Current Filter: Cloud>>>>>>

Key Word Search Filter within Articles: Where next for ERP?

   

Mid-market businesses in Europe have reported savings of more than 25 per cent when they deploy cloud over on-premise solutions, with one in five reporting reductions of 50 per cent. Nearly nine out of ten (87 per cent) mid-market organisations are now using cloud solutions, according to a study commissioned by The Sage Group. The recent rate of cloud adoption has been rapid, with four out of five organisations introducing the new services model to their business in the past two years.

However, despite its growing popularity, cloud is not yet ubiquitous - with ERP lagging behind other services. Currently just 20 per cent are using a cloud-based ERP solution but Sage's study suggests this is set to change. 60 per cent of those who do not yet have Cloud ERP are keen to adopt it, while 55 per cent want to roll out cloud ERP with mobile functionality.

"It is fair to say that the public sector's view of enterprise resource planning (ERP) is one of a platform supporting a set of tightly knitted solutions that tends to be customised to suit individual enterprise needs, in turn requiring a complex array of maintenance and licensing agreements," commented Chris Pennell, Lead Analyst, Public Sector, Ovum. "But the disruptive forces of cloud provide buyers with a chance to reconsider this preconception. Vendors must now puzzle over how buyers can carry on consuming best-of-breed services that allow for customisation while satisfying their increasing demand for flexibility that cloud-based services purport to bring".

THE RIGHT TIME
According to Sage's study the driving factors for migrating ERP solutions to the cloud include cost reduction (50 per cent), becoming more efficient (40 per cent), gaining a strategic advantage (32 per cent) and growth (31 per cent), while the main barriers to adoption were cited as security and privacy concerns (57 per cent), internal barriers such as lack of understanding (23 per cent) and price (20%).

"We're clearly at a point of inflection for ERP and businesses are telling us that it's the right time to move to the cloud," said Christophe Letellier, CEO at Sage Mid-Market Europe. "Two years ago, businesses were wary of cloud. But as more have embraced cloud for a range of services, the benefits are clear - choice, scalability and flexibility. For many, the push to invest in the cloud is driven by three main priorities: reducing costs, increasing competitiveness and efficiency. Sage's mission is to support small to mid-sized businesses' journey to the cloud, giving them the confidence and opportunity to succeed."

With this in mind, Sage launched its Sage ERP X3 Online solution in August of this year. As a cloud solution, Sage ERP X3 Online is aimed at businesses who, say the company, "value the ease of deployment, accessibility, simple management and low cost of ownership of an online service, without compromising the functionality and scalability of Sage ERP X3 version 7".

ADAPT OR DIE?
Meanwhile another recent research report makes the dramatic claim that "ERP software must adapt or die as an estimated 143,200 UK businesses - 60% of those using the systems - are less than satisfied with it, demanding extra mobility, device freedom and social collaboration for competitive advantage." These findings come from Redshift and Epicor.

80% of the 1,500 business professionals surveyed globally by Epicor say their ERP system is critical to business performance and 60% have invested in the software in the past two years. However, over half rate their current ERP as just "adequate"" or "basic", with the number in the UK dissatisfied with ERP nearly 10% higher than the average. The UK also shows the lowest incidences of 'current ERP investment' at just 5% of organisations, compared to a global average of 11% and investment peaks four times more frequent than the UK in China, and three times more in Sweden and Germany.

However, not all ERP software functions are viewed the same. In the UK, financial accounting, maintenance and HR were the functions most commonly thought of as 'basic', while operational planning and business intelligence were those most frequently considered 'state of the art.'

THE MOBILE ENTERPRISE
According to Epicor's research, ERP mobility is essential, especially for responding more quickly to customer questions and enquiries, and the UK is currently one of the most mobile of ERP users: 70% of UK employees can access ERP on the move compared to an average of 58% globally and lows of 36% in Finland and 45% in Germany.

The UK also has the top need for 'ERP home working' with 64% specifically wanting home based access compared to lows of 43% in Sweden and 48% in Germany - perhaps indicating the nation's attitude to the new flexible working rights. It is perhaps surprising then, that only 61% of UK users rate accessing ERP information out of the office as important, compared to a high of 89% in China.

Device and infrastructure choice is critical with smart phones and tablets being desired forms of ERP access most likely to increase in the future, while the requirement for office and paper based access is declining. Despite this stated desire, today as many as 75% of respondents worldwide do not access ERP from their smart phone or personal device.

According to Epicor, to support these expanding mobility and device requirements most future ERP systems are likely to be app focused, cloud based or vendor hosted, with only 1 in 5 being purely on-premises in the future.

THE SOCIAL NETWORK
Social collaboration is also vital to future ERP performance, with 91% of UK respondents seeing it as "helpful" and 52% viewing it as "important" to future business performance. Users would like ERP to include social media tools for a variety of reasons but the most common of these is to improve communication with customers, for 49%.

"It's concerning that while the vast majority of organisations place high importance on ERP many are underwhelmed by the performance of their current systems," says Steve Winder, regional vice president for Epicor in the UK and Ireland. "ERP has been a vital strategic business platform that has helped thousands of organisations to adapt and respond to changing business demands for nearly 25 years, but its seems now is the time for ERP to adapt to survive as users demand greater performance from the system or risk being outflanked by their competitors."

Our concluding thoughts come again from Chris Pennell at Ovum: "It is easy to miss (or ignore) changes to the enterprise technology road map when you have significant recurring revenue streams derived from a wide-ranging installed customer base. However, even the companies that have profited most from the "old" model must now acknowledge that the disaggregating impact of "as a service" and cloud platforms are starting to change consumption patterns in a meaningful way. ERP vendors such as SAP have therefore had to adapt. Their challenge is in how to take the installed base with them without cannibalising existing revenue streams."

The cloud trail blazers - league table of European cloud ERP usage:

33% Spain

32% Netherlands

23% France

20% UK

20% Portugal

18% Poland

16% Romania

12% Germany

6% Belgium

(Source: Epicor/Redshift)