On-premise ERP may soon be considered outdated

////On-premise ERP may soon be considered outdated

When looking at a modern ERP implementation, companies need to start heavily considering cloud computing as a method of procuring software. Chris Kanaracus of IDG News Service wrote up a report from Gartner that found that by 2016, highly-customized, on-premise ERP systems will be considered “legacy.” Gartner analysts Denise Ganly, Andy Kyte, Nigel Rayner and Carol Hardcastle said these systems are already starting to show their age and will not figure into the average business plan as much by 2016.

ERP is now common for many industries, as it gives businesses more efficient use of applications and business processes. Staying up to date with this software is essential for organizations, especially those who utilize ERP as a centralized business system. There has been plenty of great value received by businesses over the year, the Garter researchers said.

“However, the main beneficiaries were the major consultancies who managed the business process re-engineering and implemented the ERP solutions,” the analysts wrote. “These implementation service providers secured themselves a prosperous future by utilizing lucrative continuous service contracts that went beyond implementation into extensive customizations.”

Saving money and getting benefits from cloud-based ERP
Implementing these unique ERP systems is likely more expensive than standard, out-of-the-box ERP. Ganly, Kyte, Rayner and Hardcastle reported that businesses have actually spent 10 times as much money on the customization of their programs over the license fees. This is a big reason why cloud computing is becoming so popular for ERP, as executives realize how much money it is poised to save over the long haul for their company.

A white paper from Dynamics Manufacturing Solutions and The Aberdeen Group found that 56 percent of the companies with best-in-class ERP have the ability to easily change operations to reflect a change in business. This shows how important cloud computing is to ERP; in past days, making changes would require customization and hours of work on the company’s end. Now it is far easier.

The benefits to adopting ERP and staying up-to-date are apparent, as 18 percent have seen a reduction in inventory from their systems and the best companies see a 97 percent improvement in accuracy of inventory. They can also experience a 97 percent improvement in on-time deliveries and 94 percent boost in internal schedule compliance, the white paper said. Organizations need to be striving for the best possible ERP system so they can take advantage of their current situation and the best possible technology.

Learn how to define your ERP strategy by downloading the white paper entitled “ERP in Manufacturing: Defining the ERP Strategy” from the DMS website today.