ERP Systems in the Cloud

This report discusses the challenges and benefits of implementing ERP systems in the cloud. It also covers the benefits and challenges of on-premise and hosted ERP systems.

Running head: ERP SYSTEMS IN THE CLOUD
ERP SYSTEMS IN THE CLOUD
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Table of Contents
Introduction....................................................................................................................2
Discussion......................................................................................................................2
On-premise ERP system............................................................................................2
Benefits of the On-premise ERP system................................................................3
Challenges of the ON-premise ERP systems.........................................................4
Hosted ERP system....................................................................................................6
Cloud ERP systems....................................................................................................7
Benefits of the Cloud ERP systems.......................................................................8
Risks of the cloud ERP systems.............................................................................9
Conclusion....................................................................................................................10
References....................................................................................................................12

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Introduction
This report aims to discuss the ERP systems in cloud. The challenges and benefits of
the implementation of the conventional ERP system is discussed in this report. Another ERP
system which is the hosted ERP system is briefly discussed in this report that is commonly
referred to as IaaS and the benefits and challenges of implementing the hosted ERP system is
provided in this report. Finally, along with the discussion of the cloud ERP system, the
benefits and the challenges of deploying any Cloud ERP system is discussed. At last, an
appropriate conclusion is provided.
The major dilemma while selecting the ERP system for any organisation is the choice
of which ERP system needs to be implemented so that the organisations gain the most from
it. Even if the business are small or large, the benefits and the challenges of implementing the
ERP system are connected (Alajbegovic, Alexopoulos and Desalermos 2013). The
technology ERP system can be understood as the combined customisable applications who
provide the permission of the integration and the management of most of vital processes of
the business. The ERP system contains various advantages and the various drawbacks.
Discussion
On-premise ERP system
Software of ERP systems On-premise refers to the choice of any company of sourcing
the ERP software in the business and then perform the maintenance of the system from the
physical office, rather than ordering for any delivery across the internet or ERP hosted system
that are offered by the vendors (Clohessy and Acton 2013). The handling of the payroll of the
employees to accounting and the systems for analysis or the simulation of processes or
functions, which are used for controlling the inventory along with the handling of the issues

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of the supply chain are all included in the ERP system of any company. This system provides
the businesses with better opportunity of handling the business processes effectively.
Benefits of the On-premise ERP system
Enhancement of planning and business process improvement: combined with the
improved transparency, the increase in the insight for the functions of the organisation is
provided by the ERP systems. Implementation of suite of the ERP through the departments
results in the single, combined reporting system for any organisation related to each process.
The implementation of the sole source of information provides the organisations with the
ability of delivering effective results and perform analytics simultaneously (Huang and
Yasuda 2016). The ERP systems provides the capability of analysing after comparing all the
functions across the departments, without the trouble of several spreadsheets and emails.
Dedicated costs of IT: Although there is significant amount of capital involved in
implementing the ERP system in the organisations, the IT costs would be reduced and the
efficiency improvement would be gained by the organisations with the implementation of the
ERP systems. The companies would be able to huge resources that would be gained as the
implementation of the ERP system in the organisations eliminates the cost of support teams,
the requirements of the focussed staff is eliminated and the cost of the license and
infrastructure is eliminated as the ERP systems combines all these functions into one
(Elmonem, Nasr and Geith 2016). Moreover, the costs of IT of the company would be saved
significantly if the company decides on spending the significant resources on the systems that
are dissimilar rather than spending on the centralised ERP. It also eliminates the requirement
of training the end-users with the exploitation of the sole systems as these systems requires
only the learning of any system rather than performing the interaction along with the various
independent applications.

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Improved transparency: The major benefit that is gained by the organisations from
implementing the ERP systems in business is the improvement in the transparency of the
business. ERP system provides the business with the opportunity of free access to every
process in business with the creation easily access of the data from every department of
organisation with the proper access whenever it is required and all the data could be easily
accessed by the senior management of the organisation for making more informed decision of
the organisation (Bharathi and Mandal 2015). The inventory statistics could be managed by
the organisation regularly, which consists of the future projects for the organisation, which
are yet to be undertaken by the organisation and it also monitors the present inventory level,
which is in transit. With proper knowledge of the current levels of the inventory, the capital
for working could be controlled with the increased effectiveness.
Challenges of the ON-premise ERP systems
Cost of ON-premise ERP systems: It has been observed that there is lack of
considering the cost of implementing the cost of ERP and the traditional ERP requires the
most capital for the implementation (Das and Dayal 2016). The upfront cost of the software
leads to the immensely huge specifically for the small businesses. These upfront costs could
be avoided by the organisations with the implementation of the cloud ERP, where the
payment scheme is on monthly basis. However, it denotes tot the access to systems is offered
to customers till regular payments are made for accessing the services, which creates the
technology of cloud as the costly one for considering of the lifetime of the product.
Customisation process: The customisation process is the major advantages connected
to the ERP. Moreover, the organisations face significant difficulties in maintaining the
procedures in regular intervals (Mahara 2013). The time that is undertaken for the
customisation of the software of ERP needs immense time, expertise, effort and money. Still
it is discovered that the business often damage the resources, which are essential for the

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businesses after that neither execute the overall customisation which leads the exceeding of
the allotted budget easily. Various companies would require depend on the customisation
process when any system that has been selected is seen to be not fulfilling the necessities of
the business. Process of customisation would leads to reduction of the suitable processes that
is constructed in the system and it then becomes progressively challenging for the update of
the system in future.
Implementation and the maintenance cost: Although the investment on the software is
one large capital, the implementation process would cost significantly higher. Businesses
commonly requires the cost of workforce and the time that is required for the effective
deployment of ERP systems (Tashkandi and Al-Jabri 2015). The hiring of additional staff of
IT, the consultants of the ERP and specialists of the training of the software would be
required for the proper maintenance of the ERP systems. The vendors who delivers the
functions of the conventional systems to the organisations commonly charge immensely for
the maintenance of the ERP system along with the license fee. Moreover, the need of
investment in the fresh hardware for the offering the suitable support for the ERP that
includes the implementation of the servers and the mobile devices that are compatible with
the ERP system.
ERP system complexity: Several capabilities are provided by the ERP solutions but
this also means that the complexity of the software would also increase and it would be
complicated to use effectively. Often, the companies have the intention of deploying the ERP
software but the execution of the planning process is not done appropriately and the
implementation leads to the failure (Seethamraju 2015). Some businesses discovered that the
complication of the systems along with the complexity of the procedures that results in the
decrease in ROI. This is specifically accurate in the situations where the software

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implementation is not accurately handled by the several company teams and this leads to the
difficulty of gaining insight regarding the ERP systems in the organisations.
Hosted ERP system
The systems, whose implementation on any of the third part infrastructure in the cloud
post acquiring the licenses of ERP systems. The method of the Hosted ERP system has been
frequently referred as Infrastructure as a Service. The technique includes the systems that is
offered to any organisation for the procurement of the storage, hardware, networking and the
several other services, which is essential for the execution of the operations without the
trouble of management, maintenance or the purchasing of any equipment. With the
exploitation of this model, the equipment renting would be done by any organisation and the
payment is done for the capacity and the space that it used by the organisations (Kachur and
Kleinsmith 2013). All the requirement of the organisations is done by the service provides
who work offsite, along with the responsibility of managing, owning, and maintaining the
equipment of that client organisation. Whenever it is required, the access to the resources is
offered to the organisations with the use of any web browser (Hurbean and Fotache 2014).
The organisations implements the ERP systems on a third party arrangement of vendor and
then infrastructure is rented and the renting of the software is done. These are the major
profits of the operation of the hosted ERP system:
Scalable load balancing: On the basis of the requirements at any specified time, the
resources balancing is executed and it is then automatically distributed, appropriately and
efficiently across the several virtual computers.
Uptime assurance: The IaaS services providers provides the assurance of the highest
percentage of the availability along with the assurance of uptime (Scholtz and Atukwase

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2016). The terms of the uptime are pre-defined in the SLA among the client organisations and
the vendors.
Administrative tasks automation: The tasks of the management after the
implementation of the servers and all the virtual desktops have been involved in the
obligation of the vendors for the virtual server pools management, the guests, employees, and
observing of all the existing activities that includes the disks exploitation, network activity,
active jobs and the activities of the guest and the member (Zhang and Wang 2013).
Customised machine images: Along with deployment of the IaaS model, creation and
the implementation of machine images, in which applications execution is done, the
customisation and the automation of the specific requirements of an organisation is executed.
The IaaS providers provides a host of the machine images to customers, still the company
would import or build the images from an existing operation environment
Dynamic infrastructure scaling: The major responsibility of the service provider is the
ensuring fulfilment of the requirements of the infrastructure of the customer, though this
includes the major requirements (Ranjan, Jha and Pal 2016). Using the infrastructure of this
model, the assurance to the organisations could be provided that would have all the resources
of the IT that are essential.
Cloud ERP systems
Cloud ERP systems are referred as SaaS. The platform has been referred as on-
demand and the applications that are hosted, which could be exploited in the ERP systems
and significance of the service is important in ERP (Castellina 2013). The designing of SaaS
could be done to adapt the implementation in applications of the software such as the ERP
systems. The scalability of the platforms is comprehensive due to the fact that it could change
the procedures using which organisations would make payment for the services, services

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would be implemented and then the execution of the applications would be done of the
software (Emam 2013). The model of the software of the SaaS has implemented the financial
and the operative advantages over any other services compared to the software models of the
on–premises. The operation cost is immensely lower and the subscription cost is nominal as
the system operating is executed by the provider of the service.
Benefits of the Cloud ERP systems
Designing of ERP, which is implemented on the cloud is commonly done for
monitoring the flexibility of all the principal ERP software with the offering the companies
with the ability to decide the accurate choice of the deployment that meets the necessities of
companies (Boza et al. 2015). The ERP flexibility is comprehensive and the option of
immensely cost-effective for the medium and the businesses that are small sized and it also
provides the comprehensive gains advantages for growth and development:
Quick deployment: significant downside of hosted and the on-premise ERP systems is
that the utilisation of the current templates is done by the vendors and the system integrators
that are required to be configured and then customised for the matching of the specific
purposes and the practises of companies. The processes of implementation majorly intakes
several months or years (Hao and Helo 2017). The cloud based solutions provides the
comprehensive configuration with the designing of the restricted range of the option that are
specifically done for the fulfilling of all the requirements of the businesses and the companies
that is the approach which contains the capability of the time reduction for the deployment
still addressing the major requirements of the organisations.
Delivering the improved performance: At minimal cost the computing applications
can be executed centrally, which permits the increase in the performance of the companies
(Seethamraju 2013). It has been observed that the performance of the companies is done

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constantly as it has been improved in the cloud ERP systems and it is not achieved on the on-
premise deployments.
Cost: This system provides the opportunity of eliminating the purchasing outright and
the payment of ERP systems that are based on cloud is executed using the procedure of the
subscription model that commonly includes the cost of the support and hosting along with the
cost of the software (Garverick 2014). This leads to the chance of the lowering the foremost
expenditure of capital of any organisation, which is essential for the process of
implementation than any traditional systems and it even lowers the cost of the operation. The
cloud based providers could perform the offering scaling with immense ease due to the
evolvement of the necessities of organisations.
Interoperability by any third party users: The ERP systems offers solutions of the
connection of the various positions and several suppliers that uses only a sole system. The
providers of the cloud based ERP offers the solutions for the increase in the functioning of
the systems all through the lifecycle (Gerhardter and Ortner 2013).
Risks of the cloud ERP systems
Organisational resistance: The implementation of the dedicated teams has been done
by the several companies and various organisations and then advanced skills are required for
the operation of the environment of the ERP, which involves the data centre hosting,
development of the applications, support and maintenance. Including the various outsourcing
decisions, the migration to the cloud based solutions to the ERP would produce the important
disruptions in the organisations with the strong authority of ownership of the technology
solutions or solutions, which are innovative to applications and outsourcing of infrastructure
are majorly threatened by applications migration from the ERP to cloud (Haddara,
Fagerstrøm and Mæland 2015).

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Perceived data risks: The companies needs to determine the amount of the data that
has to be shared in the cloud based ERP as this kind of the ERP is maintained by the third
part providers and sometimes the companies tends to provide all the data of the company on
the cloud for proper maintenance but it has been observed that it sometimes leads to the
increase in the chances of the data theft (Bildosola et al. 2015). It is commonly seen that the
third party providers offers the assurance of the complete extensive security of the data of the
cloud but still it is not enough for the companies to trust the providers to store all the data of
the company on cloud.
Restricted functionality and availability: The main vision of the vendors of cloud is on
the delivery of the common functionalities of the ERP, which can be the purchasing, accounts
payable and receivable, and accounting (Saa et al. 2017). It has been discovered that
investment on the development is done for the innovative functions like planning based on
the constraints, production management, forecasting of the statistics, and the social media,
still it has been observed that the offerings might not be able to provide all services of the
hosted ERP and the on-premises.
Conclusion
Hence, the conclusion can be drawn that the implementation of the cloud based
services in the ERP would help the companies majorly in the improvement of the business
functions and processes. The major dilemma while selecting the ERP system for any
organisation is the choice of which ERP system needs to be implemented so that the
organisations gain the most from it. Even if the business are small or large, the benefits and
the challenges of implementing the ERP system are connected. The software of On-premise
ERP systems refers to the choice of any company of sourcing the ERP software in the
business and then perform the maintenance of the system from the physical office, rather than

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ordering for any delivery across the internet or ERP hosted system that are offered by the
vendors. Enhancement of planning and business process improvement is achieved with the
combined with the improved transparency, the increase in the insight for the functions of the
organisation is provided by the ERP systems. Dedicated costs of IT is reduced although there
is significant amount of capital involved in the implementation of the ERP system in the
organisations, the IT costs would be reduced and the efficiency improvement would be
gained by the organisations with the implementation of the ERP systems. The customisation
process is the major advantages connected to the ERP. Moreover, the organisations face
significant difficulties in maintaining the procedures in regular intervals. Quick deployment is
the significant drawback of hosted and the on-premise ERP systems is that the utilisation of
the current templates is done by the vendors and the system integrators that are required to be
configured and then customised for the matching of the specific purposes and the practises of
companies.

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Castellina, N., 2013. SaaS and Cloud ERP Observations. Analyst Inside.
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