Cloud ERP Helps Reduce Cost

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Cloud ERP Helps Reduce Cost
Cloud ERP helps reduce cost

As explained in the first part, traditional approaches to realizing an enterprise solution such as an ERP required customers to maintain technological expertise at various levels and domains (itinerate in the IT landscape). We said cloud vendors now want to save you of this trouble.

With the advent of cloud computing, the following perspectives surface and lend themselves to rapid adoption. The first perspective is one of convergence and the second is of elasticity. In this part, we will largely focus on convergence.

It is a well known fact that IT adds value by delivering capabilities to process large volumes of information and connecting people.

For example, a dairy aggregator and distributor required that purchase orders be simultaneously placed on many vendors for the same product at the same time. In another scenario, a business demand required a business to place orders for multiple spares from the same aggregate vendor.

Whichever be the scenario, ERP solutions must enable the processing of one-to-many or many-to-many interactions between buyers and sellers.

Processing alone is insufficient. The connectivity is also important – (a) the suppliers must be able to see PO generated in this manner, (b) PO must be a reference-able document at the goods receipt and invoicing stages in the procure pay continuum.

An integrated ERP delivers exactly this. The cloud (at a higher level) just makes the capability stronger.

Consider the following:

Traditionally, IT centers deliver 10 per cent productivity. But thanks to virtualization technologies, data centers have reached a 30 per cent utility and this utility is only growing. This means reduction in costs to deliver a solution and better response time. A hyper-visor ensures that service requests (ERP transactions for instance) are routed in such a way that all the servers are utilized effectively.

True cloud ERPs are multi-tenant. In other words, customers may access the ERP’s capabilities through a single application instance.

Any changes in tax laws (CST or VAT) need to be effected only once and immediately all subscribing customers feel the benefit. Previously, this work had to be done at every individual site. This, in business terms, is economies of scale as an action done once benefits many.

Cloud ERPs are inherently designed on Service Oriented Architecture which means every piece of information that it contains can be published (or subscribed to) as a web service. Thus the cloud ERP can be interfaced with multiple on-premise or cloud solutions over the net, making the connectivity more powerful.

If a system is incapable of reading/delivering a web-service, a staging database is set up to enable the communication. Mark up languages and other such communication technologies help connect any device (tablet or phone) to the cloud ERP.

Thus a wide variety of technologies and applications sit behind the cloud to deliver computing and business benefits. For customer working into the cloud, it represents convergence. It is one place where all their business data will flow into and information will flow out of irrespective of location and method of access.