The future of enterprise resource planning (ERP) rests in the cloud

Enterprises must leverage modern technology to stay ahead of competition. And they must choose wisely.

With the boom in start-ups and the number of small and medium enterprises (SMEs) increasing exponentially, it’s time businesses start leveraging new-age technology. According to a recent report by NASSCOM, the number of start-ups in India is the fourth highest in the world, at more than 3,100 start-ups. The report also predicts that the number is set to increase to 11,500 by 2020. However, start-ups have their own problems; more than 85% fall by the wayside. The government’s Digital India campaign is aimed at automating business processes, among other things so that running a business becomes simpler. Enterprise resource planning (ERP) software is one such tool that promises to remove the headache of enterprises as far as all the different operations are concerned since all the accounting, inventory tracking, record keeping and invoicing are tedious tasks. ERP allows an enterprise to use a system of integrated and interlinked applications to manage business operations and automate several back office functions. The software integrates all operations of a business including product planning, development, manufacturing, sales and marketing—and all in a single database, application and user interface. Thus, removing the hassle from the everyday running of a business and increasing their operational efficiency. From Financials, Inventory and Customer Service to Payroll, Recruitment and Projects, the ERP can take care of all aspects in the lifecycle of a large, small or medium enterprise.

Trends and Predictions in ERP

According to a report by Gartner, a global research firm, by 2018, at least 25% of new core financial application deployments in large enterprises will be public Cloud Software as a Service (SaaS). Similarly, according to a survey conducted by Deskera, a global leader in Cloud-based business software, 67% SMEs think that problems of inventory management and invoicing can be tackled more efficiently with the help of an ERP. With rapid spread in the Internet and Cloud services coming within the reach of small enterprises, Software as a Service (SaaS) ERP will become increasingly cost-effective and easier to deploy, helping SMEs catch up with their bigger counterparts. Modern technologies such as ERP will no longer remain the bastion of big corporate; they will be accessible to most. Gartner has further predicted that, by 2018, at least 30 percent of service-centric companies will move the majority of their ERP applications to the Cloud.

“Longer term, over the next 10 years and more, we envision a scenario where more of the market ‘flips’ to the cloud. Instead of having on-premises core solutions that are complemented by innovation or differentiating processes being supported in the cloud, some organizations will move all their ERP functionality to the cloud,” said Nigel Rayner, research vice president at Gartner.

Get the ERP edge over your competitors

In this age of stiff competition and profit maximization, the use of this software can give you an edge over your competitors. Additionally, businesses these days—particularly, the small and medium ones—have a lot of factors to contend with and that too on several fronts: disruptive technologies, changes in regulatory environment and consumer demands and competition from unforeseen quarters. Much of this change stems from the explosion of new technologies such as Cloud, with connectivity and digitalization bringing disruption to several industries.

Advantages of Cloud-based ERP systems

Having a Cloud-based ERP helps you store data safely and for eternity. Additionally, you can access all data at the click of a mouse and that too on the go, no matter where you are. Businesses can protect their databases from manipulation and misuse and also ensure the integrity of customer information. The use of ERP also removes any room for human error. Every sale gets recorded immediately; the details of every invoice is made available to the accounting department; every item can be tracked from the warehouse to the distributors to the eventual customers. Generally, all ERP modules can be integrated, obviating any external migration of data. The seamless integration will keep you up and running 24×7. Moreover, all maintenance issues are handled by the ERP provider, leaving you hassle-free. Additionally, to use the ERP, you don’t need any infrastructure, except for a computer and an Internet connection. The accounts get updated the second data is entered, reducing leakages and chances of fraud. According to a survey conducted by the Association of Certified Fraud Examiners (ACFE) in the USA, a typical organization loses 5% of its annual revenues to fraud and abuse. The survey further says that such frauds cause loss running in billions of dollars. Apart from the revenue loss, such activities can lead to audit problems, sullying the reputation of an organization.

Key players in the market

There are several prominent providers in the ERP space such as SAP, Oracle, Microsoft Dynamics, Deskera, and Tally. While Deskera offers cloud-based software, SAP and Oracle are premise-based ones, that is, they are non-cloud. While premise-based software has its own advantages, the global trend is towards the cloud as it offers far more functionalities and connectivity than legacy systems. Any business which has operations from more than one location needs a cloud software. So, if you have two branches, say in Delhi and Mumbai, it’s impossible to track the operations with a non-cloud system. Therefore, if there are more than one business locations involved, cloud is a must. A cloud-based software can be accessed on the go with just the help of an Internet connection and browser. This makes it the most attractive option for companies which have operations spread over several locations. No wonder, the tremendous proliferation in cloud technologies. Additionally, though products from SAP, Oracle, etc. have state-of-the-art technology, they are prohibitive and can be afforded only by large companies because of their high price and maintenance. Such software often require dedicated teams to customize and analyze the data and handle upgrades and deployment. For example, the ERP product of SAP provides a platform which has to be built upon by trained manpower. Apart from the software cost, installation charges too need to be factored in.

In Conclusion

In this fast paced world of technology, enterprises must leverage technology to stay ahead of competition. And they must choose wisely. On the other hand, for the ERP industry, it is an exciting time as more and more players jump into the fray delivering sophisticated products and state-of-the-art technology. In India, there is an enormous market waiting to be explored as the reach of the Internet and the level of digitization and automation rises exponentially.

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Muqbil Ahmar is the Editor of Run Your Business Site and Technology Evangelist. He is also an environmentalist (greenubuntu), women rights advocate, critic, columnist, social media expert, blogger and a storyteller. With more than 10 years of experience in journalism, he looks at technology from the prism of society. Armed with an M.Phil in Science Policy Studies from JNU, he wants to bring about better understanding between technology and society to make the world a better place to live in.