ERP or enterprise resource planning could be easily referred to as the significant class of the software of business management or even the compilation of several incorporated applications (Leon 2014). The specific organization has the capability of utilizing this particular software of enterprise resource planning for proper collection, storing, management and finally interpreting the confidential and sensitive data from several significant business activities (Chiu et al. 2014). Moreover, the current status of the business commitment, payroll systems, purchase order and orders are also well tracked by this particular system. This software of enterprise resource planning is used by the most popular and important multinational organizations in the entire world for making their business more effective and efficient (Shaul & Tauber 2013). The following research report will be outlining a brief discussion on the enterprise resource planning systems within the cloud computing technology. This report will be focusing on three distinct types of cloud ERP systems, which are on premises system, hosted ERP systems and the cloud ERP system. Few case study examples will also be undertaken in this report.
The few research objectives of the report of ERP Systems in the Cloud are provided below:
- To know about the software of ERP.
- To learn regarding on premises as well as hosted ERP systems.
- To understand the technology of the cloud computing within ERP system.
- To learn regarding the practical case study examples of various companies using ERP system.
The research questions for the research report of ERP Systems in the Cloud are provided below:
What is an ERP system in the cloud?
What could be the important benefits as well as weaknesses of the cloud ERP systems?
What are on premises and hosted ERP systems?
Which organizations have implemented the cloud ERP system within business?
Enterprise Resource Planning with Advantages and Disadvantages
One of the most popular and significant technologies in the technological industry is the ERP or enterprise resource planning software. This specific technology is properly utilized by all the successful and famous organizations or enterprises for the core purpose of integrating the business processes and operations (Hoch & Dulebohn 2013). There are few of the key or important features of the software and these are provided below:
Streamlining the Processes: The first significant characteristic of this enterprise resource planning software is the specific stream lining of several business processes. Every enterprise has several business operations as well as business procedures (Seethamraju 2015). The business processes or operations are extremely important for this business and hence all the operations are to be executed perfectly. Although, it is being observed during execution of business operations, the consumption of resources is higher. Hence, process streamlining is very important for perfectly mitigating the various issues.
Customer Relationship Management: Another vital feature of this software is that ERP helps in managing and retaining customers by fulfilling their needs properly. Thus, the core factor of customer relationship management is properly maintained. CRM is the basic approach for the proper management of company’s interactions with all the potential or recent customers (Garg & Garg 2013). The proper utilization of data analysis regarding the customers is done with the help of CRM. For this purpose, CRM is an important requirement of the organization and thus ERP helps in retaining this management.
Perfect Customization: The next important characteristic of the ERP software is that it comprises of the capability of customization. Moreover, it helps its customers or organizations for customizing the business processes perfectly and properly (Nofal & Yusof 2013). The excess usage of resource consumption is also decreased with this software.
Reducing Consumption of Time: Enterprise resource planning software even helps to reduce the overall consumption of time eventually and since this time consumption is lower, ERP software is extremely famous for all types of organizations (Chofreh et al. 2014).
ERP software comprises of several important and significant benefits and these advantages are properly listed below:
Provides High Efficiency: ERP software provides high efficiency to the customers and hence the repetitive processes are properly removed and eradicated. This is mainly because ERP helps to reduce the manual data entry and even allows business process streamlining (Matende & Ogao 2013).
Provides Several Competitive Advantages: Another important benefit of this software of enterprise resource planning is that it helps in providing the various competitive advantages for the customers (Tian & Xu 2015). These types of competitive advantages are extremely important for the clients of the ERP software for obtaining better efficiency, popularity and importance in the respective market.
Cost Effective: The next significant benefit of the software of enterprise resource planning is that this software is absolutely cost effective and does not incur huge costs for its uses. Any medium sized organization can easily afford the software of ERP and can streamline its business processes easily and properly (Zeng & Skibniewski 2013). Moreover, ERP software is even responsible for reducing the operational as well as administrative expenses by perfectly using the ERP software.
Better Productivity: The next important advantage of the ERP software is that it provides better productivity by reducing the complexities of business process streamlining.
Scalability as well as Flexibility: The fifth vital benefit of the software of enterprise resource planning is that it is highly scalable as well as flexible and hence migration to this system is extremely easier (Tasevska, Damij & Damij 2014)
Provides Better Collaboration: Another imperative pro of thid enterprise resource planning in any business is that it provides better collaboration to the business. It helps to collaborate with the several business processes and this type of collaboration is extremely important for the several departments within the business (Chang et al. 2015).
In spite of having these advantages, there are some of the most important and significant disadvantages of the enterprise resource planning software and these disadvantages are listed below:
Difficult Data Migration: The first disadvantage of this software of ERP is that the migration of data is extremely difficult here and hence the clients often face major difficulties while migrating the data by the help of enterprise resource planning software (Shen, Chen & Wang 2016).
Lack of Security: The next important disadvantage of this enterprise resource planning software is that the security system of this software is not at all high and thus it often becomes the most significant issue to be resolved (Yeh and Xu 2013). The integrity or the confidentiality of the data that is migrated here is lost and there is no way out to recover that particular data.
iHigh Indirect Expenses: The third vital disadvantage of the enterprise resource planning software for any business is that the indirect costs or expenses of this software implementation is extremely high and hence the total costs of this software goes higher than expected (Ha & Ahn 2014).
Cloud Computing with Advantages and Disadvantages
Cloud computing is the fastest as well as one of the most secured method of transferring data from any one location to another. The proper utilization of resources is done with the help of this technology of cloud computing (Kurbel 2016). There are some of the major and important features of this technology of cloud computing and they are provided below:
Resource Pooling and Elasticity: The first and the foremost important feature of this particular technology is that it allows resource pooling or elasticity for the customers. The users can expand as well as decrease the resources as per their demands and hence excess usage of the resources is easily eradicated (Antero 2015). The multi tenancy aspect is the most required feature in this technology through which each and every resource is easily allocated as well as removed as per the user’s choice.
Quality of Services: The next feature of this particular technology is that it helps to improve the total quality of services and for acquiring the high quality of these services, the technology of cloud computing is being used by the several users (Ram, Corkindale & Wu 2013).
Pay as per Use: Cloud computing even has the major feature of pay as peruse model. This subsequently means that the users have to pay for only those resources, which are to be used by the users (Eden, Sedera & Tan 2014). Extra costs are eradicated easily in this process.
On Demand Service: The fourth feature of the cloud computing technology is that this is properly based over the self services and even on the service models. The respective user allows for the proper interaction within the cloud for properly performing any specific task (Cao, Nicolaou & Bhattacharya 2013).
Cloud computing technology comprises of several important and significant benefits and these specific advantages are properly listed below:
Simple Implementation: The implementation of the cloud computing technology is extremely simple and hence could be utilized by all the organizations easily and promptly
Easier Accessibility: Another important advantage of the cloud computing technology is that it could be easily accessed and moreover the data access is much easier (Ononiwu 2013).
Business Continuity Planning: The BCP or business continuity planning is easily done with the help of this technology of cloud computing.
Better Flexibility: Cloud computing is extremely flexible as well as scalable and thus data migration is much easier here.
Lack of Complexity: The technology of cloud computing does not comprise of any complexity and hence could be utilized easily by the users (Sundtoft Hald & Mouritsen 2013).
Better Data Recovery: Data recovery is extremely easier and could be done effectively and efficiently.
In spite of having these advantages, there are some of the most important and significant disadvantages of the cloud computing technology and these disadvantages are listed below:
Lack of Redundancy: There is no redundancy present in this particular technology of cloud computing and hence the server of cloud is not at all redundant (Saade & Nijher 2016).
ii) Lack of Control: The next significant disadvantage of the technology of cloud computing is that there is lack of control within the technology and hence it often becomes a major problem for the users (Kasemsap 2015).
Bandwidth Issues: The other significant problem with the entire technology of cloud computing is that it comprises of distinct issues related to bandwidth. For this issue, even the cloud providers are disturbed and the users do not wish to use the technology of cloud computing any more (De Toni, Fornasier & Nonino 2015).
Lack of Security: The fifth significant disadvantage of the technology of cloud computing is that there is a distinct lack of security to the data and hence an issue always prevails that the data would be lost subsequently.
On Premises ERP System
The On premises ERP system or the ERP system eventually refers to this specific decision of the organization for sourcing this enterprise resource planning software in house and then maintaining it at the physical locations (Babaei, Gholami & Altafi 2015). It helps in elimination of the ordering of delivery on the Web or the utilization of vendor supplies over the hosted systems of the ERP. There is a specific ability for offering the cloud hosted systems or the web delivering systems for increasing them properly. Several distinct vendors are present who significantly promotes the affordable SaaS or software as a service ERP options for their clients. This type of the on premises ERP system would be involving several different products, from handling the accounting or payroll to the systems for analyzing or simulating the business procedures (Chang, Tsai & Chen 2014). The control of the inventory or even the supply chain problems is easily analyzed with the core help of this on premises ERP systems. The detailed utilization of the business is majorly related to the software set of on premises enterprise resource planning. The most basic ideology of this particular ERP system option is that the hosted or the cloud system does not usually enable the customers for the modification or supplementing the software in the major areas (Handayani, Hidayanto 7 Budi 2013). The improvement of the software is extremely important for the proper customization of the business processes and hence providing proper efficiency to the company. Hence, on premises enterprise resource planning system is extremely popular for the companies.
Hosted ERP System
The hosted services of the system of enterprise resource planning are the second option of the ERP can be defined as the outsourced systems of the IT as well as the functions of this information technology (Dalveren 2014). The respective hosted service provider is responsible for owning as well as overseeing the infrastructures, administrative tasks or even the software for the core purpose of making the system completely available for the customers, on the Internet. The three distinct components of the hosted services of the enterprise resource planning software are the SaaS or software as a service, PaaS or platform as a service and IaaS or infrastructure as a service. These three elements are utilized for encompassing the network capacity as well as the software or equipment that are being utilized for supporting the operations like networking elements, hardware, storage and servers (Chang, Tsai & Chen 2014). The hosted ERP services might be easily provided on the shared service model, which is even considered as dedicated. In these respective dedicated hosting environments, the significant service provider is responsible for reserving the infrastructure elements and servers for each and every customer. For the shared hosting, these services could be provided to the several customers from the significant pooled resources or charged for the pay per use basis (Saade & Nijher 2016). The hosted ERP system is basically similar to the cloud services and the experts often argue that these cloud services could be easily linked with the other web based services. All of these above mentioned factors clearly depict that the hosted enterprise resource planning system is extremely efficient as well as effective for all types of organization.
Cloud Enterprise Resource Planning System
The specific cloud-based ERP software is subsequently utilized to allow every user for properly accessing the various applications related to software, which is substantially running on all types of sharing or computing resources by the connection of the Internet (Cao, Nicolaou & Bhattacharya 2013). Each and every resource in this scenario is basically controlled in the data centre that is to be dedicated to host the various software applications on the specific platform. The significant cloud-based software of the enterprise resource planning is thus referred to the classic SaaS or the software as a service model, which has the ability of enabling the various users for accessing their enterprise resource planning software on the connectivity of the Internet (Ha & Ahn 2014). The cloud based software of the ERP software is somewhat cheaper as the several resources of cloud computing cannot be easily maintained as well as controlled over the premises.
There are some of the most significant characteristics of this cloud-based enterprise resource planning system and these features are listed below:
Easier Usability: The first as well as the foremost imperative feature of this cloud-based enterprise resource planning system is that the usability of this software is much easier in respect to other systems (Yeh & Xu 2013). This particular software is easily as well as promptly utilized by each and everyone and hence there is no complexity at all. The easier implementation is another important feature.
Scalability as well as Flexibility: The next vital characteristic of this cloud based enterprise resource planning software is that this is highly flexible as well as scalable (Chang et al. 2015). This particular feature is responsible for easy data migration.
Simpler Customization: The customization is much easier with the presence of this enterprise resource planning cloud software. There are some of the simplest tasks that are to be customized easily.
Constant Supporting: Cloud based ERP software provides constant supporting to the users, hence the organization can easily attend the customers irrespective of the time or place (Shen, Chen & Wang 2016).
The major advantages of this cloud based ERP software are listed below
Reducing IT Supports: The IT supports are eventually reduced with cloud based software.
Cost Effective: Cloud based ERP system is extremely cost effective and hence could be afforded by everyone.
Disaster Recovery Plan: A specific DR plan is being present in this software and thus data loss is almost null here (Zeng & Skibniewski 2013).
Lack of Hardware Installation: The hardware installation is not required in this case and hence this is termed as one of the most significant advantages of the system of cloud based ERP.
Avoiding the Attacks: The various attacks are easily eradicated and avoided in this type of cloud based enterprise resource planning software (Tasevska, Damij & Damij 2014).
In spite of comprising of all these benefits, there are few of these most important and significant disadvantages of the system of the cloud based enterprise resource planning and these disadvantages are listed below:
Integration Issues: The first as well as the most important issue of this cloud based enterprise resource planning system is that there are multiple integration issues and often it becomes a major problem for integrating the business processes within this software (Zeng and Skibniewski 2013).
Implementing Management Processes: The several management processes could be easily and promptly implemented and hence this is termed as the next important disadvantage of the basic system of the cloud-based enterprise resource planning.
Data Migration: The third demerit of this system of cloud-based ERP is that the overall data migration could be extremely complicated here and hence this could not be done easily (Garg & Garg 2013).
Difficult Decision Making: The decision making process is much difficult and hence the users often face several issues related to these.
The above mentioned factors clearly depict that the cloud based ERP is extremely effective and efficient, in spite of having few disadvantages.
Case Study Examples with Benefits and Weaknesses
Some of the major and most significant organizations have successfully implemented cloud ERP software for the proper execution of their business processes or operations. Three important case studies for the cloud based ERP software are listed below:
CaféCoffice: The first case study is of Café Coffice, which is a popular manufacturer of coffee machines. Café Coffice is a famous coffee shop that is located in Montreal. It aims for creating the best coffee for the customers. It has been serving coffee for several years; however, recently they had been suffering from several significant problems about the inventory procedures as well as accounting procedures. Since, this coffee shop requires to serve perfect coffee for the customers; the inventory process is to be executed properly. They were unable to track their goods and products and thus the inventory process and their accounting process were being hampered. This inventory process includes those goods, which remain within the inventory of Café Coffice. Since, numerous customers visit this café regularly, the regular maintenance of records and goods are required.They decided to implement cloud based ERP software in their business, for solving the issues. The first advantage that they got from this software was the availability of resources. Regular maintenance, repairs and updates of this cloud based ERP software, eradicated the existing issue of inventory or resource management. The second problem was of managing accounting processes. With the help of cloud ERP system, the transaction cycles were well executed without any issue and thus they were able to solve the problems. When the cloud based ERP software was utilized by this organization; they were able to mitigate the issues subsequently.
Living Proof: The next case study is of Living Proof, which is a hair care products company. They were facing financial issues in their organization, and thus after successfully implementing the cloud based ERP software, the total revenue of the organization was incremented gradually and even there was a major increase in the products’ portfolio. Living Proof had been serving its customers for more than 100 years and thus after the downfall of their shares, they were not being able to obtain competitive advantages and profit. The management then decided to implement cloud based ERP software in the business. The main benefit that this software provided them was to boost up their business value through customer proven best practices. Moreover, more strategy planning was supported by this and thus maintenance of their IT systems was easier. The specific range of around 330% of the total revenue of Living Proof Company has increased and thus they have become more successful and popular for their business. Moreover, the brand name has also become popular for the rest of the world.
Baldinger Bakery: The final case study of successful implementation of the cloud ERP software is of a famous bakery in USA, named as Baldinger Bakery. This bakery decided to expand their business to various parts of the world. However, when they tried to do so, the brand name dropped to low position and the shares went down. They were losing their customers and due to this issue, they were suffering from financial crisis. They took the decision to implement cloud ERP system to reduce these issues. For better growth and expansion, they have implemented cloud based ERP software in their business and hence 30% sales have increased in only 3 months. They were able to expand their business to European countries and currently it is considered as one of the most popular bakeries in the world.
Therefore, from this above research report, it could be easily concluded that enterprise resource planning is the software for business process control for the purpose of allowing the organization in utilizing the system of various integrated applications and managing the business properly. The major business modules are supply chain management, service knowledge based, configuration of prices, distribution process management, facilitation of better project planning, improvement in the accuracy of the financial data, standardization of critical business processes, reduction of the redundant assignments, integration of business processes, lowering the purchasing costs, assessing business requirements, management of payroll system and human resource system and many others. The above research report has provided a proper description on the enterprise resource planning and the systems of enterprise resource planning within the technology of cloud. The modular software system is designed for the integration of major functional areas of the business processes of a company to a unified system. This particular report has clearly identified the various advantages and disadvantages of ERP software and cloud computing technology. Moreover, the several requirements of this ERP system like the on premises ERP system, hosted ERP system and the cloud ERP system. Practical examples are also being undertaken in this particular research report for knowing which organization has got benefits from the cloud ERP software.
Antero, MC 2015, A Multi-case Analysis of the Development of Enterprise Resource Planning Systems (ERP) Business Practices, Morten Friis-Olivarius The Associative Nature of Creativity.
Babaei, M, Gholami, Z, & Altafi, S, 2015, Challenges of Enterprise Resource Planning implementation in Iran large organizations, Information Systems, 54, pp.15-27.
Cao, J, Nicolaou, AI, & Bhattacharya, S, 2013, A longitudinal examination of enterprise resource planning system post-implementation enhancements, Journal of Information Systems, 27(1), pp.13-39.
Chang, B, Kuo, C, Wu, CH, & Tzeng, GH, 2015, Using fuzzy analytic network process to assess the risks in enterprise resource planning system implementation, Applied Soft Computing, 28, pp.196-207.
Chang, BR, Tsai, HF, & Chen, CM, 2014. High-performed virtualization services for in-cloud enterprise resource planning system, Journal of Information Hiding and Multimedia Signal Processing, 5(4), pp.614-624.
Chiu, YH, Claybaugh, CC, Lea, BR, & Yu, WB, 2014, Enterprise resource planning.
Chofreh, AG, Goni, FA, Shaharoun, AM, Ismail, S, & Klemeš, JJ, 2014, Sustainable enterprise resource planning: imperatives and research directions, Journal of Cleaner Production, 71, pp.139-147.
Dalveren, Y, 2014, Using e-learning in enterprise resource planning (ERP) training: a case study to assist curriculum designers in Turkey, Procedia-Social and Behavioral Sciences, 116, pp.1353-1357.
De Toni, AF, Fornasier, A & Nonino, F, 2015, The impact of implementation process on the perception of enterprise resource planning success, Business Process Management Journal, 21(2), pp.332-352.
Eden, R, Sedera, D, & Tan, FB, 2014, Sustaining the Momentum: Archival Analysis of Enterprise Resource Planning Systems (2006-2012), CAIS, 35, p.3.
Garg, P, & Garg, A, 2013, An empirical study on critical failure factors for enterprise resource planning implementation in Indian retail sector, Business Process Management Journal, 19(3), pp.496-514.
Ha, YM, & Ahn, HJ, 2014, Factors affecting the performance of Enterprise Resource Planning (ERP) systems in the post-implementation stage, Behaviour & Information Technology, 33(10), pp.1065-1081.
Handayani, PW, Hidayanto, AN, & Budi, I, 2013, Business Process Requirements for Indonesian Small Medium Enterprises (SMEs) in Implementing Enterprise Resource Planning (ERP) and ERP Systems Comparison, JCP, 8(9), pp.2437-2441.
Hoch, JE, & Dulebohn, JH, 2013, Shared leadership in enterprise resource planning and human resource management system implementation, Human Resource Management Review, 23(1), pp.114-125.
Kasemsap, K, 2015, Implementing enterprise resource planning, In Encyclopedia of Information Science and Technology, Third Edition (pp. 798-807), IGI Global.