All entries for March 2015

March 31, 2015

Different Types of Cloud ERP

Writing about web page

Cloud Infrastructure and it’s impact on Hosting and SaaS

Cloud technology enables SaaS and powerful new forms of hosting that can reduce the cost of service delivery. Note that cloud does not equal SaaS and cloud is not mutually exclusive from hosting.

How much cloud do you need?

Customers can purchase services with different amounts of “cloud” in the service delivery stack. Assume that we have four distinct layers of delivery: cloud infrastructure (hardware resources for the cloud), cloud platform (operating system resources for the cloud), cloud applications (application resources built for the cloud), and client resources (user interface to the cloud). This distinction helps us illustrate the way cloud services are offered in the diagram below.

The Cloud Stack

Cloud Delivery Options

In this simplified diagram, we show three types of cloud services:

  • Cloud Infrastructure (for example: Amazon, GoGrid) delivers an cloud infrastructure where you install and maintain a platform and an application.
  • Cloud Platform (for example: Windows Azure) delivers a cloud platform where you install and maintain your applications without worrying about the operating environment.
  • Cloud Application (for example: delivers a complete application, all you maintain is your client access program which is frequently a browser.

SaaS ERP and Cloud Models

Even legacy ERP vendors are moving to cloud technologies to offer software as a service to their customers. When vendors offer SaaS, the customer is only responsible for maintaining their client device (usually just a browser).

Vendors can offer SaaS utilizing all three cloud infrastructures above. Some vendors such as Acumatica offer all three types of services.

  • Offering SaaS using a cloud application is straightforward. In this case the vendor builds an application which is tightly integrated with infrastructure and hardware so that the three components cannot be separated.
  • Offering SaaS using a cloud platform means that the vendor must manage the application layer separately from the platform layer. This architecture gives the vendor the flexibility to move the application to a separate cloud platform provider.
  • Offering SaaS using a cloud infrastructure is similar to a managed hosting scenario. In this case the vendor installs and manages both an operating system and their application on top of a multi-tenant hardware infrastructure. This technique provides maximum flexibility, but may increase overhead slightly.

Comparing SaaS Offering Options

Offering Advantages Challenges
SaaS using a Cloud Application
Maximizes efficiencies for “cookie cutter” applications Vendor lock-in, customer does not have option to move application to a different provider
SaaS using a Cloud Platform
Mix of flexibility and savings Coordination challenges – vendor manages the application while a service provider manages infrastructure
SaaS using a Cloud Infrastructure
Maximizes flexibility to switch providers or move on-premise Some would argue this is nothing more than a hosted service with a slightly lower pricing structure

Multi-tenant applications

Multi-tenant applications can be deployed in any scenario to reduce overhead associated with upgrading multiple customers and maintaining different versions of software. This implies that multi-tenancy reduces the flexibility to run an old version of software and limits customization and integration potential. Multi-tenant options should be priced lower to offset the loss of flexibility.

March 29, 2015

The Silo Effect (Information Silo)

This article will discuss about The Silo Effect, its drawback in a functional organization and how ERP systems like SAP helps to manage it.

Employees in the different functional areas have tendency to perform their steps in the process in isolation, without fully understanding which steps happened before and which steps will happen after. They are just focused on their specific tasks which lose the sight of the “big picture” of the larger process. This is known as the Silo Effect or Information Silo.

To make it simpler to understand, let’s take an example of our batch where we have completed GBI simulation exercise on SAP system. By using this ERP System, We (ERPI-Module Students) performed a series of tasks for Sales and Distribution (SD) Case Study, taking on roles of various people involved to perform an integrated order-to-cash cycle. This gave us the “big picture” of the larger process however in real life without the support of ERP system, Mr. Mathias Dosch was using the new information to create a customer inquiry. While, Mr. David Lopez was responsible for creating a customer quotation and sales order, unaware and not concerned with customer inquiry generation process. This continues further where he is not concerned with the new details being used by Mr. Sandeep Das to check the stock in warehouse to fulfil new sales order.

Moving on, this silo nature of the functional organizational structure can be a drawback. The employees are completing their specific tasks without regards to the consequences for the other components in the process. This is simply reducing the co-ordination amongst them. Companies nowadays require “think side-ways” attitude from their employees. Therefore, ERP systems are helpful in managing business processes efficiently and we have already experienced this advantage by using them during our simulation exercise.

The learning outcome from this article is that to view a business process from end to end is essential in understanding how enterprise systems help businesses manage their processes efficiently and this understanding has become a critical skill that companies have come to demand from their employees.

Article by Muhammad Umer Noonari (1461606)

Reference: Magal, Simha, and Jeffrey Word. Integrated Business Processes With ERP Systems. Hoboken, NJ: Wiley, 2012. Print.

March 18, 2015

Benefits and challenges of ERP in management control

ERP in actionóChallenges and benefits for management control in SME context.
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This article is about benefits and challenges for management control when implementing an ERP system.


1. Top management:

(1) Enabling the vision: ERP makes it possible to implement new strategy. Growing and globalizing business needs new kind of control systems.

(2) Transparency: ERP system is a good control tool. In particular it makes business transactions transparent.

(3) Routine tasks: Top management perceives that ERP system works well in routine tasks, but only negative things will be discussed openly.

2. Administration:

(1) Transparency/bookkeeping: Accounting and book keeping work well. Monthly profit and loss statements will be gathered very quickly.

(2) Possibilities: In ERP systems are numerous functions (some not utilized).

(3) One system: Only one system. Knowledge and support will be focused on the ERP system. There is no need to support other systems.

3. Production:

(1) Transparency/bookkeeping: Accounting and book keeping work well. Monthly profit and loss statements will be gathered very quickly.

(2)Routine tasks: Basic and simple things can be done by ERP. ERP works if things happen as predefined in the system.


1.Top management:

Making entries: ERP is based on processes, but employees do not know what the processes are. Employees do not understand why it is required to make entries in processes. Too many steps included in the entry process. It takes time and generates incorrect entries. Employees perceive that making entries is not part of their job. If supervisors use the ERP reluctantly, shop floor workers follow their lead.

2. Administration:

(1) Making entries: It is not possible to make correct entries. Such problems occur when there are different kinds of

machines or production lines than predefined in ERP system. Employees will take a short cut and in this way speed up their tasks.

(2) Personnel resources: Key person leaves the company. In that situation knowledge is lost away from the company. There is time to utilize only the basic functions of the ERP, even if people perceive that there are a lot of other utilizing possibilities. There are no experienced people to use ERP. There is a lot of data for different kind of management control purposes, but there are no people to do that.

(3) Technical problems: ERP system breaks down or it is very slow.

3. Production:

(1) Making entries: Employees do not know what processes are and how they relate to the whole. Employees do not understand why it is required to make entries. Rapid changes in production. Production lines are required to changes (by the customers), but there is no time and no personnel resources to make these changes into ERP system. Too many phases included in the entry process. It takes time and generates incorrect entries. The ERP system is very complex. Making entries is required to be done in many different screens. Complex system takes time away from physical production, which cause that people do not want to use the system. Mistakes occur (incorrect entries) and it takes lot of time to find and correct these incorrect entries. People who have only basic skills to use ERP, cannot solve this kind of problems.

(2) Technical problems: ERP system breaks down. Data which is required in production cannot be obtained from the ERP system.

(3) Standard nature of ERP: There are predefined processes in ERP system, but production is many times unpredictable: machines will break down, production lines will be changed, and the output of the machines is many times not known.

(4) Lost focus: ERP will attract all the focus away from development of production. Resources will be used to develop the ERP system and ERP processes, which is time away from the development of production.

Reference: Teittinen, H., Pellinen, J., & Järvenpää, M. (2013). ERP in action—Challenges and benefits for management control in SME context.International Journal of Accounting Information Systems, 14(4), 278-296.

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