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Current ERP Trends: What You Need to Know About the Cloud


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    Part 4 in the blog series: "What is ERP" brings us: "Current ERP Trends: What you need to know about the Cloud."

    Until recently the ERP industry was defined by two types of products.  Those defined as general or ‘horizontal’ solutions versus those defined as ‘industry specific’.  Typically a product would fall into one of these two catagories and any one particular end user had to decide between buying a ‘general’ product from a large, established, and very stable software company offering a lot of general functionality at less cost, or a product that fit a very-defined industrial niche.  The ‘industry specific’ products generally support a customer’s needs very well in any one industry but frequently have a smaller customer base, are more expensive, and don’t offer as many general features.  The down side of the horizontal product is that was designed for general purpose and often didn’t fit any one industry or company very well.

    Since about the year 2010 the horizontal software companies have been modifying their products in several ways to make them easier to configure to a customer’s specific needs, as well as developing, or encouraging others to develop, modified versions of the product to meet the needs of specific industries.  This is a huge benefit for the end customer as you can now get the best of both worlds.  Today’s best ERP systems are built on an ERP package that is sold to thousands of customers for the ‘mass market’, comes out regularly with software updates to keep up to date with current technologies, and uses a thorough product and market test environment that, with time, uncovers and resolves software issues leaving a very advanced and stable platform.  This platform is then modified to meet specific industry or customer business process needs at a lower cost.

    In addition to this,  infrastructure options have been added within the last few years to give even greater flexibility in systems and options to companies of all sizes.  Here are the three possible solutions available today:

    On Premise ERP Systems

    This option is the traditional ERP purchase process where all of the software, licenses, and hardware are purchased by the end customer and all code is loaded and managed by the company itself. This solution is ideal for bigger companies with a large user count where data security is extremely important or where a reliable, fast internet connection is not available.

    Hosted ERP Systems

    Off-site software hosting is best for those companies that do not have the internal staff and facilities to support on-site business software.  This option is similar to the ‘On Premise’ option in that the software and licenses are purchased up front.  However, with a hosted software solution, a third party is hired to provide and maintain the servers upon which the software is to be installed and run.

    Software hosting is a perfect option for those companies that often struggle with maintaining server hardware and are particularly concerned about data backups.  Hosting companies will frequently have several high performance backup services available to choose from.

    Cloud Based ERP Systems (Software as a Service/SaaS)

    Lots of attention has been lavished upon cloud software recently.  In this environment no software is purchased but instead is leased, or rented on a monthly basis along with the hardware supporting it.  The theory behind cloud services is that the cloud provider can achieve economies of scale in hardware and support and possibly receive discounts in electrical and other business expenses through negotiated volume purchases. In addition to this, a cloud vendor could build several data centers around the world and flow processing from one to another depending on the demand and load at each location.  In this situation, two data centers on opposite sides of the planet could both support the data processing needs of various countries as while one nation sleeps, another is awake and running software.  This type of ‘global load balancing’ is considered to be the future of computing—where no one buys computer hardware anymore, everyone pays a fee to a cloud provider for all processing needs whether for your business or home computing .

    The SaaS model is not widely available yet and the jury is still out on just how revolutionary this service will be.  In the meantime, most ERP solutions are currently available on a ‘Cloud’ offering and can be a huge benefit for smaller companies or startup firms where capital and IT resources are scarce.

    Want to catch up on all the articles? Check out "What is an ERP System", "The Origins of ERP" and "The History of ERP Systems".

    by eSoftware Professionals, Oregon Microsoft NAV Partner

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