Enterprise Resource Planning or better known as ERP has been the key IT Buzz since a decade now.Today every big company either has it or aspires to buy it. Why not? It is such a wonderful system that pressurizes the organization to adopt the benchmarked business processes. SAP being the leader in providing ERP packages, has gone through the entire business cycle and has developed key innovations. Considering the fact that small companies cannot implement ERP (because of the huge costs associated with it), cloud computing
is here again to help the resource scarce organizations. Today ERP can be implemented in two ways. One: In-House ERP software (traditional way) and Two: Through Application service providers (Cloud Computing way)
ASPs are organizations which rent ERP software to small companies. They have a central server which can be accessed through internet by the users. They also provide necessary training to the users. Usually they charge on per user basis or the number of transactions. On the other hand in traditional in-house ERP model, everything has to be bought and paid for by the user organization as shown in the diagram shown above.
Now the question arises, which one is better. There are three things (FIS) which should be considered before taking this crucial decision. One: Financial resources of the company, Two: IT expertise available in-house and Three: Strategic evaluation looking at your competitors.
One: Finance: It is seen that ASP supported ERP is almost 30% cheaper than the ownership model(over 5 years). However, your companies information lies at the ASP servers.
Two: IT expertise: A company which does not have strong IT infrastructure in the organization may spend a lot more in developing the expertise. The in-house model might also take a lot more time to implement ERP. Here the ASP model might be beneficial, because the risk associated with unsuccessful implementation is fraction of the former.
Three: Strategic Evaluation: If the concerned industry/competitor is growing fast and your forecast says that investment in infrastructure is key to sustainable growth of your organization, do not worry about the costs. Go for the traditional proprietary model of ERP implementation.
To sum up, now even a small company can reap the benefits of business process re engineering or the God like ERP!
Rogues
