Dennis Gaughan, Managing VP at Gartner Research recently published an article entitled Will Core ERP Move to the Cloud? In Dennis’s words, the topic of “ERP in the cloud generated a tremendous response, prompting a bunch of requests for more thoughts and opinions.” In his follow up, Reader Response to ERP in the Cloud,” Dennis summarizes the discussion and makes some interesting points.

Several people that read Dennis’s article mentioned the following discussion points.

• Need for deployment flexibility. Not surprisingly, people wanted different deployment models.
• Concerns over pricing. Many are intrigued by SaaS, but are unsure that SaaS pricing will save them money in the long run.
• Cloud adoption varies by industry, company size, and application category.
• Collaborative business models are supported by the cloud and can add value above and beyond the applications.

For commentary about the discussion topics listed above, please read the article on Gartner’s blog.

Cloud ERP Discussion Remains Spirited

The key takeaway is that people are interested in the Cloud and how they can use it to improve their ERP software deployments.

The bullet points above reveal that the Cloud ERP discussion has moved to the next level. A couple years ago, people were primarily concerned about saving money and worried about security. Today, many customers, vendors, and resellers are asking and learning about deployment and collaboration. In the process, they are finding that the security issues are in fact not security issues, but risk and deployment issues. Also, many are understanding the differences between web-based software and traditional client-server despite the attempts of some vendors to confuse the issue.

Cloud ERP on the Right Track

Discussions about Cloud ERP are on the right track:
- First, many are interested.
- Second, people are thinking beyond the standard pricing and security issues.
- Third, people are thinking creatively about how to benefit from the technology.

As we move into 2011, expect more creativity and exciting case studies that describe how businesses are taking advantage of Cloud ERP software.

One thing didn’t change – we still found a few gems in the newsletter. In today’s B2B discussion, Dennis points out the need for integration across single companies which behave as if they are different enterprises.

There are strong links between the core ERP system and the B2B infrastructure. Our recent survey on B2B shows that one-third of the data in a company’s ERP system comes from external sources. Results also show that B2B integration issues frequently cause delays in ERP upgrade or migration projects. There’s strong evidence of this link with our customers, many of which are consolidating or upgrading their B2B infrastructures as part of an ERP project.

The article continues to describe how Oracle and SAP are salivating as this represents an opportunity to involve more business systems into the core company ERP solution. This will create a single integrated system for complete supply chain integration.

What is the SaaS and Cloud opportunity?

When you hear “integration of systems across business units, geographies, and external vendors” you should think cloud. The cloud (internal and external) is designed to provide ease of access across multiple locations while working and scaling efficiently.

Benefits of cloud architectures include less bandwidth, fewer server resources, access from anywhere, browser based access, simplified integration, simplified maintenance, easier to manage upgrades, and more to deliver easier to manage global operations. Note that many of these benefits are the result of web based designs which are often the core of cloud architectures.

Are there any concerns?

Pick your cloud/SaaS solution carefully to ensure that integration with other systems is possible. Highly customizable SaaS solutions are those which work with common development environments and provide complete APIs and SDKs which can be utilized by VARs and customers. Many SaaS vendors have proprietary platforms which require specialized programming skills.