By Kris Blackmon
Enterprise resource planning (ERP) solutions aren’t exactly a hot topic of conversation in the business and technology world these days. The benefits of ERP are well-established: It reduces manual touchpoints, thereby saving time, increasing accuracy, and leading to operational efficiencies. Where 20 years ago on-premise ERP was an exciting new technology that helped businesses hurry toward digital transformation, today it’s much more mundane. It’s a little like password encryption — everyone knows they need it, but compared to all of the other cutting-edge cybersecurity solutions out there, it isn’t all that fun to talk about.
Regardless of its popularity, the efficiencies gained from an ERP solution are very real. Enterprise resource planning tools make all of your disparate systems work together. That sounds simple and straightforward, but it’s more complicated than it seems. Think of all of the different platforms a business uses throughout the day, with all of their interfaces and logins. Where you enter your sales orders is different from where you track invoicing. Where you log help tickets is a different system than where you house customer information. Supply chain, ecommerce, accounting, customer service, marketing, sales, human resources, IT — all of these job functions use different technology solutions, which creates innumerable opportunities for error.
ERP takes those manual touchpoints away, syncs data across all lines of business, and automates the flow of information. Its benefits are significant and almost immediate. They’re also, by and large, old hat and not all that thrilling to talk about.
Over the last several years, however, the cloud has gone a long way toward bringing some energy back in the ERP conversation. Cloud gives businesses the ability to consume computing as a service, rather than having to build internal infrastructure to provide and support computing functions, which is a big deal for something as resource-intensive and central to business as ERP. Think of it like that heart-healthy diet we all know we’re supposed to follow: An “on-premise” approach means that you grow the crops, process the ingredients, and fix the meals yourself. With a “cloud-based” philosophy, you place your order and have someone else do the heavy lifting. Sure, you have to take their word for it that all the ingredients are locally sourced, organic, and non-GMO, but it sure makes it a lot easier to make changes if you find there’s a recipe you don’t like or an ingredient you’re allergic to.
Am I saying that talking about ERP is just as boring as talking about whole grains and non-saturated fats? Yes, I am. The power, flexibility, and innovation of the cloud go a long way toward making that conversation more interesting.
It isn’t unusual for a fully customized on-premise ERP solution to take a year or two to develop and implement, which is clearly not ideal in 2018. If a business is still on the exact same trajectory with the same goals and same strategies in two years as it is today, it’s got bigger problems than any ERP can help with. Fast, agile, and nimble are the characteristics for success in business today, and any organization that takes literal years to overhaul business operations has already lost to its competitors.
With a cloud-based ERP solution, implementations take a fraction of the time — often as little as three to six months. And since the ERP is hosted in the cloud instead of in-house servers, it’s a lot easier to maintain a “business as usual” attitude while the solution gets on its feet. Subsequent updates and upgrades are far less painful as well. With cloud ERP, updates can run in the background without locking users out of the system or requiring vast amounts of retooling and retraining after the upgrade is completed. Worries about things such as processing times and adequate data backup processes are no longer the business’s problem. It’s up to the ERP vendor to handle those, thank goodness.
When you buy an on-premise, in-house ERP solution, you also have to purchase the supporting hardware, hire staff to install and maintain it, and shell out for all the related software licenses. Depending on how big your business is and your existing IT infrastructure, you may also need to invest in extra servers to provide the computing power needed for the ERP to run at its highest function. That’s a lot of dough, especially for smaller organizations.
Cloud-based solutions are typically purchased for a flat-rate monthly fee, and access only requires an internet connection. All of the resources needed to actually host the system are taken care of by the provider, which eases pressure on your pocketbook and lowers your stress levels.
Because cloud applications are accessed via the internet, they’re intrinsically more mobile-friendly than most on-premise solutions. That provides a flexibility that’s critical in today’s business landscape, where so much work is done on smart devices from remote locations. One of on-premise ERP’s biggest value-adds is real-time visibility, which makes sure that work isn’t duplicated and changes to customer records are reflected across the organization as they happen.
With a cloud-based solution, that visibility extends beyond the four walls of your business to any device anywhere that’s tapped into your network. Plus, a cloud ERP solution can far more easily integrate with other mobile APIs, such as those for reporting and analytics, which creates some very interesting customizable business intelligence use cases.
Unless you’re a cybersecurity company (and maybe even then), the chances you’re going to design an on-premise ERP solution that’s as secure as those provided by the big cloud vendors are pretty low. Why would you even want to? The complexities that come along with setting up an ERP can hardly be imagined by someone who hasn’t actually done it. There’s data coming in, data going out, and data sitting in repositories waiting to be accessed, all with varying degrees of security needs. Different regulations apply to different levels of information and different methods of processing it between different applications and different users.
The more variables are thrown into any equation, the trickier it becomes. Since ERP sits at the nexus of all of your business functions with its fingers in almost every pie, any security solution has to take dozens of variables into consideration. If you’re spending all of your time worrying about the security of the data housed in your ERP, you’re not able to fully realize all of the features and benefits such a system provides.
Next Generation Analytics
Done right, an ERP solution can be tapped in to every source of data that feeds into a company’s operations. This includes analytics streams like inventory, sales cycles, buying and price trends, customer support times, time to invoice, and so forth. Historically, this information sits in the system until someone accesses it. Cloud ERP applications contain built-in algorithms that create truly powerful analytical insights. Machine learning capabilities leverage all of that big data housed in the ERP to provide predictive analytics, which can tell a company not only what the data says about where it’s been, but also about where it’s going. We’ve just begun to see the crazy things that modern analytics technologies are going to be able to do, and that deep insight is all powered by the cloud.
ERP solutions can legitimately transform a business, but we’ve known that for decades. The cloud, however, makes everything old new again. The ease of use, real-time visibility, advanced analytics, and easy scaling the cloud brings puts a shiny new layer on every technology, and ERP is no exception. Enterprise resource planning is a cutting-edge conversation again.