Turbocharging ERP with the Cloud
Posted by Aaron Goldberg on March 7, 2011
In previous blogs, I’ve talked about the capabilities for integration that the Cloud will provide, above and beyond what we’ve already seen with EAI and Web Services so far. And one of the aspects that will benefit most from this increased interaction is the ERP environment.
The highly competitive nature of business requires that the next generation of ERP is able to realistically reflect, and allow us better management of, a complex, integrated, multi-entity ecosystem. From where I sit, the value of an inwardly driven and focused ERP system is declining daily.
The reality of Federation just can’t be ignored. And the inability to integrate your ERP system with key partners and customers has the real potential to provide information that could become misleading and lead to poor decisions and negative business consequences.
Many organizations have already accomplished world class supply chain integration projects, but the ability to define, plan, and execute long duration projects such as these, at the speed businesses now require is constantly eroding. Worse, hard coded integration has the real effect of potentially locking out new and more attractive partners or customers.
Simply put, ERP is the poster child for integration through the Cloud.
The key here is transforming ERP integration from highly restricted application interfaces to a more open and engaging approach where business processes are integrated at that level, not just the application interface level.
There are a couple of tactical or base level issues that need to be considered.
First, an essential aspect of this change is that the ERP system must be able to be extended to these partners and to be able to link with them without unique, one-off projects that overwhelm IT resources and budgets. This demands a higher level integration tool than we’ve commonly used with EAI. The right sort of integration tool will have a higher level logical interface that looks process to process, and then drives an automated back-end that can deliver the right formats, services, and interfaces.
Yet, it’s not only critical to change the approach to drive IT efficiency and speed, there is a much more compelling reason why the interface between your ERP system and your partners needs to be more cohesive.
The second factor is that you’re specific ERP system will likely have to interact with a number of other ERP systems, and other application platforms. My sense is that once you get past a handful of partners, you’ll find that the need to integrate disparate ERP systems such as Ariba, CommerceOne, Oracle, and SAP will be common. Then there are all the supply chain products, procurement, and even inventory systems. Doing integration on this scale with one-off, hard wired approaches just isn’t possible.
ERP systems are in many ways the heart of an organization, but the idea of limiting the flows to a “heart” is necessarily negative. Moving ERP integration into an inherently new approach, where the focus moves from code interfaces to business process interfaces is the challenge we have to face. The combination of IT economics and the impossibility of hard linking myriad products make it so.
The Cloud is the natural platform to make it happen. The Cloud will be where suppliers, customers, and partners all interact. And more will come on that topic in my next blog.
This blog is part of Hubspan’s Expert Blog Series, featuring industry experts and analysts in cloud computing, integration, application architecture, and IT management.
Tags: Aaron Goldberg, Cloud-based Integration, ERP extension, ERP integration, Supply Chain
Thank you Aaron for the insight. I am excited about Cloud ERP, yet I like to take a balanced approach. Just as ERP was deemed the panacea for all business automation pains, Cloud ERP is positioned as a revolutionary approach to deploying an ERP solution. Cloud ERP provides a solution that is flexible, adaptable, scalable, efficient, and affordable. Customers can enjoy painless upgrades, rapid deployment, and easy customization along with availability “anywhere at anytime”! Practically speaking, Cloud ERP is just another deployment option available to customers. The activities required for an “on premise” ERP implementation are also required for Cloud ERP. The scope and responsibility for the implementation activities may be different but most assuredly they are still required. The following article will provide more insight on the impacts that Cloud ERP will have on the entire ERP lifecycle.
http://gbeaubouef.wordpress.com/2011/05/22/cloud-erp/
Comment by Brett Beaubouef — May 25, 2011 @ 5:43 pm