The definition of cloud software can be as broad as any piece of software running outside your on-premise infrastructure. With cloud evolving into the IT buzzword it is today, this can lead you to false expectations and a lot of frustration when planning the evolution of your ERP roadmap.
Traditionally, the ERP ranks as one of the last solutions to move to the cloud on the priority list of most companies. The reason for this is we are usually talking about robust software not originally designed to run in the cloud. To add to its perceived complexity, cloud providers tend to offer a few resources for the ERP migration initiatives and almost no tools to differentiate them from simply hosting.
Today, a new breed of ERP software has emerged and is designed to take advantage of the cloud. The cloud ERP was conceived to explore multi tenancy, utilize remote access via web interface, integrate with other web services and consumed as a service (SaaS).
Like many technical solutions, the technology behind the ERP is not as decisive as its implementation. You can find ERPs developed on web-native technology, yet perform poorly as cloud ERPs. On the contrary, there are ERP solutions developed on Client/Server architecture, which have adapted very well as cloud solutions.
Multi tenancy is usually transparent for the end customer that does not have to deal with any of its aspects other than knowing at least some of its underlying resources are shared among multiple customers. The reasons for sharing the infrastructure are economical and technical.
The hardware wingspan of a multi tenant solution is much smaller compared to a dedicated solution requiring a full set of database, application and presentation servers. According to recent analysis conducted by Sky.One, on average, the hardware wingspan of a single tenant solution corresponds to 40 percent of the Total Cost of Ownership (TCO) of the solution. That is significantly higher compared to only 5 percent for multi tenant solutions. For example, for each $100/user/month payed for a multi tenant cloud ERP solution, only $5 goes to the infrastructure resulting in a significantly higher margins for the ERP provider.
Larger ERP companies are shifting their client/server, single tenant solutions to function in multi tenancy. SAP is a good example supporting multi tenancy in their HANA database . This allows smaller customers to deploy their ERP solutions on highly scalable multi tenant installations, effectively sharing the cost of powerful servers. Thomson Reuters is another great example where the application server of their client/server fiscal solution is shared in cloud deployments among thousands of customers in a secure and cost-effective manner.
Consolidating software deployments accelerates and facilitates the software maintenance. In multi tenant scenarios, a single upgrade affects multiple customers simultaneously ensuring they are running a consolidated and updated version.
Web access is the modern way to democratize the access to the software. Multiple operating systems can access the ERP regardless of screen size or the user’s location. The existing web development framework such as Angular or React are powerful enough to offer users the freedom to access their Windows applications through the cloud (no longer just from their desktop).
Non web-native applications can also be virtualized and delivered via Web Access. This is what ISV’s are doing to deliver legacy client/server applications in the cloud via web browser access. The screen of the cloud application is transmitted to the browser and the user can operate the original graphical user interface (GUI) as if the software were locally installed. Running a complex ERP on a mobile interface might be a challenge, however, this solution works perfectly giving access of a generic software in the cloud to any operating system over the Internet. This functionality is available in Auto.Sky, which also manages the ERP infrastructure in the cloud.
If you install a software on a customer premises or datacenter and leave it there, you are delivering no differentiation. As the market continually evolves and rules/regulations change, it is essential for your software to adapt by freeing up the complexity of constant updates/ upgrades to your solution.
The best way to achieve this is opening the software’s integration with the top solutions available on the web. Rather than develop modules such as tax, eCommerce, banking and others that do not deliver significant differentiation, the postmodern ERP interconnects with third party solutions. This allows you to benefit from a slim core competency, yet still have access to add-ons/integrations that suit your business needs.
Some companies have introduced new subscription licensing models in an attempt to look more like a SaaS offering. A true SaaS solution, however, includes several critical features such as immediate activation, no hardware requirements, scalability and self management. These aspects represent a significant challenge for a software industry used to selling perpetual licenses requiring robust hardware and months to implement. Despite these challenges, many ERP vendors have built a solid SaaS model differentiating them from the rest.
Multi tenant and web native solutions are better positioned to offer a SaaS model given their infrastructure can easily accommodate new subscribers. Traditional solutions must rely on significant layers of automation offered by modern cloud providers to deliver a similar experience.
Customization is still a challenge all solutions continue to face when deploying a new customer. There is a natural tradeoff between replicability and scalability of cloud ERPs and the level of customization to accommodate them. Legacy ERP solutions adapted to the cloud still have an advantage when highly customized deployments are needed.
Despite the technology behind your ERP, the agility and connectivity provided by cloud ERPs are the right path for any company wanting to keep its back office updated with latest innovations in the market.
Sky.One Solutions works directly with Independent Software Vendors (ISVs) and Value Added Resellers (VARs) looking to modernize their software get up to speed with cloud-native solutions. The Auto.Sky platform takes client/server solutions to the cloud immediately providing the web access and mobility desired from a cloud ERP. This accelerates the ISV’s product roadmap, so they can begin exploring the cloud as a development platform and facilitate their evolution towards a true cloud solution.