In order to capitalise on cloud computing and its benefits, there are a number of new and emerging trends within the ERP cloud market that organisations should be cognizant of. These trends can affect not only IT strategy and architecture, but may even determine the specific software an organisation selects.

Companies are becoming creative in the way they use SaaS and cloud computing technology. Because of the flexible delivery model, agility, and scalability of SaaS and cloud ERP solutions, companies can enhance functionality to existing systems, complement on-premise solutions, and unify systems that are currently in siloes. Eval-Source has identified a number of emerging trends for ERP cloud computing and SaaS technology that= will affect your software evaluation, especially if the implications of each trend are not considered in the software selection process.

Two-tiered systems
This applies mostly to larger multi-national firms. In this scenario, the corporate entity (where the head office is located) has already invested significantly in its main ‘tier one’ ERP system, usually SAP or Oracle. Satellite offices around the globe (for multi-nationals) often require unique functionality to cater to local requirements and market variances. Due to geographic limitations, IT staff training, employee training and security issues, in accessing the new system and procedures requires additional change management. The satellite office often has its own procedures and systems to which its staff is already accustomed and the larger system may make following these difficult and not provide the local variances or capabilities required such as tax localisation or regulatory compliance. As a result, the satellite offices choose to adopt and implement smaller versions of cloud ERP solutions, known as ‘tier two’ solutions, that are often different from the main ERP solution used at the head office.
 
This scenario is especially true for manufacturing companies, where individual plants implement another ERP system entirely. The satellite plants operate as individual entities year round, using their own system until the year-end accounting cycle expires. The financials are then aggregated from the child systems and imported to the parent system. All entities are treated as divisions and cumulatively all financials are combined into the parent system, where the tier-one software has been implemented.

Recently this trend is proving popular for organisations that have been acquired or have recently merged with other companies and have many systems already in place.

The two-tiered strategy is a quick way for organisations to consolidate their operations without major impact to local operations. Organisations benefit from adopting this strategy because they neither need to change numerous operational methods nor require employees to be trained on the new system, tasks that could affect employee morale and company throughput, influencing bottom line results.

Hybrid systems
The use of hybrid systems as a legitimate way to increase infrastructure, bolster functionality, and speed implementation times is starting to gain traction with organisations. This emerging trend refers to supplementing an existing (usually on-premise) software and technology with a cloud computing solution, thus the name ‘hybrid system’.

Many companies have made the investment in on-premise software and are reluctant to replace existing systems, but when investigating methods to supplement their existing systems, they tend to select SaaS and cloud computing software. Because SaaS and cloud computing is very flexible in terms of delivery, they can be integrated in many ways to existing on-premise systems. Cloud computing can offer new infrastructure, platform, applications, products, and services and any combinations thereof.
 
The hybrid system approach is a lower-risk method for companies to get comfortable and experiment with SaaS and cloud computing technology without starting from scratch. The consequences of adding a cloud system to the existing system may not affect current operations, as familiar software is left untouched and already in place.

For example, a company that currently has a legacy or home-grown customer relationship management (CRM) system containing data that has accumulated over many years would be reluctant to replace the entire system. Issues such as data migration, integration, professional services, and new functionality may prove problematic for the application. A SaaS or cloud computing application that has financial and distribution capabilities can be added to enhance functionality for the existing system.

Unifying disparate systems
The use of cloud computing has become a cost-efficient way to leverage and bolster existing infrastructure while extending the functionality of existing systems. Using a cloud or SaaS model to unite all the data over the organisation’s many systems is now an option. Aggregating data from all these systems is cumbersome, and that is considering that all structured and unstructured data has to be stored, backed up efficiently, tagged, and retrieved properly – a problem that has become more prevalent as organisations increase the number of systems they use. Content management systems (CMS) have a hard time aggregating unstructured data as well as aggregating data from many sources. Meta-tagging is required for all company-wide data and may cause record duplication when recreated within the CMS.

Cloud mash-ups
Another trend we are seeing is companies using the cloud to monitor all systems and creating a technology mash-up that unites the data from all its systems. Cloud mash-ups are proving effective in monitoring and tracking updates, and companies have found them easy to build and administrate. 

Components of corporate data such as internal collaboration, external company monitoring, social feeds, email, and other unstructured data can be unified into one application. This option can be deployed using the web – from within the organisation. This option enables the organisation to adhere to any corporate security policies and provides the security by having the application exist behind the company firewall. In addition, this model may be deployed on either a public or a private cloud. Organisations are using the cloud and building their requirements as a mash-up, using their own technology and security requirements.

Business agility
The fast pace of today’s business environment requires organisations to be agile and flexible in both their business operations and in corresponding IT systems to support changes. Our research with end-users indicates that although features and functions are important aspects of a software evaluation, business agility is emerging as the next major factor in software buying decisions.

When an organisation makes changes to its business by adding additional products or services or by provisioning its offerings through different methods, it is important their systems are capable of supporting their new business strategy. Organisations are investigating business agility as a key software selection criterion.

An organisation’s ability to quickly adapt its systems to supporting a change in operations or business model requires business agility. Whether it was new configurations, redefinition of workflows, additions to database requirements and a host of other system tweaks, or custom programming, previously, the vendor had to be engaged to make these changes. The new landscape vendors have created through their technology and inherent software infrastructure means organisations can now make their own changes without much vendor interaction, saving money, keeping control of their own system changes, managing change-management components more effectively, and allowing quick systems changes should the business require them.

A key strategy for success is to define the organisational IT, service levels, infrastructure, platform, and application strategies and to identify which areas the cloud may applied to for reducing costs, maximising efficiencies, enabling integration between disparate systems, and/or adding supplementary functionality to existing systems.

By not applying these trends to your software selection project, you can negatively impact your software evaluation.        

ABOUT DYLAN PERSAUD//

Dylan Persaud is the managing director of Eval-Source, a consulting firm that provides enterprise software selection and strategic technology consulting services. Follow Eval-Source on Twitter @Eval_Source.