The term “Cloud ERP” needs breaking down if we are to understand the simple essence of what it is about, so let’s start by doing just that …
To be honest, CLOUD is a pretty odd buzz word for a really great idea.
Mostly the word conjures negative thoughts, (think “clouds on the horizon”), but don’t let this cloud your judgement as every cloud has a silver lining .
Take all the nasty things you don’t want to think about (security, servers, networks, bandwidth, programs, updates and backups), put them all in a box and give it to someone else to look after. Whether that box is put in a secure data centre or held at your own premises, you then access the information you want from wherever you are on whatever device you like working with. Basically that’s what cloud computing is, and those of us in the know often use it for ERP.
ERP (or Enterprise Resource Planning)
This supercedes MRP (Materials or Manufacturing Resource Planning), which was all about making sure enough bits were available to make the stuff you wanted to sell. MRP II added making sure enough people and machine time was available to make stuff with all the bits. ERP extends that to the whole company and typically now includes accounting, HR, customer management, support and pretty much everything you do.
A great example is booking a meeting room. The room is the resource, booking and reserving it for a meeting is resource planning and doing so in a single place for the whole company is enterprise resource planning.
CLOUD ERP is doing this 24/7 for anyone and everyone who needs to be involved using any device they choose. We, like many others, believe the best way to do this is with Web Services.
Now this is the bit that is causing some consternation, but really its very simple and nothing to be worried about.
Remember that computers work in absolutes – black and white, on and off, one and zero. This is because they work on a two state code – binary. We on the other hand work on a four state code (some might even say five) – DNA. This means we see the shades of grey between black and white and work with concepts and ideas and non-absolutes. The ones and zeros computers work on can’t do these things and should be viewed as simple digital ink.
Using a robust network computers can now talk to each other and do stuff we tell them to do with this digital ink. That robust network is the internet, the stuff they do is web services. The benefit to us is more boring things getting done faster and more accurately for less cost. In terms of cost, the cloud way of doing things is often to use SaaS.
What is SaaS
Software as a Service (Saas) is about charging for use rather than buying outright. Rates are worked out on the computing power “consumed” rather than a cost per user, so you can have as many people as you like on board. The best way I’ve found of thinking about this is to compare it, believe it or not, to a bus. A single decker bus costs less to buy, run and maintain than a double-decker bus and has a smaller engine using less fuel. Both can carry hundreds of passengers a week without issue, but the double-decker, with its bigger engine burning more fuel carries significantly more passengers per trip.
This is the essence of charging for computing power and there are very few software providers out there at present who make their programs available in this way, although the virtual computers these programs run on, and the companies that provide those, do.
Of course cloud computing is more than just software, so watch out for IaaS (Infrastructure as a Service) and PaaS (Platform as a Service) too. Using our analogy of a bus, IaaS is where someone else builds and maintains the physical bus for you, PaaS is where you’re given the tools to create your own routes and other services (such as including a tour guide on each trip), leaving SaaS to be viewed as the end result of having a driver for the bus and a conductor to collect the money.
Why Should I Care ?
Blame it on Amazon, iTunes and Facebook if you like. These cloud applications have educated the current (and next) generation of customer to expect something different from you as a supplier. The next generation of employees also expect a more “joined up” way of working using a wider range of tools, often of personal choice. Cloud computing, as the loose concept described above outlines, is the only mechanism supplying this. You can create private clouds, public clouds and closed group clouds, but the simple fact remains – you’re accessing data and contributing to systems using a remote device over a robust network without the limits of past technologies, and it isn’t just us saying so …
Things to Watch Out For
In my opinion too much time is wasted trying to make the digital world more like the real one, and make those of us in the real world think digitally. This is pointless as we are meant to deal with different things so let’s stop – let computers be computers and us be us.
Many cloud “solution” providers are actually only offering a part of what can be done, so be careful about walking up blind alleys – it always hurts and costs in the end. A good example is “cloud accounting” – your business is more than just a set of books, so why should your investment in cloud computing be just about accounts (or payroll, email or anything else for that matter) ?
Now, for the slightly more technical explanation of “Cloud ERP”, read on …
An Introduction to Cloud ERP
According to WhatIs.com, Cloud ERP is an approach to enterprise resource planning (ERP) that makes use of cloud computing platforms and services to provide a business with more flexible business process transformation.We like to think of Cloud ERP and Cloud Accounting Software as tools that help small and medium businesses unlock their business potential and our suite of business software is written specifically with that goal in mind.
For many businesses the biggest investments they make are in human resources, inventory and fixed assets and managing those resources are what ERP is all about.
Empowering your people, taking control of your business and playing to your strengths are the core areas where the Acumatica Cloud ERP suite of business applications can help your organisation grow profitably by allowing your people to work anywhere, anytime on any device via our web browser based accounting, inventory management and financial management applications.
Whether you choose to use Apple iPad, iPhone or Google Android platforms – Windows, Mac or Linux desktop platforms, a Cloud ERP solution such as Acumatica can run on any or all of these- giving you the power of choice and allowing your business and your people to take advantage of BYOD (Bring Your Own Device) initiatives whilst keeping your data secure and protecting the privacy of your data and your customers data.
Why Cloud Computing Matters
Cloud based ERP benefits customers by providing application scalability and reduced hardware costs. In addition, Cloud computing technology made it easier for Acumatica to deliver it’s ERP through a software as a service (SaaS) model for customers who want to acquire cloud ERP and not have to manage hardware, software, and upgrades while reducing up-front expenses. Customers can build an internal cloud to reduce ongoing hardware costs while maintaining greater control over integration and require local access to their data server.
Web Technology Is Critical To Cloud Computing
Web technology allows cloud ERP customers to utilize a browser to access their business applications.
Definition of Web-Based Software: Use of a browser (thin client) to access a software application over the Internet (or intranet) to perform work.
By using web-based software, customers receive many benefits that are not inherently part of The Cloud. By eliminating client software, customers save time and money on installation and maintenance. In addition, the web delivers access from any device on any platform without expensive and complicated VPN and remote access software. Finally, web based solutions such as Acumatica are managed from a central data store to guarantee that users can access real-time data and dashboards from anywhere. The benefits of web software are especially significant when companies have multiple locations or companies.
When vendors place legacy software on a hosted virtual server, they claim to have a “cloud based ERP solution.” But without web-based software, customers receive very few of the benefits described here. The presence of a thick client often requires longer installation times, dispersed data, client upgrades, and complicated remote access software. When looking for cloud ERP software, make sure that it is web-based!
The tables below summarize some of the key benefits.
The Conflict in the Cloud
Vendors and advocates have introduced terminology and requirements which have been disputed as a source of being a true cloud environment.
- Multi-tenancy– Some cloud ERP vendors argue that multiple users must share the same software in order to qualify as a cloud application. SaaS companies argue that they can reduce the cost of upgrades and product updates by running this type of infrastructure. Multi-tenancy can occur at the infrastructure level, platform level, or application level. The trade off between flexibility and cost easily justifies a multi-tenant infrastructure and a multi-tenant platform. Multi-tenancy only makes sense at the application layer if the cost of software is low compared to the need for flexibility.
- Internal clouds– A large corporation can own a server with as many servers as a cloud data centre. In this case, it’s difficult to argue that a cloud cannot be internally hosted. However, if a company has only one server, the ability to add capacity would be limited and the NIST definition of the cloud could be challenged. Between these two extremes there is a gray area where experts argue over whether an internal deployment can be considered a cloud.
- Hosted versus cloud– Hosting is another way to outsource IT operations. As described above, hosting is only effective if the software does not contain any client components
A Pure Definition of Cloud ERP
Cloud ERP is Enterprise Resource Planning software that is hosted in a platform over the Internet.
The use of the term “Cloud” includes a broad set of applications and software deployment models, namely Software-as-a-Service or SaaS.
After compiling several online resources, we created a generally accepted definition of cloud computing.
Definition of Cloud Computing: Use of the Internet to access hardware, software, and other resources that are provided on-demand in order to perform work and other business processes.
A more in-depth definition of cloud computing has been provided by the National Institute of Standards in the US. (NIST). Despite this work, disputes over multi-tenant, internal clouds, and cloud infrastructure versus cloud application create conflicting opinions of cloud requirements.
The bottom line is that ERP software that is deployed in a cloud environment becomes “Cloud ERP Software”. Most (if not all) Cloud environments are built using virtualization and load balancing technology that allows applications to be deployed across multiple servers and database resources.
The Benefits of Cloud ERP
Cloud ERP is designed to address the inflexibility of existing ERP software by allowing businesses to choose the deployment option that fits their specific needs.
More importantly however is that Cloud ERP is a flexible and cost-effective option for small and medium-sized businesses and offers extensive benefits for growth and expansion:
- Freedom to scale and grow: Lowers businesses’ total costs and flat-fee prices
- Freedom from IT constraints: Offers high-level security and privacy, easy accessibility and integration
- Freedom from lock-in: With your data in the cloud, you can move it at any time
- Freedom to innovate: Offers continuous new features and functions