Companies such as Salesforce.com have made it possible to put customer relationship management (CRM) systems in the cloud, but core enterprise resource planning (ERP) has so far remained untouched. If IT departments can make considerable savings switching from in-house systems to cloud-based software-as-a-service (SaaS), why stop at CRM? Businesses should consider using the cloud for ERP.
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Andrew Vize, propositions director at Computacenter, who runs the company's CIO panels, says, "The efficiency of services from Google and Amazon is superb. They offer the lowest power costs and are five to 10 times cheaper than traditional small datacentres."
It makes sense for an IT director, but the major ERP suppliers have moved reluctantly to cloud computing. SAP has been touting its Business ByDesign SaaS suite for smaller companies.
Meanwhile, Oracle offers its middleware and database products on Amazon Elastic Compute Cloud (Amazon EC2), but does not recommend putting E-Business Suite ERP software in the cloud. "Since Amazon EC2 uses a virtualisation engine that is not supported by Oracle and has not been certified with E-Business Suite, this environment is not supported for production usage of E-Business Suite. Using Amazon EC2 for hosting E-Business Suite may be suitable for non-production instances, such as demonstrations, test environments and development environments," Oracle stated in a blog post.
In fact, it is far from clear how the major ERP suppliers will charge for cloud-based ERP. The significant ongoing revenue they receive from annual software maintenance from on-premise applications makes it harder for established ERP companies to offer considerably cheaper software licensed on a monthly subscription basis.
ERP cloud success
However, smaller software companies are making cloud ERP float.
Cloud computing company NetSuite has unveiled SuiteFlow, workflow management software which enables users of cloud computing business suites to automate and streamline complex business processes. NetSuite says SuiteFlow allows businesses to customise workflows to support the way they need to work. Companies can use SuiteFlow to develop and deploy new business processes. NetSuite says it can be used to support processes such as contract renewal workflows with tasks, reminders and customer notifications, sales processes that include mandatory data entry, follow-up tasks and rep notifications, and customer support processes, including inactivity reminders, escalations and service level agreement (SLA) enforcement.
Lawson Software, which has mainly focused on traditional ERP, has moved into the cloud by offering its core Lawson Enterprise Management Systems and Lawson Talent Management suite on Amazon EC2 infrastructure. The products will be included in the Lawson External Cloud Services offering, which is part of the company's new Lawson Cloud Services portfolio.
Lawson's cloud ERP service is targeted at mid-sized companies and organisations looking for a more affordable, flexible and agile deployment option for full-function enterprise software. "We are making it easier for our customers to license, use, keep current and even pay for Lawson full-function enterprise software. This should be great news for CFOs and CIOs who worry about lengthy and complex on-premise installations, the cost and inefficiency of their datacentres, the best way to allocate IT staff, and the complexity and difficulty of maintaining software versions and upgrades," says Jeff Comport, senior vice-president of product management at Lawson Software.
A slice of ERP
Some experts believe it is unlikely ERP will move wholesale into the cloud. The major ERP systems tend to be architected as large homogenous IT systems, which may not be such a good fit for delivery via the internet cloud. Licensing major ERP systems to deploy via the cloud is still immature. Instead, niche software companies are likely to build cloud-based services that do many of the functions of ERP.
"We will have much more specialist systems that do a slice of ERP," predicts David Bradshaw, IDC research manager for software and services in Europe.