More Manufacturers Turning To Cloud ERP
Businesses are realizing that the cloud is the future of enterprise software and offers many attractive business benefits. IDC India recently released a research report on the adoption trends of ‘ERP on cloud’ among manufacturing enterprises in India. ERP continues to be a critical enterprise application in the IT portfolio of manufacturing enterprises for day-to-day operations, with an ever increasing demand on performance and functionality with cost pressures. The road map for ERP in the medium to long term is critical for organizations. Cloud based deployment is an attractive option that should definitely be on the check-list for decision makers.
The report is a result of IDC’s vertical IT spend forecasts and detailed studies among manufacturing firms and software vendors. ERP is the largest item for spend in a CIO’s budget with significant growth expected over the next 5 years. The maximum workload is also taken up by ERP among enterprise applications. It is the top ranking area of investment in the short term for small & medium enterprises. But large enterprises have already made significant investments and are planning their budgets to keep the system upgraded, maintained and running efficiently. This makes it an interesting phase in the adoption of ERP in the country, especially on the cloud.
As cloud based deployment of applications in a SaaS type of model becomes mature and organizations feel comfortable in adopting it, critical applications such as ERP and supply chain planning will see more deployment on the cloud. Sometimes demand from the ecosystem to extend the ERP to suppliers and partners in the ecosystem will push the need for a cloud based deployment using a 2-tier approach. The core ERP stays as such on-premise. But a lighter ERP on cloud synchronized with the core enables flow of necessary information outside the enterprise. External collaboration brings in the focus on security, though it continues to be an area of concern and organizations should have consistent policies for all components of the ERP application.
With the convergence of IT and OT (Operations Technology), ERP and its associated enterprise IT applications are undergoing transformation in the type of information they store, their functionalities for business processes and integrations for information flow across the enterprise and its ecosystem. As these applications undergo transformation, it will be interesting to see how cloud based ERP deployments evolve with their out-of-the-box features, customizations they need to undergo and their integrations. Additional checks and balances such as bundling of security along with the SLAs, local regulations for data ownership in cases where the cloud setup is outside a country and awareness of terms and conditions for termination of a contract are some points that need to be taken care of.
“Manufacturing companies need to keep looking for opportunities to migrate to a cloud based ERP in stages if not in entirety to fully leverage the advantages offered by the next generation of applications and their deployment methods available in the market today. The advantages range from better cost models to improved functionalities leveraging best practices, global performance standards and competitive SLAs that cannot be ignored.” says S Ramachandran, Principal Research Manager, IDC Manufacturing Insights.
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