by Casey Curtis, January 2014
While organizations have spent billions of dollars on software, services and infrastructure to implement and maintain enterprise-wide enterprise resource planning (ERP) systems, a growing number of organizations are investing in cloud solutions instead of implementing comparable functionality within their ERP systems. In fact, IDC projects that the cloud software/Software-as-a-Service (SaaS) market will grow from US$23 billion in 2011 to over US$67 billion by 2016—accounting for one dollar of every five dollars of software investments.
From what I have seen working with clients, those that have implemented SaaS solutions or are considering them are doing so because:
It would be tough to argue that there is any SaaS solution on the market today that can completely take the place of today’s modern ERP system. I think it’s safe to say that there will likely not be one for the foreseeable future. However, there is perceived value to be achieved from cloud-based solutions that provide needs-specific functionality, for a relatively low cost, that can be implemented rapidly and will scale with the needs of the business. As a result, SaaS solutions are quickly establishing their place in the enterprise information ecosystem as point solutions.
One of the most important issues to plan for up-front is what you’re going to do when the solution grows and becomes the repository for critical company information that needs to be integrated with your core systems.
Still, despite some inescapable upfront financial benefits, SaaS may not always be the best option in the long run. One of the most important issues to plan for up-front is what you’re going to do when the solution grows and becomes the repository for critical company information that needs to be integrated with your core systems – especially your ERP system. Consider that:
In a recent white paper entitled Cloud Integration – A Comprehensive Solution, Oracle referred to this phenomenon as the “Accidental Cloud SOA Architecture.” It typically occurs because SaaS subscription models make it easier for lines of business (sales, marketing, etc.) to bypass IT best-practice planning. As a result, you end up with information and business processes in a best-of-breed, cloud-based, external system that you need to integrate with your core systems.
But, isn’t all this leading us to a de-facto best-of-breed model that we spent millions of dollars on our ERP systems to avoid? What about the significant value in effectively and efficiently managing business processes across the enterprise and having mission-critical information accessible from one system?
As organizations start to deal with the issues of mature SaaS applications and how to handle integration requirements, technology is evolving to provide answers.
For one, new tools are available, such as Oracle’s Cloud Integration solution. Additionally, ERP software itself is being improved. This is the case for Oracle E-Business Suite, which is migrating to the Fusion Middleware platform in R12.2. As a result, the tech stack will allow us to open up Oracle E-Business Suite to integration with cloud solutions.
Casey Curtis is a senior project manager at SmartDog Solutions, an Oracle Platinum Partner.
More than likely, the ERP system of the future will not be a single system. Instead, it will consist of a composite applications architecture that integrates large-scale core ERP systems, like Oracle E-Business Suite, with point SaaS applications to handle functions such as sales, HR, recruiting, procurement and/or logistics. These applications will need to work together as if they were a single system, and must offer real-time availability for functions like e-commerce and customer service.
Of course, financial implications will permeate these decisions as SaaS subscription costs, the costs of the technical components required for integration, and the costs of implementing new ERP functionality are considered.