reason& deployment of a ne
ERP system in!house can involve considerable business process reengineering&
employee retraining and bac"!end information technology ($+) support for
database integration& data analytics and ad hoc reporting.
ERP softare is considered an enterprise application as it is designed to be used
by larger businesses and often re,uires dedicated teams to customize and
analyse the data and to handle upgrades and deployment. $n contrast& small
business ERP applications are lighteight business management softare
solutions& customized for the business industry you or" in.
ERP Softare Mo!ules
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ERP softare typically consists of multiple enterprise softare modules that are
individually purchased& based on hat best meets the speci'c needs and
technical capabilities of the organization. Each ERP module is focused on one
area of business processes& such as product development or mar"eting.
business can use ERP softare to manage bac"!o/ce activities and tas"sincluding the folloing0
istribution process management& supply chain management& services
"noledge base& con'gure& prices& improve accuracy of 'nancial data& facilitate
better proect planning& automate employee life!cycle& standardize critical
business procedures& reduce redundant tas"s& assess business needs& accounting
and 'nancial applications& loer purchasing costs& manage human resources and
payroll.
2ome of the most common ERP modules include those for product planning&
material purchasing& inventory control& distribution& accounting& mar"eting&'nance and 3R.
s the ERP methodology has become more popular& softare applications have
emerged to help business managers implement ERP in to other business
activities and may incorporate modules for 4R5 and business intelligence&
presenting it as a single uni'ed pac"age.
F!gr* 68 ERP S$#*1
n ERP system can either reside on a centralized server or be distributed acrossmodular hardare and softare units that provide 6services6 and communicate
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on a local area netor". +he distributed design allos a business to assemble
modules from di8erent vendors ithout the need for the placement of multiple
copies of comple and epensive computer systems in areas hich ill not use
their full capacity. ERP is a massive softare architecture that supports the
streaming and distribution of geographically scattered enterprise ide
information across all the functional units of a business house. $t provides the
eecutives ith a comprehensive overvie of the complete business eecution
hich in turn inuences their decisions in a productive ay.
ERP referred to the ay a large organization planned to use its organizational
ide resources. *ormerly& ERP systems ere used in larger and more industrial
types of companies. 3oever& the use of ERP has changed radically over a period
of fe years. +oday ERP can be applied to any type of company& operating in any
"ind of 'eld.
What is Clou!?4loud computing is the delivery of computing services over the $nternet. 4loud
services allo individuals and businesses to use softare and hardare that are
managed by third parties at remote locations. Eamples of cloud services include
online 'le storage& social netor"ing sites& ebmail& and online business
applications. +he cloud computing model allos access to information and
computer resources from anyhere that a netor" connection is available.
F!gr* 28 Co& Co1#!g
4loud computing provides a shared pool of resources& including data storage
space& netor"s& computer processing poer& and specialized corporate and userapplications.
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"o organi#ations can a!! $alue to their
%usiness using ERP on a Clou!?
:y moving ERP systems to the cloud& companies can gain an assortment of
technological and business bene'ts. Enterprise $+ is embracing cloud!based ERPfor many reasons& including0
&oer upfront costs '
4loud computing substantially reduces the capital epenses incurred by an
enterprise in order to implement an ERP system or to sitch to a ne
cloud!based one. +he part of the upfront costs that is mainly reduced
includes epenses for hardare& user licenses and implementation&
ecluding user training and customization. +his bene't is generally
considered to be more important for 25Es than for large enterprises.
&oer operating costs '4loud!based ERP loers operating costs for energy& maintenance&
con'guring& upgrades& and other $+!sta8 costs and e8orts. +his bene't is
generally considered as having increased relevance for 25Es.
Rapi! implementation'Rapid implementation is generally agreed to be among the top bene'ts of
cloud!based ERP. $t could also contribute to easier change of cloud service
providers and reduced time of providing ne products in certain types of
business.
Scala%ilit'Resource pooling and rapid resource elasticity of cloud!based ERP ma"e
the infrastructure capacity highly elastic. +hat in turn enables faster timeto mar"et& high level of strategic eibility and improved competitiveness.
+his feature is reported as a possible advantage that is particularly
relevant for 25Es in competing ith large rivals.
ocus on core competencies'4loud!based ERP and other enterprise applications allo focusing the
resources that ould be used to maintain an $+ department on other
essential areas of business. $n some cases it mainly results in reduced
pressure on internal $+ department hich can focus on servicing core
competencies.
*ccess to a!$ance! technolog'4loud!based applications often enable access to specialized technology
and advanced computing re!sources that otherise ould have not been
accessible to 25Es.
Rapi! up!ates + upgra!es'4loud!based ERP systems usually get faster updates and ne functionality
than traditional ERP systems.
Impro$e! accessi%ilit, mo%ilit, an! usa%ilit':esides their inherited features of mobility and accessibility cloud!based
ERP and other enterprise applications can usually boast higher levels of
user friendliness and usability than other types of ERP.
Easier integration ith clou! ser$ices'
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<sing bene'ts of 2aa2 shared infrastructure& companies that adopted
cloud!based ERP may get relatively inepensive integration ith other
cloud services once respective cloud providers have integrated their
infrastructures.
Impro$e! sstem a$aila%ilit an! !isaster reco$er'
$n many cases 2aa2 providers ensure measures such as bac"up routines&fall bac" and recovery procedures& conditioned poer etc. of higher ,uality
than most 25Es do in!house.
• vailability of more robust& feature!rich ERP cloud applications from
established and trusted enterprise softare vendors.
• Ease of deployment.
• Pay for only hat you use.
• =eed to shift $+ investments from the capital budget to the operating
budget to closer align business bene'ts ith cash outo.
• *ree valuable resources from maintaining legacy softare and
infrastructure to focus on higher!value and innovation!driven activities.• >uic"er deployments leading to faster time to value and freeing up
resources for more strategic initiatives.
• 5ore eible and scalable solutions to provide long!term support for
groth and epansion.
• s more enterprise applications reside in the cloud& having a cloud!based
ERP system can simplify integration and eliminate data silos.
:usinesses are realizing that the cloud is the future of enterprise softare and
o8ers many attractive business bene'ts. mong the most compelling are0
• 5ore modern user eperiences (<?s) that increase productivity andemployee satisfaction.
• Embedded analytics to support more e8ective real!time business
decisions.
• Embedded social collaboration tools to increase collaboration and
productivity.
• Pervasive mobile access to application services.
• Ease of 'nding and sharing information to support collaborative decision
ma"ing and increase productivity.
• <ser self!service to simplify provisioning and system administration.
•bility to more e8ectively tie bac"!o/ce systems into the front o/ce tosupport the company%s customer eperience strategy.
• Eliminating data and people silos to ma"e more e8ective business
decisions more ,uic"ly.
• $mprove and shorten the 'nancial close process through better access to
data and embedded collaboration.
• :alance the company%s 'nancial needs beteen capital and operating
budgets.
*or midsize companies on a fast groth path& there can be additional bene'ts
from ma"ing an informed and strategic decision hen it comes to ERP systems.
Often these companies choose something that is scaled don too much instead
of choosing a fully mature& enterprise!class ERP system. @hile such a system
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might 't today& it on%t "eep up ith the rapid change that occurs in groing
businesses. $n e8ect& businesses are re,uired to go through to implementation
processes& hich they could have avoided by selecting a system ith the
eibility& scalability and headroom to accommodate their groth.
"o the Technolog or-s?
Clou! ERP Sstems
4loud computing& as an innovative distributed computing& can provide dynamic
resource bu8er& virtualization and highly usable net generation of enterprise
data centre. @ith cloud computing& the resources are shared and so are the
costs. <sers can pay as they go and only use hat they need at any given time&
"eeping cost to the user don. 4loud computing is very much a business model
as ell. Providers of cloud computing solutions& hether they are softare&
hardare& platform& or storage providers& deliver their o8erings over the $nternet. +here are no shrin" rapped boes containing discs or hardare for you to buy
and set up yourself. 4loud providers typically charge monthly recurring fees
based on your usage.
+he cloud computing can be categorized as Public 4loud& Private 4loud and
3ybrid 4loud as de'ned belo0
a) Pu%lic Clou! Computing' +he cloud infrastructure is made available to the
general public or a large industry group and is oned by an organization selling
cloud services.
%) Pri$ate Clou! Computing' +he cloud infrastructure is operated solely for an
organization. $t may be managed by the organization or a third party and may
eist on premise or o8 premise.
c) "%ri! Clou! Computing' +he cloud infrastructure is a composition of to
or more clouds (private& community& or public) that remain uni,ue entities but
are bound together by standardized or proprietary technology that enables data
and application portability (e.g. cloud bursting for load!balancing beteen
clouds).
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F!gr* 38 T*$ o5 Co& Co1#!g
+he services provided by the cloud service providers can be collected into three
categories0
a) S**S' 4loud application services or 62oftare as a 2ervice (2aa2)6 deliver
softare as a service over the $nternet& eliminating the need to install and run
the application on the customer%s on computers and simplifying maintenance
and support.
%) P**S' +he CPlatform as a serviceD covering a layer of softare and presents it
as a service that can be used to construct higher!level services. $n other ords&
the capability provided to the consumer is to deploy onto the cloud infrastructure
consumer!related or ac,uired applications created using programming languages
and tools supported by the provider. +he consumer does not manage or control
the underlying cloud infrastructure including netor"& servers& operatingsystems& or storage but has control over the deployed applications and possibly
application hosting environment con'gurations.
c) I**S' 4loud infrastructure services or 6$nfrastructure as a 2ervice ($2)6
delivers computer infrastructure& typically a platform virtualization environment
as a service. Rather than purchasing servers& softare& data center space or
netor" e,uipment& clients instead buy those resources as a fully outsourced
service. +he service is typically billed on a utility computing basis and amount of
resources consumed (and therefore the cost) ill typically reect the level of
activity. $t is an evolution of virtual private server o8erings.
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ERP softare that is deployed into a cloud environment becomes 64loud ERP
2oftare6. 5ost (if not all) cloud environments are built using virtualization and
load balancing technology that allos applications to be deployed across
multiple servers and database resources. 4loud ERP is positioned as a
revolutionary approach to deploy an ERP solution. $t provides a solution that is
eible& adaptable& scalable& e/cient and a8ordable.
ERP as a business management softare has provided big success to deliver
business critical data. ERP softare as a service (2aa2) is provided for customers
ho ant to ac,uire ERP ithout managing hardare& softare& and upgrades
hile reducing up!front epenses. 4ustomers can build an internal cloud to
reduce ongoing hardare costs hile maintaining greater control over
integration and re,uire local access to their data server.
Softare.as.a.Ser$ice (SaaS) is often referred to as on!demand or hosted
applications hich can be used in the enterprise resource planning systems.
2aa2 vendor advertently ta"es responsibility for deploying and managing the $+
infrastructure (servers& operating system softare& databases& data center space&
netor" access& poer and cooling& etc.) and processes (infrastructure
patchesFupgrades& application patchesFupgrades& bac"ups& etc.) re,uired to run
and manage the full solution. 2oftare as a service features a complete
application o8ered as a service on demand. single instance of the softare
runs on the cloud and services multiple end users or client organizations.
2oftare!as!a!2ervice (2aa2) may also be described as a process by hich
pplication 2ervice Provider (2P) provide di8erent softare applications over
the $nternet leveraging cloud infrastructure on Cpay!as!you!goD pricing structure. +his ma"es the customer to get rid of installing and operating the application on
on computer. $t also eliminates the tremendous load of softare maintenanceG
continuing operation& safeguarding and support. +he great bene't of 2aa2 is the
ability to run the most recent version of the application.
+he 2aa2 softare model has 'ed 'nancial and operative advantages over the
others in on!campus softare models. +he operation cost is very less and the
subscription cost is also lo& normally far cheaper than a licensed application fee
hich is possible due to its monthly fees based revenue model. @ith 2aa2
rchitecture& a provider licenses an application to customers on subscriptionbased service delivery. $t allos customer to re,uire a computer or a server ith
internet access to donload the application and utilize the softare& hich ma"e
customer to get rid of purchasing epensive hardare F softare to run an
application. $t also allos the softare to be licensed for either a single user or
for a hole group of users.
The Managerial Issues/Challenges
Su%scription e0penses
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n eplicit part of cloud!based ERP additional costs is idely used periodic
subscription fees that do not depreciate over time& in contrast to capital
investments in traditional ERP softare.
Securit ris-s2ecurity and con'dentiality ris"s are reported to be among the top
concerns about cloud!based ERP. 2ecurity ris"s of cloud ERP adoption areusually more important for large enterprises than for 25Es.
Performance ris-sIeaving out pure integration issues& performance ris"s of cloud!based ERP
are essentially related to threatened speed and reliability of netor"&
outage ris"s and limitations on data.
Customi#ation an! integration limitations
5any cloud!based ERP systems have noticeable constraints on
interoperability ith home!gron applications and integration into eisting
application portfolios and $+ infrastructures. <nli"e on premise and hosted
ERP& cloud!based ERP may not allo etensive customization and comple
integration ith some third!party services and systems. t the same time
this issue is referred to as of less importance for 25Es.
Strategic ris-sOutsource such a business critical system as ERP& companies usually bear
increased strategic ris" of high dependency on the service provider.
Compliance ris-s
4loud!based applications often face additional di/culties in complying
ith data& energy and environmental standards as these regulations are
generally designed ithout regard to peculiarities of cloud computing.
&oss of IT competenciess a result of outsourcing the maor part of $+ support& organizations may
lose some valuable $+ competencies as ell as face their $+ departmentJs
resistance toards organizational changes. +hese e8ects of cloud
adoption are generally considered as more important for large enterprises
than for 25Es.
unctionalit limitations
4loud ERP is based on not that mature systems as traditional ERP and may
not be functionally rich enough to Csatisfy the bac" o/ce needs of
organizations in every type of industryD.
&imitation on h%ri! !eploment strateg4loud!based ERP usually has substantial limitations on hybrid deployment
strategy that may be re,uired to ($) retain legacy systems if needed& ($$)
integrate ERP ith on premise systems that re,uire lo latency and ($$$)
overcome de'ciency of public netor" infrastructure.
S&* issues
$n many cases it is rather hard to accurately de'ne 2ervice Ievel
greements (2Is) negotiated beteen cloud service provider and their
corporate clients. +hese 2Is usually do not really cover such aspects as
con'dentiality and integrity leaving space for unclear damage liability.
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References'
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