ERP programs such as Microsoft Dynamics NAV have become commonly used by organizations in many industries, including manufacturing, but Colin Barker wrote in a blog post on ZDNet that the cloud may soon be changing how organizations look at and use their ERP system. Gartner analyst Nigel Rayner told Barker that the cloud will "completely disrupt" the ERP market, with the technology being the most important development of ERP in the next decade.
"For the next five years or more we will see the deployment of what we call hybrid-ERP, a mix of on-premise and the cloud", Rayner told Barker. "What we do know is that there will be come (sic) occasions when on-premises ERP is the way to go and some where the cloud is better suited."
Many organizations are now facing trouble to keep pace, so staying with a service that is guaranteed to be on the cutting edge of the industry is a must. Classic ERP systems may work well in certain circumstances, but Rayner said organizations need to be able to scale and update their solutions quickly.
Industry professional Tony Lock told Barker that there are three main issues linking the cloud to ERP: integration, the relationship for long-term relationships with vendors and organizations and capabilities within the company. There must be the right skill sets within the company to deal with the cloud, as compliance will soon become a big worry for those organizations looking to adopt a cloud solution with their ERP.
Cloud ERP by the numbers
Automation World highlighted a report by one provider which found that most manufacturing respondents, 60 percent, said they operate on a traditional ERP system on-premise, but 22 percent now use a software-as-a-service or cloud computing based system. One troubling statistic is that 18 percent have no ERP system in place, as 26 percent of companies with no ERP have sales of less than $50 million, a number which could clearly stand to rise.
"Having witnessed the impact that software technologies such as ERP have had on the manufacturing industries, I think it's fairly evident that we're on the cusp of another surge in technology-driven developments for the industry as a whole," Automation World's Dave Greenfield wrote. "In fact, the lower costs of cloud-based ERP will likely drastically reduce the number of manufacturers without ERP over the next few years."
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