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Whither Enterprise Resource Planning in the cloud computing era

Cloud computing continues to hold centre stage as it demonstrates through practical application that the advantages it promises are consistently delivered. These advantages, of reduced cost, improved efficiency and greater flexibility, have always held great appeal for the enterprise technology user, since in simple terms, it means reduced capital and operational expense. But in the onslaught of services which are available in the cloud computing era, what becomes of the ‘traditional’ enterprise resource planning (ERP) systems upon which big business has relied for decades?

That’s a question to which Johani Marais, South Africa country manager for HansaWorld, turns her attention. “The process of ERP moving into the cloud has already started,” she confirms. “Like many other cloud services, it starts with the most common services or modules, which are also the most mature and are somewhat commoditised. That sets the scene and lays the groundwork for further services to migrate into the cloud.”

Where ERP differs from consumer cloud services such as Facebook, Google or YouTube, is that the consequences of any interruption to the service are serious. “System unavailability means lost income. This, together with security concerns, is perhaps the biggest inhibitor to market acceptance of enterprise cloud services,” notes Marais.

However, she points out that these issues are far from insurmountable. “New models for ERP are arising where clients can opt for pay-per-use or application hosting services, switching capacity and functionality on and off as required. It starts with the standard core functionality such as financials, distribution and basic manufacturing, but as confidence grows with these modules, many more will follow.”

The runaway popularity of mobile devices such as smartphones and now tablet computers is further driving a trend towards improved availability of enterprise information though web services. “That’s something which the younger generation will expect and already takes for granted. It’s a further advancement of the always-connected individual, the blurring of work/leisure boundaries and the insatiable thirst for to-the-minute information. This environment is enabled by cloud computing and ubiquitous connectivity – and it is an environment to which ERP software providers are adapting to meet user demand for information access,” she says.

As this process takes hold, Marais says it is likely to fundamentally change the ERP landscape, both from a vendor and a user perspective. “Already the force of consolidation is shaping the market. Bigger players are buying smaller players for their niche markets, specific features of their technology and skilled staff. Competition between vendors means they are concentrating on niche industries or vertical markets as they seek competitive differentiation,” she notes.

While these processes deliver even better software with improved delivery models, it is not all good news for ERP software users. “With merger or acquisition activity which seeks specific technology or skills, customers aligned with smaller vendors may find themselves with reduced and diminishing focus on the core products, which can even eventually get thrown out; migration to ‘new’ solutions can be a major disruption,” Marais explains.

That said, she points out that while occasionally difficult or uncomfortable, progress means improvements in efficiency and performance. “The developments within the ERP vendor community are driven by robust competition and an acknowledgement of the validity of the cloud computing model. Ultimately, these developments have the client at the core: delivering software more effectively and helping clients to conduct their business more efficiently is where the competitive edge for the ERP vendor lies,” she concludes.

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