Benefits And Challenges Of Cloud-Based Enterprise Resource Planning Systems

Introduction to Enterprise Resource Planning Systems

Discuss about the Recent Research Literature on ERP Systems.

With a lot of Expectations on the Return-On-Investment many enterprises nowadays have put a lot emphasis on in investing in various aspects with an agenda to reduce cost, maximizing of profits and to help to support in decision making. The first investment aspects made by the enterprise is when we want to implement the Enterprise Resource Planning Systems. The Enterprise Resource Planning System will help in collecting, recording, integrating, managing and delivering data info in all the units in function in the entire environment. ERP system helps in breaking down the info between the inventory, planning, level of production, sales & marketing, finance and any other department in the organization.

When we implement the ERP system in an enterprise we will expect to a quality that is high, reduced time to market, communications that is improved, decision making support, lead-times being shortened and lowering the cost and yielding very high products. When we have low costs then the enterprise will be able to improve the customer service and hence increasing the sales and the number of market shares with the profits associated. Current ERPs are built with a major aspect of working over the internet. The reason for it working over the internet is because it is enhanced with electronic commerce capabilities, ability to integrate, collaborating easily with the suppliers, partners, portals of the customers and enhancing the follow up and track of all row material coming in and the final products going out which helps in extending the visibility and controlling the inside and the outside of the enterprise. Enterprises do an estimation of the ERP project cost which is termed to be the only cost for the software license. When we work it practically we see that there are many issues that we will need to consider we are budgeting on the implementation of the Enterprise Resource Planning System such as the fees for the software licenses, Hardware to be used, services to be implemented at the fee to be paid for the training offered. The enterprise size may be increased due to the cost of implementing the ERP system being very high.

Enterprise Resource planning is a software system that aims in integrating the units functioning in the enterprise in a way that is cooperative. The integration has been extended with inclusion of parties that are outside the organisation where the supplier and the clients are involved in the integration process. Enterprise Resource Planning Systems is a very major element of the IT infrastructure that is used to deliver the solution of the business [1]. We can define an ERP to be a software package that is very comprehensive as it seeks the way we integrate by completing he range of processes in the business and the business functions that are ordered in presenting all holistic views of the business from a single information and architecture of the information technology [2].

Benefits of ERP Systems

As time passes the ERP systems have undergone evolution and upgrading the processes in enhancing all functional units of an enterprise and increasing the capabilities of the integration. There are some vendors of ERP are such as the SAP, Oracle, PeopleSoft and the J.D Edward. Most of this vendors in developing the different modules in covering and supporting all functional units of the enterprise [3].  The traditional enterprise resource planning systems are divided in to two categories namely the On-Premise and the hosted Enterprise Resource Planning Systems. The On-Premise ERP where there is loading of the system and running of the enterprise IT infrastructures networking devices such as the Servers, the networks, platforms used and the personal computers.

When running an enterprise we must operate and manage the ERP system with reference to model of the license. Cost of running, cost of operation and maintenance that is covered by the enterprise and the disaster recovery [4]. Hosted ERP is defined as a service which is offered to an organization or an individual that will help in hosting the servers physically and running the services in other places. Most of these services are offered through a network that is direct connected in that they may run or not run over the internet.

The computations in cloud have been very promising as the trend of computing will leave an attention to the research in academics and those in the industry of software. Cloud computing has been known to exist in the environment that will provides how available, scalable and how flexible the computer will reassure the abstraction different levels with the low running cost. Cloud computing is defined to as the method of computing which provides computations acting as the utility in meeting the daily needs of the entire business [5]. It may also refer to all applications, the hardware and the software that are delivered as services through the internet [6]. There are service models provided in Cloud computing as shown in the diagram below.

• Software as a Service (SaaS)
• Platform as a Service (PaaS)
• Infrastructure as a service (IaaS)

1. The top layer in the triangle pyramid is the Software as a Service which has been known for targeting the end user or the specific business. It is concerned with the software applications delivery across the internet where we have many users. Cloud ERP systems are found in this category the work in this paper will be based on this category.
2. The middle layer in the triangle is the platform as a Service which the middleware delivery containing tools and services that are targeted to developers of the software and allowing them in building the software as a Service applications.
3. The bottom Layer is the Infrastructure as a Service which is known for delivering the computing power of the hardware and that of the software’s for the targeted administrators. It is the mandate of the enterprise to pay when they are in need of upgrading the usage depending on the growth of the business[7].

The cloud Enterprise Resource Planning solutions are provided via software’s in form of a service model. There are different enterprise resource planning systems that in the market to be offered as cloud based ERP systems [8]. ERP system is taken to be cloud-based nowadays based on the cloud computing characteristics. The cloud based Enterprise Resource Planning System is accessed via the browser of the user in the internet where we don’t need to install or configure the system on the side of the user [9].  The most famous ERP in the cloud market is the use of SAP business by the design [10].

1. Lowering the upfront Costs which is due to separation of the location and resources in computing, where the enterprises will not need to pay for the premises as they are needed to pay for accessing the environment over the internet[11].
2. The implementation is very rapid where CSPs offers provisions of ERP solutions where the solutions must satisfy the most of the enterprise needs[12]. When we are choosing the solutions which are very different the products will take place with regard to the enterprise needs of the business.
3. The scalability of the cloud services are of very high elastic as the enterprise can be scaling up or scaling down the resources that has been used and according to its current needs.
4. A lot of focuses on the core competencies where the ERP systems have helped the enterprise in managing the businesses in way that efficient where a chance is given focusing on the concerns in relation to the major activities.
5. Have been known as is used in advanced technology that have been working in the cloud allowing the enterprise I accessing and using the technology is specific and advanced computing resources that are mostly available in the cloud.
6. The updates and upgrades are very rapid as compared to those of the Traditional ERP systems. CSPs is known for performing the processes of upgrades according to the requests of the enterprise.
7. Improving the access, mobile and the usability of the applications over the cloud in an environment that is open where we increase the options of accessing. When accessibility is increased it will in turn increase the usability of cloud ERP in the internal and external of the enterprise.
8. Integration is easier with the cloud services where we have huge number of applications are offered for the purpose of satisfying the needs of the enterprise.
9. Improved system availability and disaster recovery: CSPs provide well-defined policies and plans for backup, restore, recovery and all other functions that concerned with the availability and disaster recovery.
10. Cost transparency there is a transparency where they pay per use of the models with regard to the enterprise plan.
11. Sales Automation which makes the separation from clients and CSPs where the sale the issues must be accomplished in automatic over the cloud.
12. It uses Security standards where some of the CSPs must implement some standards for encrypting and decrypting leading to move of the security issues and efforts from the CSPs to clients that will allow easy monitoring[13].
13. The trials are free where many cloud ERP offers provision where they allow all the potential clients in trying the ERP systems before we purchase it[14].

1. Subscription Expenses are normal as they must pay them periodically for them to receive such services.
2. When it comes in handling the security over the cloud then this might be so complex and difficult. The security risk is very high because we can anticipate or predict the occurrence of such risks[15].
3. There is a high risk in performance as the client and the provider are in two different locale making them to communicate over the internet and so any internet break down will cause them to disconnect hence directly reflecting to risks caused the by cloud ERP.
4. There is limitations when customizing and integrating then ERP solutions offered by CPS unlike in the traditional ERP systems.
5. They depend so much CSPs and must comply with the stated policies making them to be in a strategic risk performance[16].
6. The architecture of Cloud ERP may make it difficult to comply with the data, the energy and the environment standards as there are minimal regulations in handling such difficulties[17].
7. WE may lack the IT competencies for when we are moving the ERP so many activities in the IT department will have to be moved to the cloud ERP provider.
8. There are a lot of limitations in the functions of the system in the Cloud ERP unlike in the traditional as time passes the ERP system becomes more stable hence maturing up and achieving the advance maturity level. In achieving the maturity and stability in the cloud Enterprise Resource Planning System a lot of time will be needed.
9. The other section is the issues causes by the Service Level Agreement (SLA) which are very hard and so complex as it considers all the aspects of the services provided which may include the way we integrate and customize.
10. It my hard to trust this cloud ERP providers as many enterprises consider their data to be a private a property and storing them far away from them becomes hard.
11. When we want to control the cloud ERP it might be very tough as both the provider and the enterprise are located in two geographical positions hence making it tougher than that of the Traditional ERP.
12. There always arose some hidden cost in the contract such as the cost for monitoring, transitions and 6eh coordination cost.
13. Most of time there is loss of technical knowledge in cases when the cloud ERP systems are being implemented as they tend to lose the understanding of such service over a given time.
14. When we want to migrate to other CSPs packages then it might be difficult as the cost are very different.
15. The enterprise will need the ERP service standards this is because the cloud ERP market is very new making them to have no clear regulations and standards that will be used to manage the Cloud ERP providers and the specific clients.
16. Many are the times many clients are afraid of the technology and the impact when they are implemented on their business. This lack of being given enough info attention by description of such ERP services and the facilities may not be clear to the client or customers[18].
17. There sometimes lack the startup support especially when the client is moving from the traditionally ERP systems to the Cloud ERP systems.
18. The challenges of the organization when we are implementing the ERP systems which may be more challenging than those when we would have been using the Traditional ERP systems such as the involvement of the executive and the poor cross functional communication[19].
19. It will be very difficult when choosing the cloud ERP systems of your choice. The availability of many Cloud ERP systems in the market nowadays as they have been developed by many vendors have become a challenging process. When we want to choose we want the personnel that is to be involved in the evaluation and the selection of the appropriate cloud ERP systems will be challenging job[20].

On-Premise and Hosted ERP Systems

Cloud systems are very in new in the modern technology and hence they will need set standards and rules & regulations to be applied on to them [21]. One of the best challenges is when we understand the important challenges such as the security challenges. Security risk is the biggest challenge that makes to have a high availability option in exposing the cloud ERP systems to the security threats. Sharing of the resources for computing over the cloud creates a lot of risks when performing. When we want to improve the standards of the security then we will have to reflect it in the performance. Some of the recommendations need to be put across when a client want to move to the Cloud ERP systems [22].

Cloud ERP have been known have detailed responsibilities in keeping and maintaining the privacy the data of the client. The other side of the client they will be needed to develop and customize the features that will satisfy their requirements as stated when implementing the cloud. It is the mandate of the Cloud ERP system SLA to present as contact between the ERP provider and the client who need the CLOUD ERP systems [23]. This will help in solving the differences especially in cases when they arose. The cloud ERP systems have been known for offering packages that are generic in satisfying the requirements for the wide range of the clients that are expected. These packages which are ready have been known for facilitating the implementation processes which have been known for reflecting directly during the time of implanting as it may lead to rapid implementation [24].

Conclusion

In this research we have introduced the use of SLR on clearly explaining the cloud ERP systems describing their benefits and the challenges. The SLR have covered the published research from year 2011 to year 2016. Some of identified and major areas in the research are such as the benefits have lowered the cost, the scalability feature, how and rapid it is when implementing the Cloud ERP systems, accessibility is improved, availability being very high and very easy to update. There are so many benefits that are associated to this research as there is use of technology that is very advanced, updates and upgrades being rapid, accessibility improvement, usability improvement, very easy to integrate with other cloud services, cost is transparency, sales automation, use of security standards and they offer free trials.

Introduction to Cloud Computing

The key ideas are things that may challenge when we are implementing the cloud ERP systems which may include things like; risks in the performance, limitations when we want to customize and integrate, limitations of the functionalities, issues of the service level agreement and lastly is the ownership of the data. There have been other cases where we have reported other challenges from what we have investigated in this research. Some of this challenges are such the expenses incurred when subscribing, strategic risks, risks for compliance, IT competencies loss, information being sensitive, need of control of the cloud ERP system, need for the ERP as the service standards and their regulations, cloud knowledge, challenges in the organization and the dilemma when choosing the appropriate Cloud ERP systems

In conclusion, before one move to the Cloud ERP system, the client of the Cloud ERP must try and balance the challenges and the benefits of doing that. One may see it to benefit one area but it is good to know that it may lead to many challenges that may be unseen in that particular moment and there are other challenges that can be solved by other benefits. The high rated challenges have been presented very well through the given research points all in the relation of the benefits and challenges of using the Cloud ERP systems.

References

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