Friday, June 15, 2012

ERP in the Cloud

Does any Enterprise Resource Planning (ERP) system belong in the Cloud?  There is a lot of discussion in the media about this topic.  The Cloud promises the concept of economy of scale.  Mass produce a product and it becomes more economical.  The compromise is that you do not have control of many options that you once did.  That is both good and bad.  For the smaller business that can be a blessing. 

Why should I have to worry about hardware or the physical stuff?  It would be nice to have someone else worry about disaster recovery, electrical disruptions, heat, cold, water, you know, the weather?  Let them worry about employees and I will worry about running my business. 

Does this thought really make you feel comfortable?

Just how much compromising will my organization have to undergo to implement a Cloud solution?  Could be quite a bit, maybe very little.  It depends.  Some of the constraints are the physical location of the hosting, the type of hardware being hosted, the software application itself, and your employees.  Where are your locations?  How reliable is the Internet connection to the resources you need?  How reliable is their Internet connection(s)?  Is this even appropriate for a manufacturer capturing real-time inventory transactions on the shop floor?  Finance- yes, customer service- yes, inventory- maybe, manufacturing- not so sure. 

How do you even know where to start or what questions to ask?

Will the software or applications be stripped down or lite versions?  Do you even need everything they offer?  There are significant differences today versus just a few years ago.  At what point does it become or stop being cost effective?  Is a non cost effective solution still desirable, because the stuff is someone else’s problem?  You may end up paying a premium for less worry.   

What is the Return on Investment (ROI) and Total Cost of Ownership (TCO)?  Looking at the TCO may be a good place to start.  In order to evaluate this you will need to take time to identify as many cost elements as possible.  Power consumption, acquisition costs, warranty, staffing, reasonable life span. 

Cloud solutions trade the variables for a monthly premium. 

Leasing cars does not always make monetary sense, but the worry free drive of a new car, full warranty and peace of mind that comes along may be worth the trade off.

Do you share the resources or will you have dedicated resources?  How is security implemented?  Just exactly who has access?  I am sure that they will be certified and bonded.  Will the only thing that keeps outsiders out be a user id and password?  They back up the information, but do they provide archive services?  There is a big difference in functionality and recovery options.

There is a growing movement in technology today that negates the old school philosophy of what is behind our doors is safe and what is outside is not.   Today borderless computing is growing.  Administrators need to know who wants access, where they are, what equipment they are using, and what are they trying to access.  The combination of these four entities must be looked at together.  If the cloud solution takes these factors into account then you may actually be better off with a hosted solution than in-house. 

There are many issues to be identified and addressed. 

For an Enterprise, this is a first step.  Cloud or not, technology or not, there needs to be a solid business driver identified first, then comes the selection process for a solution.  You might be surprised to find out that you might still be better with an in-house version.  Train and use that version for a few years, then take advantage of a more mature hosted version. 

Maybe you should jump right in.  Maybe not.  First and foremost, it has to be the right solution.

What chances are you willing to take with the health of your organization?  It is too important to tackle alone.  Select Dolvin Consulting to help you look at your operations, to identify your needs, to listen to your concerns.  Contact us today to see how we can help.  We work with manufacturers, distributors and specialty retailers to help them streamline their operations, reduce costs and become more profitable.

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