It’s as though a switch has been flicked, says Phil Lewis, vice-president for solution consulting at enterprise applications giant Infor. Suddenly, he explains, there’s been
a significant change of perception in how manufacturing businesses are looking at ERP in the cloud.
Infor itself, for instance, is seeing exceptional interest in cloud-based ERP, with a 300% year-on-year increase in customers electing to go for enterprise applications in the cloud. Globally, says Lewis, Infor now has 45 million users accessing Infor’s cloud applications of which a growing number, he stresses, are for full-blown ERP systems.
“For some time now, it’s been clear that manufacturers have been happy to go with the cloud for so-called non-core ‘edge’ applications, such as expense management, CRM, route scheduling and so on,” he notes. “But this is different: suddenly, manufacturers are
saying: ‘Let’s locate our ERP in the cloud as well.’”
That said, of course, ERP in the cloud has for several years been a popular choice with start-ups and smaller businesses: some ERP providers, in fact, have brought out cloud-based ERP products solely for this market.
“But this is different,” insists Lewis. “The demand we’re seeing isn’t for small-scale, very generic, ‘one size fits all’ ERP systems – instead, we’re seeing large enterprises make the jump, moving to cloud-based suites of highly differentiated industry-specific ERP solutions. It couldn’t be further away from the small business or start-up view of cloud-based ERP.”
That said, he adds, the phenomenon is not industry-wide: while some ERP providers report strong interest in the cloud, others are seeing only modest take-up.
The conclusion to draw? It’s a very simple one, stresses Lewis: for cloud-based ERP to truly resonate with the manufacturing marketplace, both manufacturers and ERP providers alike have to change their perceptions of what a move to cloud-based ERP involves and the benefits that it brings.
Take those benefits, for instance. Turn the clock back a few years, and perceptions of cloud-based ERP and cloud-based enterprise applications in general were around the
cost savings that subsequently arose. Instead of hefty upfront investments in on-premise hardware and software, ran the logic, a move to the cloud delivered elastic, on-demand computing, paid for as an operating expense rather than through capital expenditure.
“The mood music has changed,” sums up Lewis. “The financial benefits are still there, but they’re dwarfed by a more mature understanding of the operational and strategic advantages of cloud-based ERP: that it brings agility, flexibility, access to continually upgraded software and hardware, and that it opens the door to industry-relevant ERP at an affordable price.”
But that more mature understanding, he adds, has been matched by a more mature understanding of something else, namely, that not all cloud-based ERP solutions are equal, or will actually confer all these operational and strategic advantages of cloud-based ERP.
“What we’re seeing is that there’s market ‘push back’ against what has been termed ‘lift and shift’ ERP in the cloud – that is, simply taking a standard ERP solution, and hosting it in the cloud,” explains Lewis. “Larger manufacturers especially don’t want that, because all it delivers are those same purely financial benefits that haven’t excited them in the past. They want the full operational and strategic advantages of cloud-based ERP and if an ERP provider goes down the ‘lift and shift’ route, larger manufacturers are canny enough to realise that they’re not going to see the benefits they want.”
Significant vendor investment
That said, he points out, the alternative to ‘lift and shift’ calls for an ERP provider to make what can turn out to be a very significant investment, an investment that not all providers have the financial and engineering resources to undertake. Infor’s own investment
programme, for instance, has taken five years of hard work, much of it detailed as a ‘work in progress’ in these very pages over that period.
“Basically,” says Lewis, “Infor has brought together a whole series of advanced capabilities in areas such as social collaboration, mobile computing, Business Intelligence, and expense management; applied a ‘consumer grade’ easy-to-use interface; and then tightly
integrated them with its Infor Xi flagship technology platform via its advanced ION middleware capability, but done so within the cloud, in the form of industry-specific cloud-based ERP suites, pre-configured and pre-enabled with connectors to leading third-party ‘edge’ applications.
The result: a genuinely best-in-class industry-specific ERP solution for the subset of industries on which Infor focuses – aerospace and defence, apparel and textiles, automotive, consumer packaged goods, distribution, food and beverage, industrial equipment and industrial manufacturing—but with all the advantages of the cloud, in a scalable, multi-tenanted and elastic format. And better still, he adds, it’s a genuinely best-in-class industry-specific ERP that comes equipped with an ‘implementation accelerator’, purpose-built to reduce the total cost of ownership, reduce implementation timescales, and reduce risk.
Put like that, agrees Lewis, the scale of Infor’s investment is much easier to grasp. And internally, he adds, Infor has been completely restructured in order to turn its customers’ aspirations into reality.
Software is 100% cloud ready
“Hundreds of people have been devoted to delivering the best industry-specific cloud experience possible, with our Infor Labs team assigned the responsibility for making it work,” he sums up. “Developers have looked at every line of code in order to make sure that it is 100% ‘cloud ready’, in terms of being scalable, open, and fully-integrated. We’re using the phrase ‘re-engineered’ to describe it and that’s not an exaggeration.”
And certainly, customers can appreciate the difference, adds Lewis. Take the giant Royal Boskalis Westminster NV, a Dutch company that provides dredging, maritime infrastructure and maritime services stretching from working on the expansion of the Suez Canal to raising of the capsized Costa Concordia cruise liner. With 1,000 vessels, it owns and operates the world’s largest dredging fleet.
Wanting to experience the operational and strategic advantages of cloud-based ERP, but globally, across the 75 countries in which it operates, Boskalis has begun the process of moving away from its existing on-premise solutions and onto a single cloud-based ERP suite.
Doing so, Boskalis realised, would allow the company to move ERP capability around the globe as needed for short periods of time, adapting the solution quickly to meet business needs in newly-entered countries, while simultaneously freeing its IT function to focus on other mission critical priorities. ERP, in short, would be a service managed by Infor, but a service that was always updated to be cutting edge, providing access to the latest innovations in order to deliver compelling competitive advantage.
“Look at the business case, and you won’t find much importance placed on the sort of purely financial rationale that we used to hear a few years ago,” concludes Lewis. “Instead, this is a company looking at ERP in the cloud, and recognising that both operationally and strategically, it’s a move that will make the business stronger and more agile. And going forward, we expect many more companies to come to the same conclusion.”
