(PDF) Enterprise Resource Planning Systems Research

enterprise resource planning systems research report
ERP systems in the Cloud
MAY 18, 2018
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Introduction
There has been significant media attention and hype about the potential of cloud technologies.
Companies are investigating how these technologies can be applied to their ERP Systems
requirements. Companies are presented with a number of options which they need to consider.
These include: On-premise which refers to the traditional approach where a company purchases
the licences for an ERP systems and then installs it within their company. Hosted ERP System
which refers to where the company purchases the licences for an ERP systems and then installs it
on a third party’s infrastructure (hosted) in the cloud. This is sometimes referred to as
Infrastructure as a Service (IaaS).Cloud ERP System which refers to an ERP system which is
developed to operate purely in a cloud environment. The company pays a subscription to access
the ERP system and shares it with other companies. This is often referred to as Software as a
Service (SaaS).Companies are faced with increasing pressure to investigate the potential of these
different offerings and the strengths and weaknesses of each.
Nowadays there has been a wide variety of IT services being moved to the cloud as they have
been offering online cloud storage and many executives in the ICT field has put in to
consideration of moving their enterprise resource planning systems to cloud as well. Many have
been reported to have succeeded in doing so but others are still lagging behind due to financial
and supply chain operations being sceptical. The use and introduction of the cloud strategy is
based with some very important factors that each and every board of a given organization must
strategize before migrating its ERP to the Cloud technology. Some of these factors include things
like the type of the industry, size of the company, complexity of the offered solution, security
needs and many other issues that are addressed by the company.
The purpose for this report is getting the organization to understand enterprise resource planning
systems requirements. We have to understand the different types of ERP systems that is the
cloud ERP systems, on premise ERP systems and the hosted ERP systems comparing and
contrasting their benefits to the organizations. The other purpose to be brought about in this
context is the cos and pros of each and every suggested ERP forum. The purpose will be
analysing all the mentioned ERP systems clearly indicating their strengths and weaknesses and
how they help an organization in meeting the mentioned factors as above.
This report will try to analyse the ERP systems for an organization that want to choose a
platform. The idea to be discussed will be explaining each and every platform in details, showing
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the benefit and comparing all of them to see which meets the requirements of the company.
Lastly we will address the strengths and weaknesses of the discussed platforms of ERP systems.
Lastly we will conclude by giving a summary of what we have done throughout the report.
ERP Systems in the Cloud
Enterprise resource planning systems in the cloud has gained a lot momentum as companies are
trying to reduce the costs of enterprise resource planning systems, speeding up the deployment
times and making it easier in customizing the software for the individual needs (Robb, 2016).
On-premise Enterprise Resource Planning Systems.
This an enterprise resource planning software that has been known for running on in-house
servers at one’s location or locations where they have control over the servers. This on premise
solutions are known for offering security and control when using one’s IT infrastructure to
connecting to its people and the entire system. On premise enterprise resource planning solution
are always installed locally on one’s company’s hardware and servers and managed by the same
company (tactical, 2012).
When we say that the on premise ERP systems is secure and very easy to control is because
when a company maintains its own data in an in house data center it will have complete access
and control to its data (Wunderlin, 2017). There are some circumstances that we may consider
when we want to use or migrate to an On-Premise Enterprise Resource Planning Systems.
1. When we need to have a close supervision of the data and securing the Enterprise
Resource Planning systems and have full control of data and the access.
2. When we need our system to have specialized integration with all other existing systems
for the functions of the business daily.
3. When we want to have the dedicated Information technology resources on site for
handling the servers and the application maintenance
There are some advantages that pushes us in to using the On Premise ERP systems which
includes (collins, 2018).
1. The data that is confidential will remain secure on the onsite
2. One can retain full control of the data and their processes
3. There is robust integration which allows it to integrate with other systems.
4. There is the customization options like those of robust.
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Hosted Enterprise Resource Planning (ERP) Systems
Hosting has started the other day and it means one buys a software solution from a publisher or
vendor (Value added Reseller). The software is installed in the data center of the specific
company acting as the hosting center where the servers which are virtual are setup. In this case it
is just like in the on premise but just that we use virtual servers. The payment will stream wisely
as one have large upfront of the software payments. Sophisticated business s/w has enabled
many organisations in optimising their processes, where they streamline the efficiencies and
driving the levels of production across all departments. These set benefits make enterprise
resource planning systems to be very crucial investment used by many modern companies.
When we select the ERP system that is appropriate then it will have to fit the company’s unique
way to which they operate which may be a challenge to the stated company. The cloud and the
on premise platforms have both many advantages appealing to the business with reference to the
model that is needed.
Hosted solutions in ERP systems have been known for offering an effective compromise which
has allowed one to benefit from the other models. In this understanding it has made one to make
arrangements where we can buy ERP software outright, afterwards we purchase or we hire the
virtual or the physical servers in facility for running the system whose hosting services is secure.
There are some key benefits of hosting the ERP systems solutions. Some of them are: the
advantages of the cloud and the On-Premise features, it is more flexible over the future enterprise
resource planning setups, ownership of the software, options of security and disaster recovery
and the IT services which are managed (Precis, 2018). Like the other platforms hosted ERP has
its strengths and weaknesses as explained below.
Advantages of Hosted ERP systems.
1. The company will one the software (owning the indefinite license. In this case one may
pay the maintenance fee which be dependent on the third part providing the service.
When one stop paying the maintenance fee the licence of the software will expire making
it hard for you to work on the specified version
2. Data that is hosted is secure in the manner that it can have multiple site redundancy in
cases where we have disasters. Data backup is reliable and one can connect to it from
anywhere.
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3. Lastly is that we can bring the application back in the house without a lot of interruption.
When we are using virtual servers like the VMware or the MS Hyper-V where we can
take the server and run it physical hardware quickly.
Disadvantages of Hosted ERP systems.
1. The monthly cost for hosting may exceed the house costs long term, dependant
variables such as the other non-hosting solutions one have in house.
2. When the internet is down then one cannot access the system that is hosted
3. We need to have fair amount of bandwidth
4. For integrating with other solutions in other systems we will need to have the
solutions to be supported and installed at the hosting center and hence the
compatibility and interoperability will be a key decider.
Reason for Adopting the Hosted Solution
Investing in Enterprise Resource planning system is very important but in understanding the best
platform then we must choose the right delivery model. Some of the reasons to why we may opt
for the hosted ERP solutions other than the on premise of the cloud software.
1. Maintenance Support- organisation lacking enough IT infrastructures or resources in
house in supporting fully the On-premise solution.
2. Easy to shift to the On-Premise- in this case we have seen it easier in moving the hosted
solutions to the on premise unlike when compared to the cloud-based models in house
due to the architecture differences.
3. Security- organisations have been known to hesitate in hosting their company in the
cloud making the dedicated server to be a good option in situations when the on premise
is not suitable or possible (Precis, 2018).
Cloud Computing ERP systems
Cloud ERP systems is when we deploy software’s that is similar to the hosting but in this case
we have virtualized servers. The two vendors of such services are the AMAZON EC2 and the
Microsoft AZURE platforms fitting well in the definition of cloud computing (aws, 2014). The
application is not necessarily running on one server but it is entirely running on multiple servers
in real time which are spread over different locations (Wunderlin, 2017). In this case we rent the
servers, communications and the messaging capacity and the capacity of storage of the data. One
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is charged depending on the usage of space (MICROSOFT, 2015). Some of the advantages of
using Cloud ERP Systems include things such as the.
1. Cloud ERP systems have allowed the small developers to provide software applications
to customers in prices which are affordable. The use of mobile phones and the apps
installed on them has made communication very easy with other users who are hosted in
the cloud.
2. It is difficult in making a traditional in house solution to work in cloud ERP systems then
it makes rewriting very minimal.
3. We have less significant upfront of the hardware setup. It also good to note that the
acquisition cost is the same case as that of the hosting.
4. There is enough data security, redundancy is minimal and we can get unlimited
scalability.
Disadvantages of Cloud ERP systems
1. The transactions costs that is passed to the customer may exceed that of the On premise
solutions due to the fee of the Cloud architecture.
2. Applications in existence may need a lot of rework for them to work properly and taking
advantage of the cloud
3. It may be very hard to migrate from the cloud storage to the on premise because of the
architecture nature of the cloud being distributed.
Software as a Service (SaaS)
This is a hybrid of both the financial and the model in terms of architecture. SaaS ERP which is a
hosting model for the Enterprise Resource Planning systems which will involve any firms
Enterprise Resource applications on the vendor’s servers (Mark Patterson, 2010). The main goal
being is to reduce the software cost, hardware cost and the total support (Rouse, 2018). The
growth of SaaS ERP solutions has been adopted by many organizations have adopted the use of
SaaS as the losing of data and limitations to storage has led to this. The following are some of the
advantages if SaaS ERP.
1. The cost of ownership is less as one will only have to pay the maintenance cost for the IT
infrastructure.
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2. The risk of deployment may be lower as one has no worry of installing the hardware of
platforms, sofwares and the databases restoration. SaaS has ensured that there is faster
deployment with less risk of the project failing.
3. SaaS enterprises has made the enterprise software’s to allow different locations in having
the same level in accessing the system.
4. It is easy to upgrade to SaaS when one have hosted or the cloud based ERP systems.
Disadvantages of SaaS in case of hosted solution.
1. The cost of buying and renting may be high depending on the SaaS providers.
2. It may be hard to convince an organization how secure SaaS ERP systems in cases where
the cloud or hosted ERP systems have already failed.
3. Loss of the internet may lead to instability of SaaS
4. Upgrade maybe hard when we want to move from on premise to SaaS directly without
understanding what the hosting and Cloud entails.
Differences between Cloud Enterprise Software Architecture and The Traditionally On-
premises (Quirk, 2016).
On-premise Cloud
The top talents always comes with top costs
and niche skills that are always very
expensive when attracting and retaining.
The cloud service providers have been known
to offer provisions and specialize by
providing staff with the expertise that are
necessary.
The systems used for monitoring can be used
to run 24/7 but to keep the staff around 24/7
then it might be very hard and very expensive
in all ways.
Just like in traditionally they offer 24/7
services and does not need to monitor all the
time as the information is stored in a manner
that allows easy monitoring and do not
necessarily with our presence.
The scale of the on premise is always at stake
and one can do anything with the cost given
but it may be hard to be cost-effective.
The idea of providing the resource pooling
then cloud are able to afford the scale of
services which one could not afford or pool if
doing it on your own (tactical, 2012).
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You are the only person who trust you own
premise. You worry about your own data in
your own on premise (Software, 2015).
In the cloud you give your trust to someone
where you offer your trust to the service
provider.
Running the on premise one has to ensure that
they comply with the laws and regulations
that are applied with the business.
The cloud service vendors have teams that
devotes themselves to complying with the
ready set rules and regulations (Bratten,
2015).
Security is critical in the on premise where
one understands and know his or her assets
and people.
Security is complex, very expensive and
which must be maintained 24 hours in a day.
Customization is dependent on the features
that the on premise can support. Things such
as the plug-ins.
Cloud based services may offer a lot of
choices and many configurable options.
The software is physically installed on every
computer from which information can be
accessed
The software is deployed over the internet. In
this case we will need a reliable internet
connection
All the technical devices are managed by the
owner of the resources
While in Cloud based the PMS are deployed
over the internet, hardware and all technical
resources are maintained and housed by the
vendor.
The licensing fee is typically for each
workstation. The maintenance fee and the
hardware and IT infrastructure cost is catered
by the owner of the on premise
One only pay a onetime fee and afterwards
one subscribes either monthly or annually.
The fundamental difference and comparison between the cloud and the traditional ERP systems
is simply where they reside (Ambe, 2016). The following are some of the reasons to as why we
may opt to move to the Cloud ERP systems such as hosting, cloud and SaaS ERP systems.
1. They can be accessed anytime and anywhere
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2. They are affordable depending on the organization size and structure and the information
that need to be stored and the services they need,
3. The cost is predictable with reference to the services needed by the organization
4. There is no worry as one don’t need to but the IT resources.
5. There is a high level of security
6. Scalability is a key as they allows future expansion
7. The energy costs for the organization will be low.
Conclusion.
Adopting the Cloud based ERP approach will be the best approach and choice as it depends on
the providers to invest significantly to enhance what they offer, expand their functionalities,
services made available and reduction of risks caused by adoption (xperience, 2017). Smaller
organizations might be in need of gaining the benefits of scale, lowering their costs and driving
the standardization figures should put in to consideration the reason to why Cloud Based
approach ERP is the best choice which should also be applied by the large companies in
lowering their functional units costs within the classified divisions (rootstock, 2017).ERP in the
cloud is the future, and even companies that have good reason not to take the plunge yet should
be monitoring developments and considering their longer-range plans.
As explained above in the report the report entails looking forward to explaining the approaches
to ERP systems from the one we used to use traditionally to what we are using currently. The
purpose for this report was giving the analysis of ERP in the cloud explaining in details the On-
Premise ERP systems, Hosted ERP systems, Cloud Based ERP systems and the SaaS (nicole,
2017). We have explain their pros and cos and the reason to why we might consider to deploy
them. The explanations have gone to the extent of discussing some of the differences to why we
might opt for the cloud based approaches over the traditional ERP systems approaches in all
areas. The traditional ERP systems discussed in this report is the use of On Premise ERP systems
while the one for cloud are the use of hosted, Cloud based and the SaaS ERP systems
respectively.
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References
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cut it. Cloud ERP software allows for customization and flexibility, but still has drawbacks.. Differences of
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