In asset-intensive companies with a Cloud ERP strategy, 63 percent plan to move functions in the next two years
Toronto – October 27, 2015 – Illumiti, in collaboration with Sungard Availability Services® (Sungard AS) and Cisco released their joint survey-based research paper today titled Cloud ERP for Asset-Intensive Industries – Driving Strategic Decisions to Leverage the Cloud. According to the survey conducted in late spring this year, more than 140 North American business leaders from the Mining, Industrial Manufacturing and Energy sectors indicated that they were not fully informed about the benefits and risks of enterprise resource planning (ERP) and cloud adoption.
"Many executives don't understand the cloud, how it works, or the real benefits it can provide to business, which is why we have developed this report," said Dror Orbach, Chief Operating Officer, Illumiti. "We hope the information in our report will help educate executives on what ERP in the cloud really is, opportunities and challenges associated with cloud-based ERP, and factors to consider when determining your company's path forward when it comes to enterprise resource planning."
Executives who understand the value-add of a comprehensive cloud-based ERP can create informed strategies for their organizations. Yet, this study found that more than 80 percent of business leaders deferred to their CIO or IT leaders for advice and strategy about moving ERP functions to the cloud. In fact many executives did not feel they had enough knowledge to answer all the questions in the survey or needed their IT leaders to interpret the information available to them.
"Our study found that corporate executives are interested in seeking out knowledge on both the challenges and benefits of cloud adoption and rely on IT thought leadership for information and advice," said Wade Alt, Senior Vice President, Channel & Market Strategy and Solutions, Sungard AS. "Enterprises have the information, but they need further assurance of the full strategy, the security and the savings associated with ERP in the cloud. We help them build an effective cloud strategy that meets their business outcomes on their timelines, freeing up their (scarce) resources to focus in new ways," he added.
Highlights from the Report
ERP Trends and the Cloud
- Companies are already using the cloud, even if they don't realize it. According to a Gartner survey conducted in 2014, almost 50 percent of respondent organizations had a hybrid ERP environment where ERP functionality was delivered through a combination of on-premises and cloud solutions. At the time, 63 percent of respondents said they would be in a hybrid environment in five years' time.1
- Among asset intensive industries, the study found that companies are already using the cloud:
- 41 percent of such organizations already use the cloud for email, 21 percent for human resource management and 21 percent for project management.
- Complementary to current usage, 24 percent say that they are considering a move from their current ERP solution to more cloud-based services. Of these, 63 percent are planning to make a move within the next two years.
Key Benefits of Cloud ERP
- More than 84 percent of respondents indicated the ability to quickly access corporate information anywhere from a cloud-based ERP system can help ensure a business is sustainable even in the event of a disaster or other major emergency situations.
- 50 percent of companies say predictable costs and service is a major driver of ERP in the cloud, while a similar number believe lower total cost of ownership is a key factor.
- 53 percent of organizations believe the scalability of cloud-based solutions and the ability to adjust infrastructure capacity quickly is a key benefit in ERP for the cloud solutions.
Key Challenges of Cloud ERP
- 46 percent of companies are concerned about security or privacy issues related to having their critical business data in the cloud, while 43 percent are worried about service abuses – like service traffic hijacking and hacking.
- Over 60 percent of companies are concerned about their dependence on an external vendor when it comes to the infrastructure and architecture underpinning a cloud-based solution, while 42 percent are concerned about possible system performance and availability issues should they use a multi-tenant service.
- 47 percent of companies are concerned about the integration of data between different systems when some are hosted in the cloud.
Why should companies in asset intensive industries consider cloud ERP?
Many asset-intensive businesses operate globally, with operations or individual projects located in remote regions of the world. The costs associated with developing an on-premises ERP solution that fit the needs of a specific company can be very high.
That's why asset-intensive companies should consider a cloud-based or hybrid approach to ERP. Such solutions provide the flexibility and scalability to shift as project locations shift, while giving companies confidence that their systems will always be up to date and their information sustainable and accessible in the event of an emergency.
In this report, 30 percent of companies already have a strategy focused on moving business functions and applications to a cloud based service. 46 percent say that their strategy involves moving to a private cloud platform (i.e. managed hosting), while 42 percent expect to use a hybrid approach that includes some systems managed in-house and others through cloud-based services.
Illumiti is a leading systems integration and management consulting company with offices in Canada, the U.S. and Switzerland, serving customers globally. Its team enables customers to realize their vision by leveraging the world's leading on-premise and cloud-based business applications. Illumiti helps its clients achieve optimized operations in the key areas at the core of their business, by implementing custom-fit solutions from SAP and other vendors faster, at a lower cost, and at a lower risk than other alternatives. Illumiti is a member of United VARS, which is an SAP Platinum partner. Illumiti has been recognized as the top SAP reseller for Canada for five consecutive years and is one of the fastest-growing SAP channel partner in the U.S. For more information please visit www.illumiti.com. Connect with us on Twitter @illumiti and LinkedIn.
Cisco is the worldwide leader in helping companies seize the opportunities of tomorrow by delivering the amazing results that come from connecting the previously unconnected. Cisco is empowering countries, cities, industries and businesses around the globe to move faster in order to keep pace with digital transformation and the move to the Internet of Everything (IoE). With approximately 70,000 partners, Cisco is very well positioned to provide our customers with next generation of networking, security, data center, and collaboration products and solutions that help them achieve their desired business outcomes.
About Sungard Availability Services
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1 Gartner. Adopt a Strategic Approach to Application Integration for Postmodern ERP and Business Applications. July 28, 2015.