Thinking About ERP? Think About the Cloud First

Erp. Oh, excuse us there. Wait a minute, actually. Don’t excuse us. What we’re really trying to say is ERP (enterprise resource planning). Yes, today we’re blogging about business management software for collecting, storing, managing and interpreting data for business-related activities. Considering that data hosting is in our blood, the topic is pretty near and dear to our hearts.

Anyway, if you’re thinking ERP you might be tempted to turn your attention towards server and storage specs before anything else. Big mistake. Huge. At least, it’s a big mistake to start there. You should be starting by taking a look up at the cloud, even if you’re planning to rely on in-house ERP. Unless, that is, you really, really, really enjoy wasting money on a whole bunch of server hardware that you don’t really need to own. The cloud can save you big by allowing you to simply rent space at a data center rather than turning half of your building into your very own – and very expensive – data center. This is because cloud-based ERP solutions, like the netsuite erp system, for instance, tend to be less expensive to set up than traditional, hosted models. There is no hardware setup required, so the program can begin without disrupting the company’s system. Server maintenance is no longer required easing the burden on the IT department. Hence, once your aforementioned cloud-based needs are met, you can refer an effective ERP consultant, similar to Syte Consulting Group – who can offer an enterprise a business advantage within almost any process-oriented environment.

“Come on, Superb. There are legitimate reasons for some enterprises to have on-premises servers.” OK, we hear you, and you’re right. You caught us white-handed – because clouds are white, get it? Absolutely reprehensible jokes aside, it’s true that some organizations have excellent reasons for keeping server hardware on their own property. Of course, you shouldn’t keep all of the servers storing your data local, though. Last we checked, this is 2014, and oh, look over there, it’s your good friend and ours hybrid cloud calling. Going hybrid allows you to save some money while experiencing a huge amount of scalability and flexibility.

Why Your ERP Needs the Cloud

Whatever you’re doing with ERP, you need to get thinking about the cloud. “Without a doubt, anyone looking at putting ERP on premises today really needs to be looking at building a hybrid environment,” Enterprise Applications Consulting Principal Joshua Greenbaum recently told Tech Target. “You can’t upgrade any modern-day IT system without some sort of cloud interaction.”

The reason you need to think cloud first is that its usage will have wide-sweeping effects on all aspects of enterprise resource planning. Everything from specs of physical hardware to the way your company handles procurement and licensing terms will be impacted, according to Greenbaum.

Back in the bad ol’ days of ERP, companies did some things that look pretty crazy today. We’re talking about ginormous facilities capable of handling peak loads, even when they were only planned as temporary or seasonal solutions. That doesn’t exactly sound efficient, and it wasn’t. In those days, your IT people would have hashed out decades-long leases with major hardware vendors for incredibly precise targets for what usage levels and maintenance costs would be. Scalability and flexibility weren’t really part of the equation, which is obviously nothing short of absurd in 2014.

“It was a very fixed model and not designed to change as your needs changed,” said Greenbaum. “Today, hardware contracts need to reflect a different window that is the reality of the new environment. It’s crazy to buy a monster machine [for Oracle Exadata or SAP HANA] on a 20-year lease — by then, it’s pretty much guaranteed to be a dinosaur.”

Yep, there’s the other problem. Technology, and you may have heard this one before, doesn’t stand still. It’s always getting better. Meanwhile, and stop us if you’ve heard this one too, data needs are increasing exponentially every single year. Last year’s servers might not do you much good in 2015, let alone in 2025.

Look Who’s Coming to Cloud

“Of course you’re telling me that my ERP should be cloud-centric, Superb. The cloud is kind of your thing.” OK, you got us there. But guess what? Lots of people are looking for cloud ERP solutions. “Like who?” you ask? Like that little soft drink outlet known as Coca-Cola, that’s who.

“We have already started this process and have just deployed the core services on the cloud at some of our locations,” Coca-Cola Bottling Company CIO Onyeka Nchege told delegates at Cloud World Forum 2014. “In the next two to five years, we will move most of our core applications, including enterprise resource planning (ERP) systems to the cloud.”

It’s only a private cloud for now, but Coke plans to add public cloud storage services to the mix in the next three to five years. Nchege said it would be “a lot of public cloud services,” to be a smidgen more precise. Microsoft Office 365 for email services is just one of the solutions they’re considering. Google, AWS and Microsoft have also been invited to send proposals to Coke, though.

The company, which is the largest independent Coca-Cola bottler in the US with revenues sitting around $1.5 billion, is already using the private cloud for certain things. HR systems, recruitments, procurement systems and time keeping are all up there in the cloud. But this is just the start. There are plans to move up to 80 percent of the company’s IT into the cloud. Nchege claims that cloud computing makes information technology simple and management of it easy.

“Business stakeholders would come up to the IT team and ask for customized IT services,” Nchege said. “It then leads to more complex, less robust IT estate, and there’s more downtime as the IT team takes time to develop those services.

“But with a standard cloud service, they don’t get to pick and choose but consume agile, on-demand IT in the way it is designed.”

Some might wonder if that leads to business managers being frustrated. Not if they’re educated and informed about exactly what to expect from the cloud, he said. “If [the] IT team collaborates with other business heads to explain to them the benefits of using a standard cloud service with simple SLAs, then there won’t be too many complex IT demands from the business.”

The bottler has a five-point process in place to ease cloud migration: ownership, collaboration, feedback, adaptability and execution. Nchege stated that the technology is not a problem, only figuring out what the processes and culture will be is.

“But the benefits far outweigh the challenges of using cloud services.”

Avoiding the Under-Spec

Nchege has a huge enterprise with many tech needs to consider, and it’s common for mammoth companies like his to over-invest in hardware. If you’re a small or midsized company, you can’t afford to do that. But you also want to avoid the common mistake of coming in too far on the low end.

“The biggest mistake companies make is that they undersize their hardware infrastructure and they do it because they’re spending a lot of money on ERP,” Ken Klika, director, network solutions for BCG Systems, an ERP systems integrator told Tech Target. “They take a minimalist approach as opposed to looking at realistic requirements. Their ERP environment will run, but they won’t like the way it runs.”

Even if you’re one of the little guys, you’d be foolish to attempt to do too much with too little hardware. There is such a plethora of varying hardware options available to you today that you should be able to put together a solution that’s right for your needs and budget if you just plan appropriately based upon real usage patterns and your future demand curve.

Image Source: Encore Business

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