Cloud ERP—More Than Just Another Deployment Option

Cloud-based applications (software as a service) are also becoming increasingly widespread, especially in the areas of customer experience management and human capital management. But what about ERP systems in the cloud?

ERP SaaS

A lot is happening here too. Both traditional software houses and newcomers are courting companies that want to obtain modern ERP software as a service. In our opinion, these systems score points for example with small and medium-sized companies that want to replace individual solutions or outdated ERP applications.

There is also great interest in SaaS solutions where larger companies want to equip new locations or branches with ERP software. These companies have already gained experience with in-house ERP. The SaaS applications, they hope, will shorten the introduction and simplify the management and lifecycle of the software. In addition, companies are choosing such SaaS ERP systems because they expect these modern application systems to better meet the new requirements for supporting digital business models. This is because the modern software platforms already have features for data analysis and artificial intelligence.

Many also offer development and integration environments for writing extensions and integrating third-party solutions. Another reason for their popularity is their contemporary user interfaces. We expect SaaS ERP to spread quickly, especially since the relevant solutions no longer come exclusively from the U.S. Local software industries are also becoming involved in this market.

ERP hosted in the cloud

The imminent triumph of SaaS ERP is only one trend in the cloud ERP segment. Another trend concerns the relocation of existing ERP environments to a cloud data center. We are not just talking about the private cloud, i.e. a dedicated cloud environment for the respective customer, but the public cloud. We are seeing a growing interest from ERP users to run their application systems or at least part of them in the public cloud environments of companies like Amazon Web Services, Google, Microsoft (Azure) and other cloud providers.

This also applies, for example, to SAP customers who are present in various regions of the world. Cloud operators have expanded their services so that business-critical SAP applications—and not just the corresponding test and development systems—can be operated on their platforms. In addition, these cloud services are also available from local data centers in different countries and regions. Of course, there are many companies that are concerned about moving their business applications into the cloud. Even so, a lot are already there and the number of those who are seriously considering this step is growing steadily.

Often it is not a question of migrating all ERP solutions to the cloud. Rather, many companies we are talking to are aiming for a hybrid approach, i.e. combining in-house data centers with external cloud services. So what is the benefit of moving ERP operations to the cloud? There is often talk of cost benefits, but companies should not overestimate them. While it is true that there is no need to purchase and install hardware and there is no need for local system operation, even cloud services are not available for free. Anyone who relies on the cloud as the new operating environment for ERP solutions only because of possible savings could quickly be disappointed.

Data-driven innovation for ERP backends

Advantages can be achieved by ERP operation in the cloud in other ways. One such advantage is the much greater flexibility in the scalability of the IT infrastructure offered by cloud platforms, for example. However, not every company has the infrastructure requirements like e-commerce providers with strongly fluctuating load peaks.

On the other hand, a much larger group of companies can benefit from the data management, data analysis, software development and artificial intelligence functions offered by cloud operators.

We see a great opportunity for companies to modernize processes and support new business models by using such cloud services in conjunction with the ERP backend.