ERP in the cloud
- March 16, 2016
Cloud computing continues to transform the ERP landscape
By Andrew Brooks
In the early days of enterprise resource planning (ERP) software, one of the main complaints customers had was that the sheer scale and complexity of the software made implementation difficult and error-prone. Early failure rates were high. And small to mid-sized enterprises were left out; these costly, massive, one-size fits-all solutions were beyond the reach of all but the largest customers.
A lot has changed. There are more ERP vendors on the market, and many have targeted their own market niches by building ERP solutions tailored to the demands, business profiles and sizes of companies in different verticals, including manufacturing.
Today, ERP software is more flexible and much easier to customize. And the way it's implemented and delivered has also evolved. One of the most important developments has been cloud computing–also known as IIoT or "the industrial internet of things." Cloud computing enables applications, IT platforms and IT infrastructure to be offered and accessed entirely across the Internet.
The cloud computing model has enabled customers to avoid the long, expensive and error-prone implementation required when the software–and the hardware required to run it–is on-site. The software is easier to maintain, upgrade and customize, with most of the work happening entirely out of the customer's sight. Maintaining and upgrading software and hardware becomes the job of the vendor or service provider. And ERP solutions are now within the reach of small organizations.
"The cloud has changed the landscape for small to midsized customers," says Tom Muth, senior manager, product marketing, ERP/MES manufacturing for Epicor, an ERP vendor that focuses on the manufacturing sector. "In the past, the benefits have been primarily focused on cost of ownership, the elimination of the hardware associated with ERP and the need to maintain it." Now organizations can also lower their risk and speed up business innovation; they can stay up to date with the latest cloud technology without having to have large-scale infrastructure on-site that has to be managed constantly.
Manufacturing businesses do tend to be on the conservative side when it comes to implementing any new business solution, says Dave Lechleitner, principal, Product Marketing, Cloud Solutions-US for Exact Business Software, which produces Exact JobBOSS, an ERP package tailored to small to mid-sized manufacturing businesses. However, despite that conservatism, cloud computing is making converts. In 2012 the cloud computing market generated some US$100 billion, and the figure could be nearly three times that by 2020.
"Just over the past 12 months, we have seen manufacturers now considering cloud deployment of their key business systems," Lechleitner says. The primary benefits of cloud deployment, he adds, are the security of the data managed by certified data warehouses, and improvements in the initial and ongoing cost of deployment, "since the manufacturer no longer needs to upgrade file servers, work stations, etc. or employ an IT specialist just to manage the solution."
The advantages of cloud computing do fall mainly in the area of IT management. There isn't a lot of difference between cloud-based IT and on-premises IT when it comes to what the ERP software actually does for the business, whatever sector-specific needs it happens to have. Some of the top IT efficiencies that manufacturing companies, like others, are looking for include:
control over upgrades;consistent support of global operations;the ability to undertake more and faster upgrades;the ability to migrate quickly from an on-premise system to a cloud-based solution.
Cloud-based ERP delivers greater flexibility and agility. The Internet delivery model means that employees can easily work on the system through their mobile devices. It enables closer collaboration with business partners earlier in product development life cycles, an important consideration as time-to-market constraints become tighter.
"Agility has become a more important advantage as things have progressed," Muth says. "In fact it has become more critical than some of the other cost savings." It's a critical success factor for any business in the just-in-time economy, but Muth also cites some of the advantages that manufacturing-specific ERP like Epicor's can deliver:
support for job setup and predefined attributes such as material size, shape and dimensions;management of on-hand inventory;incorporation of data based on unique fabrication needs, such as heat number, material allocation, and traceability;audit trails.
"There are other areas that might be standard ones across many industries, but that become more important in the fabricated metals space," Muth says. One example he offers is the ability to track, manage and support effective engineering change control, giving visibility so the user can track back through the engineering changes that happen throughout the production process.
Of course, companies looking to move to cloud-based ERP solutions should do their homework. One important consideration is ease of use and the standardization of the user experience across different platforms, notably mobile devices. "What is that user experience like?" Muth says. "Does the technology use the most common interfaces that one would expect–on a mobile basis as well as in the workplace?"
Lechleitner also sets out a few criteria. Seek vendors with expertise in your industry, and take care in selecting the people within your organization who will manage the implementation process. Make sure you give them the time they need to do a good job. Work with the ERP vendor to build a written implementation plan, and get buy-in beforehand from all levels of the organization.
"Work through the implementation of the most key areas of the solution specific to your business," Lechleitner says. "And always have a contingency if something goes wrong."