Core ERP systems in the cloud, what’s next?

Core ERP systems in the cloud, what’s next?

While small to mid-sized businesses and start-ups have shown high level of interest in adopting the cloud to deploy core applications like hosted accounting and cloud based enterprise resource planning (ERP), many businesses that were established before the cloud became mainstream have shown more reluctance.  Deploying your first business management solution in the cloud is one thing, moving off of a legacy on-site system is a much bigger decision.  Moreover, a recent Gartner Survey showed that the professional services industry is likely to be quicker to move core ERP systems in the cloud than an industry like manufacturing or distribution for example.

Cloudtech recently published an article by Louis Columbus that analyzes the Gartner survey.  Columbus argues that these industries will be quicker to move core ERP systems in the cloud than Gartner predicts.  Here is a synopsis of why this might be the case.

“This is quickly turning into a year of transition for many supply chains, with the shift most noticeable in aerospace and defense,” Columbus says.  “Tighter project schedules driven by reduced budgets, coupled with more aggressive launch schedules is making this the year of the agile supplier.  Cloud-based ERP systems are essential to suppliers in this industry especially.”

As the world globalizes it becomes more complex, new regulations and tighter restrictions have increased the need for high-level compliance that legacy ERP systems lack the agility to support.  Older on-site systems lack the data models to support quality management, security and compliance requirements.  A hosted solution like Microsoft Dynamics GP is a scalable cloud-enabled solution with the ability to span across departments, geography and locations.

“It’s common knowledge in the Microsoft Partner community that the company runs one of the largest two-tier ERP system architectures in IT today, with an SAP R/3 instance in headquarters and Microsoft Dynamics AX running in each subsidiary.”

Columbus draws on another study by MintJutras in which he reveals that SaaS-based manufacturing and distribution software will increase from 22% in 2013 to 45% by 2023.  Further, SaaS-based applications will blossom from 22% of all manufacturing and distribution software implimentation to 45% within 10 years.  The driving force behind this potential growth will be two-tier ERP system adoption, Columbus said.

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