Utilizing the Cloud Effectively for Optimal ERP Performance
Read the following article for an overview of ERP to better understand whether ERP or self-hosting is the more effective choice for an organization.
Join the DZone community and get the full member experience.Join For Free
An ERP (Enterprise Resources Planning) is a set of packages or a specialized business management software that attempts to integrate all departments and functions within the company in a single, centralized system. The purpose is to optimize decision-making capabilities for business processes and strategies.
One of the biggest decisions that organizations need to make is whether to host their ERP on the cloud or rely on self-hosting. Before they can make that decision, there are a few things to consider. Read the following overview of ERP for a better understanding of ERP and self-hosting.
Overview of ERP Solutions
The core work of an ERP is performed through an information system whose processing capabilities encompass both technical and behavioral perspectives, highlighting the awareness of administrative, organizational, and technological dimensions. It is very useful when it comes to resource planning for businesses. The location of the ERP is sometimes also called the systems department because it is through the information system that most solutions are offered. However, it is also called the information department because it is precisely the provider of the information.
An ERP supports the different purposes and institutional levels and provides real solutions in the different modules or information subsystems in modern institutions. These include the processing subsystems of commercial operations, the subsystems of work automation in the offices, the information subsystems for accounting and administration, and the subsystems of support to the decisions and management control.
The Theory of Knowledge Management and the various aspects of Institutional Theory can be discussed relative to the acceptance and diffusion of ICT and ERP. However, the most recent approaches to Institutional Logics address the urgency of experiential homogeneity of the social orders that determine production and the reproduction of practices, as well as the symbolic meaning of benchmarking included in the software of integrated computer systems.
ERP business software encapsulates the evolution of technological advances in hardware and software, among which include the integration of accounting and management information systems, which has become increasingly sophisticated and customized to the specific needs of each company. No modern manufacturing company is immune to the impact of globalization or the acceleration of change. Most companies are looking for demonstrable business value from ERP and see the need to improve customer service as a key factor. However, it can be inferred from the Garner Group's 2004 annual survey that few companies saw the growth of ERP vendors, either organically or through mergers and acquisitions, as a determining factor affecting their acquisition decisions.
Comparing and Contrasting On-Premises With Cloud ERP Options
ERP has numerous practical applications for enterprises with large computing needs. These benefits can be easily amplified by leveraging ERP solutions over the cloud.
In a nutshell, the difference between cloud enterprise resource planning and on-premises resource enterprise planning is the storage location of the resources. On-premises ERP solutions are self-hosted, whereas cloud ERP solutions are stored on a vendor cloud platform.
From a purely practical standpoint, there are a variety of benefits of cloud ERP strategies. Some of these benefits are listed in the sections below.
Minimize Initial Investment
On-premises ERP technology is costly to setup. There are a lot of infrastructure costs, such as new hardware and site construction.
You can forgo these costs by using a cloud ERP option instead. Cloud ERP providers also operate on economies of scale, so the long-term infrastructure costs are still lower, even if they are amortized over time.
Easily Adapt to Fluctuating Resource Needs
One of the biggest challenges that organizations using on-premises ERP face is dealing with data scalability challenges. Their storage capacity is going to increase, which can be a major bottleneck with on-premises ERP options. It could require a complete overhaul of the infrastructure, which could be impractical.
Cloud ERP provides a lot more flexibility as data storage needs to fluctuate. This can be ideal for enterprises trying to cope with scalability issues.
Providing Better Security Against Enterprise Level of Targeted Attacks
Enterprises using cloud ERP solutions will be much less vulnerable to cyber-attacks directed specifically against the organization. The resources will be stored on a third-party platform, so cyber criminals would not be able to target them directly. Their data would only be at risk if the cloud vendor was attacked. Since the vendor is likely to have much more resources and a more fortified server network, risks of data breaches or DDoS attacks are going to be considerably reduced.
Option to Leverage a Larger Array of Applications More Quickly
There are a number of software applications that support various ERP strategies. Accessing these applications can be vastly more difficult with on-premises ERP approaches because the enterprise needs to pay for individual licenses and take the time to set them up.
You don’t usually need to pay for these licenses with a cloud ERP provider. You will be able to start using them right away without the additional licensing fees.
Opinions expressed by DZone contributors are their own.