Why You Should Move Your ERP into The Cloud
June 20th, 2012 By: Olafur Ingthorsson
Olafur Ingthorsson is an IT professional in Reykjavik, Iceland who writes about cloud computing at Cloud Computing Topics.
While a lot of systems are being migrated into or integrated with the cloud, you might think that your corporate ERP systems are staying on the ground. After all, for most companies their Enterprise Resource Planning (ERP) systems are the software “crown jewels.” Discussions about collaboration systems, media sharing, and search will generally note that these types of systems are outside the company’s core business. On the other hand, many ERP systems are directly in the center of the core business. So why would it make sense to move an ERP system into the cloud? First, let’s be sure we’re on the same page with what we mean when we say “ERP system.”
What is ERP?
Most of the time, when folks think Enterprise Resource Planning (ERP) systems they think “manufacturing”, but “ERP” systems have many facets which can include:
- Financial Systems: Corporate financial systems including general ledger, asset management, budgeting and receivables.
- HR Systems: Human resources management systems covering payroll, recruiting, personnel and benefits tracking.
- Supply Chain Systems: The business systems for managing parts and logistics.
- Manufacturing Systems: Servers and software that govern the complexities of the manufacturing process. These systems include work orders, scheduling, bills of materials, costing, and managing the manufacturing systems.
- Project Management: These also fall under the label of enterprise project management (EPM) systems.
- Customer Relationship Management (CRM): CRM systems drive the sales machine in a company. In addition to managing tracking customers and sales opportunities, they can also cover marketing and commissions programs.
These systems are often stovepipes, that is they are isolated islands of data and functionality. Your company may have problems integrating their ERP systems with each other, or with other systems. Another common problem is enabling access to the systems for employees in a global workforce.
Solving the ERP Problem
In the past, ERP systems have always been viewed as large, bulky operations that must reside onsite with the enterprise. Today many companies are moving some or all of their ERP operations to the cloud. Putting your enterprise resource systems in the cloud is not a decision to be taken lightly, but it is an option which can solve many problems.
Moving a business system to the cloud immediately makes it more accessible to those employees and users who need access to it. A secure cloud deployment doesn’t increase the vulnerability of your business data, but now any authenticated user that has access to the internet can access the system. For geographically distributed companies, this can be a boon to operations, enabling remote sites to integrate their data with the primary site. Now roll-up reporting is much easier, and overseeing global operations becomes a matter of implementing a dashboard instead of worrying about setting up and maintaining a wide area network (WAN).
In addition, once an ERP system is in the cloud, it becomes a lot easier to integrate other systems with it. Cloud systems are designed for interoperability and access. Connecting one ERP system to another, or to an auxiliary system, becomes a lot more straightforward. In the same way, reporting and business intelligence systems can connect to your ERP system, or multiple systems.