Economic reasons such as speed and costs speak for ERP applications in the cloud. However, medium-sized companies are still hesitating at the moment, because placing core systems in the care of an IT partner is a step that needs to be considered. […]
ERP systems are always mission-critical and are therefore not the first systems to be transferred to the cloud. Especially in their core processes, medium-sized manufacturing companies are still reluctant. However, if companies play for time, they may lose the productivity benefits that a cloud ERP offers. Since the average age of an ERP installation is more than eleven years and a replacement is pending for many medium-sized companies, a hybrid cloud architecture should be considered. Based on six strategic questions, the ERP manufacturer Proalpha shows how medium-sized companies can gradually approach the ERP cloud.
1. Which cloud approach is ideal?
If a company decides to use ERP in the cloud, the question arises as to the optimal cloud approach. Is the company in a development or modernization phase? Then a standardized Software as a Service (SaaS) solution is a good option. If an existing ERP is to be migrated to the cloud in whole or in part, then a hosting model is a good choice. In order to test the live operation first, companies can also opt for a temporary “implementation hosting”. This is an individually replicated on-premise system.
2. Do I have to run my entire ERP in the cloud?
Not everything that can be in the cloud has to be in the cloud! With a hybrid architecture, it is possible to run applications partly locally and partly from the cloud. This sensible combination of both worlds currently provides the greatest added value for medium-sized manufacturers. The rule of thumb is: the closer an application is to the core processes of a company, the more sensitive it is to operate it in the cloud. Conversely, this means that the further away an application is from the core processes, the more sensible it is to migrate to the cloud, for example for e-procurement solutions.
3. How can a smooth data exchange from and to the cloud be ensured?
Especially in manufacturing, in addition to the ERP system, other specialist applications are often used, for example for production control or the construction of technical solutions that cannot be easily transferred to the cloud. These can still be used on-premise. They can be easily connected to a cloud ERP via a standardized integration platform, such as an Integration Workbench (INWB). The only requirement is that a clearly addressable interface exists in the target system. The data transfer itself takes place via a highly secure VPN connection.
4. When is it useful to outsource other applications as well?
Many downstream applications are ideally suited for cloud use, especially if they support mobile or cross-location working methods of employees. For example, it may be useful to host office applications in conjunction with the ERP system. Other applications such as VoIP telephony, EDI, Exchange, a web shop or B2B solutions are also suitable. The cloud ERP continues to be at the center of the company’s IT infrastructure and acts as a data hub.
5. Which basic architecture is suitable for hosting?
In order to ensure a high level of acceptance by employees, the front end of a hosted ERP cloud solution should be easy and intuitive to use. If there is no new introduction of an ERP system, it makes sense to take over the established and well-known interface of the previous on-premise system 1:1. The frontend has to meet all requirements for a secure, mobile, flexible and virtual workplace. This includes location-independent access at any time and with any device, high performance and a fast user login.
6. What about the data security and compliance of the providers?
A cloud environment offers many companies higher security standards overall than the internal ERP operation in the in-house data center. An indicator of a provider’s careful handling of productive data is the operation of a second data center in the cloud for security purposes and certificates, for example according to ISO 27001 for information security management. In order to comply with the strict German data protection rules, there is no way around cloud data centers located in Germany.
“A hybrid strategy is currently delivering the greatest benefit for SMEs,” says Michael Bzdega, Solution Architect Business Cloud at Proalpha. “ERP manufacturers are increasingly combining best-of-breed with best-of-suite approaches in an innovation platform. A prospective further development of the ERP application to a microservices architecture would facilitate the integration of third-party applications of customers with applications of this innovation platform in the future. In this scenario, companies then use the advantages of the cloud for selected application areas and at the same time remain on-premise where it seems reasonable.“