The prediction that the European Cloud ERP market is expected to grow comes as no surprise, considering all the advantages it provides.
Cloud ERP systems enable companies to reduce upfront development costs, scale systems up and down easily and speed up deployment times. This is especially beneficial for small and medium sized businesses that lack internal IT resources.
IT support services are also minimalised since the cloud vendor handles updates and upgrades, and the cloud ERP model makes co-locating or porting data to another country much easier.
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There are several different options for ERP cloud configurations. Businesses can run their ERP in public Software-as-a-Service (SaaS) models or as private self-managed ERP cloud installations, or a hybrid cloud computing model where core ERP processes are being deployed in the cloud while some best-of-breed solutions are still hosted on premise in the company data centre.
Hybrid cloud configurations provide a high degree of flexibility, but also an added level of complexity for data integration.
Public, private or on premise?
Hybrid clouds offer variety, so companies can pick and choose which aspects of their business are better off in a public or private cloud versus on premise.
In addition, if users want to scale computing requirements beyond the private cloud and into the public cloud, they can switch resources quickly – otherwise known as “cloud bursting”.
Public clouds deliver services over a network that’s shared by other businesses in a multi-tenant fashion, making the service more cost effective while leveraging investments in advanced technology by giants such as Amazon, Microsoft, Oracle and Salesforce.
The pay-as-you-go scalability of public clouds is ideal for heavy or unpredictable traffic and when there is a need to implement a single set of operational and administrative processes globally across several locations or subsidiaries of a large multi-national corporation.
Despite the advantages, a European survey, commissioned by managed services company Easynet, claimed that just 11% of the respondents were using public clouds. One major concern is the US government’s potential access to European companies’ data following the US Patriot Act.
Private cloud services are maintained on a private network protected by a firewall. The enhanced security and ultimate control with more data visibility helps organisations meet data security regulations for health and financial organisations.
An externally hosted private cloud provides the cost advantages of hosted services with more privacy than public clouds.
A hybrid cloud can also involve on-premise ERP systems and integration to cloud-based third-party applications.
A hybrid two-tier ERP model in which companies run more than one ERP system, often a primary one at headquarters and additional cloud ERP services at subsidiaries, is popular with many customers of cloud ERP vendors.
The integration challenge
All of these different cloud computing models mixed with on premise solutions creates confusion as to where integration should reside. The “best” deployment model for today might not be the best model in a few years, or even a few months.
In addition, cloud based systems can be procured on short-term contracts and frequently switched from one model to another. For example, ERP systems currently housed in private clouds may move over to public clouds due to enhanced functionality, improved security and lower operating costs.
There is also the possibility to have a different configuration for each supplier. A company can run JD Edwards on Oracle private cloud, SAP ECC HANA in the private cloud and a separate Salesforce.com SaaS application in a public cloud that integrates to both ERP environments.
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The challenge is to find a way to manage all the different data flows in and out of public and private clouds and on premise solutions. Businesses can achieve their hybrid cloud goals by enlisting systems integrators and/or leveraging third-party integration tools that can integrate both cloud and on-premise systems.
Third-party integration tools have the advantage that companies can achieve the right balance between agility and control with the ability to manage all the ERP data in a consistent and efficient way.
With all the flexibility and financial benefits ERP cloud hybrid configuration offer, it seems like the most practical and popular approach.
But whatever ERP configuration an organisation chooses, they need to plan the best way to tackle new integration challenges to ensure that they can achieve the results they need.
Integration platforms deliver the agility companies need to provide one unified platform to manage data and business process complexity for today and tomorrow’s cloud computing needs.
Sourced by Stephan Romeder, general manager, Magic Software Europe