What is ERP and why is it needed?
ERP, a term started by the Gartner Group in the 1990’s. It stands for Enterprise Resource Planning. It is an integrated software which allows any firm to use a common platform to manage all its departments.
The ERP software can be used to handle:
ERP brings with it a host of advantages:
However, the ERP softwares are typically heavy products. Using them in-house requires a certain amount of IT expertise in the firm. Like installation, maintenance, up gradation of the ERP softwares requires people who are well versed with the system. This job cannot be entirely outsourced since the ERP network forms the backbone of any firm. Hence, some extra spending on employing IT personals has to be borne by the company, even though IT might not be the core-competency of the firm.
In House ERP
Currently all the ERP solutions provided are in house in nature. The hardware and software maintenance is all done at the company which uses the ERP software.
Some major disadvantages of the in house ERP would be
What’s the big thing about Cloud?
Most of us use computers isn’t it? What’s the most annoying thing you face while using computers?
Is it the complexity of assembling your desktop when you shift it? Or is it the Windows crash you had faced and lost some important data? Is it the softwares you need to install to view that new epub file? Or is it the antivirus updates that keep nagging each time you are working on that all important presentation?
Well, take all these annoying stuff off yet still use similar computing powers. That’s Cloud Computing in a nutshell!!!
Cloud computing gives you just an interface to use all your softwares and store data. The maintenance of the softwares as well as hardwares is taken care of by the service provider. You need not even have a CPU. A thin client and a high speed internet connection would be enough to get things going.
Also with the advent of smart phones and other PDA’s, using a common data pool has become all the more relevant. You use your data and softwares across all platforms, from any device, across geographies; that’s the ideal situation that anyone can dream of.
Cloud based ERP
This is a relatively new concept; however it is gaining prominence because of a multitude of factors:
Shifting to a Cloud Based ERP
Some of the current vendors providing cloud solutions on ERP are as follows:
IT departments in the future can make considerable savings by switching from in-house systems to cloud-based software-as-a-service (SaaS) systems. A sample study which shows the cost savings of this approach would certainly vouch for cloud based solutions:
ERP Software Cost Comparison
Of late, big players like Oracle are targeting SMEs and other small businesses to scale their business. For this to be successful, a primary shift is required as far as traditional ERP softwares are built. Low cost, scalable solutions need to be developed to cater to this market segment which does not have the financial capabilities as well as the needs of big manufacturing houses which use the traditional ERP softwares. Cloud based ERP solutions are a right way in such ventures.
However, cloud based approaches also do have some disadvantages:
Future Way ahead and the long run
The past decade has clearly proven how IT solutions can improve and streamline the delivery process of any firm. In the upcoming future, IT will be increasingly perceived as a cost driver which would improve upon the efficiency of a firm as well as reduce the cost incurred by the firm. Challenging as it may seem, this is one of the key expectations which the industry has. With the ever increasing number of smart devices in the market and the rapid improvements in networking technologies, information flow across platforms and geographies would be the key factor which would determine the performance of any IT architecture.
Using cloud based ERP solutions is a step towards this direction. Though the technology in this field is still in its nascent stage, it does hold a lot of promise.
This article has been authored by Sayan Chakrabarti from SJMSOM IIT Bombay.
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