An ERP solution is one of the most important tools for an organization to increase visibility and access key intelligence from across the value chain; in addition, it is crucial in providing management with the information needed to make business decisions.
Cloud ERP solutions are adaptable, scalable, efficient and affordable, facilitating seamless upgrades, rapid deployment, and easy customization within enterprises, unlike on-premise ERP solutions that require high cost maintenance and upgrades, across processes and locations. It is little surprise then, that companies across most industries are jumping onto the Cloud ERP bandwagon.
For several years, I have observed the growing adoption of Cloud ERP as a viable and sometimes preferred delivery and acquisition model for enterprise software, specifically in certain functional areas. Research firm Aberdeen points out that a large number of companies are willing to consider cloud ERP, and examples like salesforce.com, Google Apps, SuccessFactors, Taleo, Netsuite and Workday show how SaaS/Cloud can be an advantageous model in certain functional areas. However, these are not core ERP functions, but solutions for peripheral or sub-processes like talent management, recruitment, supply chain in manufacturing, etc. Core ERP has seen a slower adoption rate. Why?
The slow adoption is primarily due to the lack of a true Cloud ERP solution that can offer the depth and completeness that an on-premise ERP system delivers today. Cloud ERP solutions cannot yet claim to provide companies with a way to share the efficiencies inherent in an up-to-date ERP system across all functional areas.
Each business has highly differentiated ERP needs, so the ERP solution it adopts will have to be highly customizable. Maximizing business productivity relies on customizing/automating some tasks and changing some tasks to conform to standard business practices. The exact mix depends on the individual business, the regulatory environment, and the maturity of the process in the company. And no Cloud ERP solution offers this 'complete' flexibility today.
Data security and secrecy is another big concern in the cloud space, especially for organizations operating in the pharma and healthcare and financial services sectors. However, cloud data security standards are fast evolving, and as more firms become aware of the improved security standards, I feel the pace of cloud ERP adoption will increase at a faster pace.
Cloud ERP is a fast emerging and potentially disruptive model that may provide a great opportunity to capitalize on ERP investments. I wouldn't view Cloud ERP in isolation, but as an integral part of a firm's business and IT strategy. ERP is rightly looked at as an enabler of business and innovation, and today has to enable businesses overcome challenges and drive the next wave of growth through variabilization. A business strategy for the next wave of growth that does not integrate a Cloud ERP strategy has already lost out on a significant competitive advantage.