Is Cloud ERP the ultimate solution to our problems?

Nowadays, Cloud ERP has become a hot topic among manufacturing and supply chain industries. It provides several advantages over traditional ERPs such as low initial cost, flexibility, scalability and the burden of software maintenance is on the vendors. Often the operation cost is also low. However, can we blindly go and support the implementation of cloud ERP? Many of us would say yes but there are some things that you should definitely look at before moving forward with cloud ERP.

You need to identify how important is your business data that resides on your ERP. Many organizations place high importance on data security and hence they are leery of placing their data on cloud ERP. In case of supply chain too, you need to identify how important is the privacy of data that flows through different ERP/ legacy systems. It does not mean that cloud ERPs are not secure. Cloud providers, including Oracle and SAP,have invested heavily in state-of the-art security that may exceed what a hosted solution, or even an on-premises solution, can provide. Some of them are even willing to guarantee that the data will stay in the same national jurisdiction or in a specific data center.

The second issue could be the level of customization that can be provided by the Cloud ERPs. Supply chain consists of an intricate network of various ERP systems that are connected together in a fashion that meets business requirements. These business requirements differ from one organization to another. So, it is practically not possible for any Cloud ERP vendor to design their solution that meets the need of every customer. They design standard ERPs which may be useful to most of their clients but such solutions do not meet all the business requirements.

It is essential to know when you should go for cloud ERP and when you should not. If the system complexity and implementation size is small it is often recommended that the organization should implement cloud based ERP system rather than traditional ERP system. On the other hand, if both the system complexity and implementation size are large, you should settle for traditional ERP systems. At first glance, it is not clear why one should follow this approach, but there are certain reasons behind it. Can you think of any?

Source- "ERP in the cloud Is it ready",http://www.booz.com/media/file/BoozCo_ERP-in-the-Cloud.pdf