Six considerations for manufacturing enterprises to purchase cloud ERP

Although the topic of cloud computing is still popular, the conversation with the selection team (the ERP system for manufacturing users) has made me realize that users are still skeptical and uncertain about the software's adaptability to their business.

Market-Ready Manufacturing ERP software has not reached the point where it is not in demand, and in any vertical manufacturing market, cloud and hosting solutions are conventional, and TEC data shows that the solution is not widely used in the manufacturing industry.

To facilitate analysis, I will apply TEC Advisor to a variety of ERP project data, including process manufacturing ERP, order-designed ERP, garment processing production of ERP, mixed-mode manufacturing ERP and mining industry ERP combination, And put SaaS and managed solutions into a set of applications that are deployed at the manufacturer and can be accessed over the Internet----. SaaS-based ERP software will not only change as countries and geographies change, but also be influenced by the political environment and general development capabilities, as well as by the communications and local business and Internet regulations and practices, but the details are beyond the scope of this article.

Cloud and managed solutions show steady growth-the manufacturing industry's interest in the sector has grown by nearly one-fold since 2007, 9.4%-19.4%. In fact, there is a downward trend in interest in other platforms.

However, the fondness for SaaS and managed Solutions is only a small part of the 2011-year response to the traditional server platform One-fifth. The results are not surprising, as the market based on cloud computing or SaaS ERP manufacturing systems is still relatively immature and in a positive development phase.

While other software quickly launches cloud solutions, such as Customer Relationship management (CRM), Human resources management (HRM), and project and process Management (PPM), manufacturers still have reason to avoid externally deployed ERP systems. Some of these reasons are inseparable from SaaS-based software products and others are related to the manufacturing industry.

Six major reasons manufacturers hesitate to move solutions to cloud deployments:

1. Multiple modification requirements. Since manufacturing is usually a complex process that includes a wide range of business and High-volume transactions, it is very likely that the need to modify or customize the basic out-of-the-box ERP software is significant. Multi-tenant SaaS ERP typically delivers the same application to all users, contrary to the software modification requirements of the manufacturing enterprise user. Of course, some SaaS software products can be made with low-level modifications, such as screen customization or changes that do not require source code modification. But such modifications clearly fail to meet the significant changes in business logic and processes.

Handling Exceptions in business processes and modifying ERP systems is often a laborious and costly task, and should be given serious consideration if the standard functionality of a cloud solution reflects all the specific needs of the manufacturer.

2. Total reliance on data owners and third parties increased. Any use of the ERP system implies that the business is more dependent than you can directly control. In the case of cloud computing, however, this dependency will be absolute. The problem goes beyond a temporary interruption in service or, in theory, a service provider may have filed for bankruptcy clearance. The basic differences may exist in the strategy between service users and service providers, general operating methods, information delivery, and reaction speed. In addition, manufacturing enterprises in terms of data availability, for example, due to a variety of reasons for contract expiration or planting logic concerns.

Clearly, not all businesses are willing to divulge their private data and related infrastructure to others, especially remote services that they cannot control. On the other hand, modern business has relied on a large number of service providers, such as banks, consultants and suppliers, to outsource various business functions, thus sharing their private data more or less.

3. Strict compliance requirements. Many manufacturing companies operate in small markets, and stringent policy rules must be consistent with government standards or different requirements from non-governmental certification bodies. ERP software systems often have functional designs that help determine compliance.

Because of their own implementation concepts or technical limitations, cloud ERP vendors often cannot always support specific regulations. For example, some compliance activities may require server involvement, but cloud solutions often rely on shared server power. Specific regulatory policies may also require internal information storage and processing.

4. Security factors. Although cloud vendors have made great efforts to mitigate security risks, this has always been the biggest obstacle to adopting a cloud-based ERP system. Cloud application providers believe that SaaS is even more secure than internally deployed systems, because the cloud service provider's employees are highly trained and experienced in handling various access and security issues, and devote more attention and control to dedicated data centers.

It would be wise, however, to keep in mind that the weakest factor for security is never the data center but the software end user, whether the user accesses an internal deployment system or an externally deployed system. Some cloud ERP vendors may emphasize that the security risks to end users lie in their service level agreements, which should be taken into account in the total cost of ownership of the system.

5. Rental and purchase. While renting seems to be more cost-effective than buying in the short term, this approach is not suitable for some manufacturing companies. The final decision to purchase or hire depends on the following factors: finance, geographic area, tax and corporate policy. Also note that in the long run, the delivery of SaaS leases is not always less expensive than buying a complete system may be more cost-effective.

6. Integration with other enterprise-class application systems. Operational problems often occur at the same time as two or more software products, and ERP systems should be integrated with other cloud and internal deployment systems, and a manufacturing enterprise may operate in dozens of or even hundreds of systems at the same time. From a technical standpoint, all potential integration issues can be resolved, but there are still disagreements from an enterprise-or management-level perspective. Remote control complicates inherently complex problems. In addition, the cost of such integration work makes the deployment model less appealing.

In fact, the cloud solution architecture becomes more complex because of the types and levels of applications offered, including private cloud, platform, service, architecture, service, software hosting, and a mix of different delivery modes for a single manufacturing enterprise. To guide software evaluation and selection processes, businesses need to be clear and understand their business priorities and strategic objectives.

(Responsible editor: Lu Guang)