By: Aimee Claire
CEOs and other corporate executives have long been aware, that the amount of money their companies spend on IT systems and software licenses is phenomenal and that costs are set to grow. As a result many companies have now started to use the Cloud and are finding that there are considerable cost savings to be made, particularly in respect of Enterprise Resource Planning.
Enterprise Resource Planning (ERP) was originally introduced in 1990 and rapidly gained popularity as numerous companies realized the gains that could be made in terms of increased efficiency by synchronizing all departmental processes across a single database. The benefits of ERP include the ability for an executive to be able to analyze departmental productivity and it also provides managers with the tools to make accurate projections based on this information. The drawback is that ERP requires extensive IT investment and many smaller companies came to the conclusion that the cost of installing and maintaining the system was too high.
With the growing realization of the importance of ERP many companies have started to look at alternative (cheaper) methods of accessing the software. Cloud technology is one solution that is of great interest to small and medium enterprises (SMEs), especially as many of their traditional in-house functions may already have been migrated to this solution. One of the major benefits behind this change is flat fee subscription; in addition, the ERP software is much faster to set up, which substantially reduces corporate IT costs. Instead of a company having to purchase multiple items of hardware and software, all the necessary technology can be accessed through the cloud.
Computer analyst, Nigel Rayner, of Gartner, the company that first coined the expression ERP, recently said: “The cloud will completely disrupt the ERP market… the world is moving to the cloud and it will be the most important factor in the development of ERP over the next 10 years or more.” Online ERP isn’t going to happen overnight, however. It is more likely that companies will incorporate a hybrid system, with some functions being retained in-house while others will be migrated to the cloud. While this will immediately reduce the costs associated with employing a large IT department, companies should understand that they may well need to employ IT specialists with a different skill set. A further benefit of cloud technology is that it allows greater flexibility; a company will be able to choose which elements of ERP are most suitable for its purposes. The idea of a flat fee subscription is also appealing to many businesses; the licenses have the added benefit of allowing multi-user access.
Any company that is thinking of implementing cloud based ERP technology is advised to carry out as much research as possible before deciding whether in-house ERP, software as a service (SaaS) or a cloud application is most suitable for their specific requirements. The cost of maintaining a site-based system can be enormous, but if a company’s Internet access is unreliable moving to the cloud might prove impossible. Too many companies already experience Internet problems at 9am on a Monday morning when the rest of the corporate world logs on to the net.