The cloud

Five years after the cloud really went mainstream, many businesses are still failing to grasp what it offers them. That's the uncompromising view of Carter Lloyds, chief marketing officer at manufacturing ERP specialist QAD, which this year celebrates 35 years of focusing on key manufacturing industries. "When it comes to ERP, the question of cloud or on-premise isn't just a deployment decision," he stresses. "And to think of it like that is to miss a lot of the value. Instead, it's a strategic decision—and one which goes right to the heart of how a manufacturer defines its business." For proof, says Lloyds, think about how manufacturers describe themselves to shareholders, stakeholders, and partners. Typically, he points out, such descriptions revolve around markets, mission, customers, strategy and products. "ERP simply doesn't show up anywhere in how businesses view themselves, and on how they define what they do," he insists. "But then take a look at where they're investing their resources, capital, people, and management time and you'll see a considerable investment in ERP. So there's a huge strategic disconnect between how manufacturers like to think of themselves, and how they actually operate in practice." All of which, adds Lloyds, comes to the fore during QAD's annual customer engagement process, where the company formally sits down with customers and reviews progress over the previous year, and talks about potential improvements that customers might like to make over the coming year. "Typically, we'll draw up a list of potential projects on a whiteboard, in order of the attractiveness the resulting ROI," he explains. "And equally typical, the list of such projects is always longer than what can be achieved with the resources available so we'll draw a red line part way down the list, and aim for projects that fall above it." Confronting the issues And increasingly, says Lloyds, such exercises prompt customers to confront the issues that are preventing them from tackling a longer list of high ROI projects. Chief among which, he explains, are the resources tied up in managing the ERP system. Simply put, place ERP in the cloud, and you'll see in-house resource freed-up, and be able to take on improvement projects. And nor, he emphasises, is this a theoretical conjecture. "What we're seeing when customers move to the cloud is that there's a much greater capacity, with fewer resources tied up on administering the ERP system, and more resources available to work on process improvements and high-ROI projects," he sums up. "In other words, the red line moves—and we think it's due to the cloud, and to the ROI that the cloud offers in being able to re-focus resources." That said, adds Lloyds, not every business is yet ready to embrace the cloud. For a mixture of reasons—some practical, some philosophical, some real, some less so, a move to the cloud is one that businesses will want to carefully consider, especially when that move is literally that: taking an existing QAD ERP on-premise instance, and relocating it. "With existing customers, a move to the cloud is one of the options that we typically look at in our annual customer engagement process," he explains. "And if we see potential value in it, then we'll suggest a four day evaluation project, looking at coming up with a recommendation and a business plan." But for new QAD customers, the decision is usually more clear-cut. "It's really down to a question of philosophy: why would you actually want to have your ERP on-premise?" says Lloyds. "A manufacturing business wouldn't expect to have its own electricity generation on-premise, or handle its own water supply, so why would you want to do that with ERP? It doesn't make any strategic sense." Indeed, he asserts, it is the firm belief of QAD – as well as influential analyst firms and industry observers – that in less than 20 years, the vast majority of ERP systems will be located in the cloud, where it's not only easier and more economical to manage them, but also easier and more economical to connect them to other systems: suppliers' systems, customers' systems, and third-party best-of-breed niche 'add on' systems. "It's not about ERP for ERP's sake: it's about viewing ERP as a tool for running the business, and making pragmatic decisions about how and where that is best undertaken," he stresses. "Traditionally, there hasn't been an alternative to viewing ERP as a bespoke system that has to be managed in-house, but going forward, that's no longer the case." Especially when, as is the case with QAD Cloud ERP, it's possible to finally surmount one of the biggest barriers to cloud ERP that faces multi-site businesses. Namely, the ability to have a single ERP 'instance' straddling both cloud and on-premise installations. And which QAD, unlike some vendors, is able to offer. Totally seamless and transparent to the end user, it's a feature that involves some clever tweaks to a business's domain architecture as defined within ERP. Effectively, says Lloyds, it allows QAD users to define business entities in any way that makes sense for them, yet at the same time enabling them to use different costs, BOMs, routings, billing terms, and charts of accounts at various sites, but still be able to see consolidated information across sites. "Our ability to offer a 'blended' hybrid solution has been a differentiator for us, and even today QAD is the only vendor offering a blended deployment that enables customers to have the entire system for a given site in a mixed cloud or on-premise environment," he enthuses. "You might hear the 'blended' term elsewhere, but what they're referring to is a single ERP module that can be deployed separately. But with QAD's cloud offering, you can mix and match cloud with on-premise all within a single instance, meaning that it's possible to take a multi-strand approach to the cloud, to suit the overall business." So roll it all together, concludes Lloyds, and ERP in the cloud can play a vital part in helping manufacturers to become what QAD characterises as an 'effective enterprise', one where every business process is working at peak efficiency, and is perfectly aligned to the company's strategic goals. "The trick," he sums up, "is to recognise what the barriers are towards being able to undertake the necessary projects and process improvements that are required in order to become an Effective Enterprise. And if, as is usually the case, the biggest barrier is simply the lack of resource, then a move to the cloud is the most effective way to free-up that resource."