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International Journal of Engineering Research and Applications (IJERA) is an open access online peer reviewed international journal that publishes research and review articles in the fields of ...

International Journal of Engineering Research and Applications (IJERA) is an open access online peer reviewed international journal that publishes research and review articles in the fields of Computer Science, Neural Networks, Electrical Engineering, Software Engineering, Information Technology, Mechanical Engineering, Chemical Engineering, Plastic Engineering, Food Technology, Textile Engineering, Nano Technology & science, Power Electronics, Electronics & Communication Engineering, Computational mathematics, Image processing, Civil Engineering, Structural Engineering, Environmental Engineering, VLSI Testing & Low Power VLSI Design etc.



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  • Dr. Bright Keshwani, Rajeev Sharma/ International Journal of Engineering Research andApplications (IJERA) ISSN: 2248-9622 www.ijera.comVol. 3, Issue 3, May-Jun 2013, pp.1130-11361130 | P a g eStudy& Analysis Of Cloud Erp SolutionsDr. Bright Keshwani1, Rajeev Sharma21(HOD,Department in Computer Application,Suresh Gyan Vihar University, Jagatpura Jaipur, Rajasthan, India)2(M Tech. Scholar, Department of Computer Science & Engineering.Suresh Gyan Vihar University, Jagatpura,Jaipur, Rajasthan, India)Abstract:Cloud Computing is a buzzword incomputer science it has gained momentum in thelast decade. Research work shows that manysoftware companies is evaluating the promisedadvantages and considering making use of cloudservices. It is based on rent and sharing model.In this paper I present my view and analysis forcloud computing and its importance for theoperation of ERP systems and SMBE (Small andMedium Business Enterprises). As per myopinion the phenomenon of cloud computingcould lead to a decisive change in the waybusiness software is deployed in companies. Myreference outline contains the three basic levels(IaaS, PaaS, SaaS) and explains the meaning ofpublic, private and hybrid clouds.The three levels of cloud computing and theirimpact on ERP systems operation are discussed.From the analysis I identify areas for furtherresearch and sketch a research agenda.Keywords: SMBE, Cloud Computing, EnterpriseSystems, IT Outsourcing, IT Services,I. Surroundings and Research Area issues“In the wake of the 2008-09 financial andeconomic crises, firms have looked for ways toconsolidate their ICT infrastructures and servicesand increase returns on their investments. Cloudcomputing appears an attractive option.” [12]Cloud computing is a concept that has gainedincreasing attention over the last years [12]. In manyways it is not a completely new phenomenon as itincorporates elements of IT outsourcing which hasbeen available for more than 10 years (e.g. theprovision of software over the Internet or thehousing of IT infrastructure for client companies).There are clear signs that companies’ interest incloud computing services is rising: “Demand forcloud computing services is expected to continue toincrease; according to IDC, the market for cloudcomputing services will grow by around 40% in2010” [12]. Some authors argue that cloudcomputing represents the future way of usinginformation technology in businesses [2][14]. Theypoint out that obtaining computer power over theInternet could have a profound impact on the wholecomputer industry and rid companies from having toinstall software on their own internally operatedsystems. As a consequence, they will not need topurchase or maintain hardware and software thatcan simply be rented online.1.1 Appearance of Cloud in ComputingThe development of services for cloudcomputing (as a particular form of IT outsourcing)has been stimulated by three complementary andvery influential technological achievements:1. AJAX technologyWhich enables a client to communicate with theserver in the background and to dynamically changeWeb pages without reloading them. AJAXtechnology helps create a “rich client”, a so calledRIA, and has boosted the use of thin clients andmobile devices. [10]2. The concept of multitenancyWhich describes the shared use of an installation ofa single software program by multiple clientcompanies using their own, private, individual dataspaces. [14]3. Last and most importantly virtualizationWhich enables the sharing of physical computerresources. [1]AJAX makes rich clients possible and thus improvesthe capability of running an externally hostedapplication locally, Multitenancy is the prerequisiteto the shared use of software, and virtualizationallows for dividing of physical resources – all threetogether drive the cloud computing market.Cloud computing, like similar forms of IToutsourcing, is heralding certain promises to usercompanies:• The decrease of capital cost because thecustomer does not acquire hardware or licenses upfront any more• Cost transparency e.g. through pay-per-use orsubscription models• The decrease of operational• Increased flexibility for business processesdue to lower switching cost• Guaranteed service level• Simplicity through commodityThese advantages of cloud computing are backed bythe latest Ovum report (2010) and the OECD 2010report on information technology: “Cloudcomputing is one of the most discussed andpublicized technologies of recent years. Interest in
  • Dr. Bright Keshwani, Rajeev Sharma/ International Journal of Engineering Research andApplications (IJERA) ISSN: 2248-9622 www.ijera.comVol. 3, Issue 3, May-Jun 2013, pp.1130-11361131 | P a g ecloud computing is mainly motivated by its potentialto reduce capital expenditures and to deliver scalableIT services at lower variable costs.” [12]On the other hand, the literature discusses someopen problems [6][10]• Permanent access (if Internet connection is downthe service is down) [14]• Service provided can be down [14]• Sensitive or proprietary information which cannotbe stored outside the company does not allow forcloud computing in certain application areas• Integration of applications run by differentproviders [7]• Lock-in with vendors (getting your data “out”when you want to move is connected to heftymoving fees) [14]• Some vendors are not established players andmight not be able to sustain their operations forlong [7]1.2 Relation of Cloud with ERPThis paper investigates the impact thatcloud computing might have on the way standardERP systems are operated (their “operationsmodel”). ERP systems are integrated softwarepackages with a common database that supportbusiness processes in companies. They comprisedifferent functional modules that reflect thedepartmental structure of a company (accounting,procurement, sales, production, warehousing, etc.).They are developed and offered by ERP vendorsand sold as “standard software” that fits the needs ofmany companies, often optimized for certainindustries (industry or vertical solutions).Since ERPsystems support the core processes and have toreflect the organizational structure of a companythey come in many different sizes andspecializations. Most importantly, they usually gothrough a substantial customization process to makethem fit to the needs of a particular company; andthey often need to be electronically linked with othersoftware systems (e.g. legacy systems or partnersystems). The feasibility of such adaptations need tobe addressed before the decision for cloudcomputing is taken. Whilst there is little doubt thatcloud computing can be beneficial in the areas ofoffice computing and work group collaboration it isinteresting to examine different forms of operating acomplex business software system (such as an ERPsystem) in a cloud environment.The parties that need to be discussedwhen looking at cloud computing as an operationsmodel for ERP systems are the following:1. User company (the company that uses the ERPsystem for their daily business processes)2. ERP vendor (the company developing andselling licenses for the software)3. Cloud service provider (the company runningthe cloud environment).4. ERP implementation partner (the company thatsupports the user company with theimplementation).1.3 Definitions and Research Area issuesThere is no common definition of the termcloud computing in the literature yet [14]. Thispaper synthesizes definitions and perceptions from abroad range of literature (academic and industry)and provides a framework of reference for IS(Industry Specific) research. I base our terms anddefinitions on the understanding reflected in themajority of literature sources and apply it to the areaof ERP systems. At the basis, I am using the NIST2009 (National Institute of Standards andTechnology) definition of cloud computing whichseems to have gained common acceptance in theliterature [11][7][4]. The NIST definition describesdifferent types of services in a layer model(infrastructure, platform, software) and distinguishesprivate, public, community and hybrid cloudsdepending on the exclusiveness of the servicemodel. Table contains terms and definitions and thefollowing section explains these concepts in moredetail.The underlying research questions of thispaper are the following:What impact is cloud computing going to have onthe operations model of ERP systems?What are the future opportunities and challenges ofcloud computing for ERP systems?In order to discuss these questions, I firstneed to define and understand what exactly Cloudcomputing is. For this I developed a referenceframework of underlying terms and concepts. Withthe help of this framework I discuss cloud aspectswhich could be influential for ERP systems. Basedon the literature and our own observations I thenpropose a research agenda for “cloud computing andERP systems”.The remainder of the paper is structured asfollows: First I present our literature analysis and theresulting reference framework for cloud computing.I then discuss the relevance of cloud computing forERP systems. Next I propose and discuss an ISresearch agenda for cloud computing. Theconcluding section contains a reflection on ourresearch findings and casts a look on futureresearch.II. Reference outline for CloudBefore engaging in the analysis of researchissues in the literature, I needed to understand thephenomenon of cloud computing in detail. Tablecontains the definitions which are pivotal to ourdiscussion. In the first step I collected all availabledefinitions (academic and industry) in a table. In thesecond step I identified the common concepts anddistilled them into a single, coherent definitionsuitable for the area of ERP
  • Dr. Bright Keshwani, Rajeev Sharma/ International Journal of Engineering Research andApplications (IJERA) ISSN: 2248-9622 www.ijera.comVol. 3, Issue 3, May-Jun 2013, pp.1130-11361132 | P a g esystems.Figure 1. Level model for cloud computingI then supplemented it with a graphicalrepresentation of the framework.The suggesteddefinitions reflect our common understanding andperceptions and are an important part of ourresearch findings.The definitions are grouped in three main areas:1 = general terms and infrastructure2 = service type (service model)3 =cloud type (service boundaries)# Term Definition Source1CloudcomputingThe operation ofinfrastructure,platforms andsoftware in avirtualizedenvironmentwhosecomponents canbe accessed andused over theInternet. Theword “cloud”signals thatservices are offeredwithout the need ofexplicit knowledgeabout where theseservices arephysically located.NIST2009;Smith2010;JohnstonTurnerandGens2009, p.3; Clarke2010, p.5731CloudserviceAny provision ofaccess to computingdevices or humanresources includinghardware, software,networks or staffwhich are based on acloud computingdelivery model.Smith20101VirtualizationThe configuration ofa physical server thatallows installingmultiple instances ofVelte2010, p.317virtual servers on asingle machine.2Softwareas aService(SaaS)The provision of anapplication which ishosted (off premise)by a provider as aservice to customerswho access it via theInternet. In contrastto application serviceproviding (ASP),SaaS is based on amulti tenant modelwhere manycustomers are usingthe same programcode but have theirown private dataspaces. SaaS is onlysuited for software“out of the box” thatdoes not requiremuch customizationor integration withotherapplications.Iyer andHenderson2010;Velte2010, p.112Platformas aService(PaaS)The provision ofresources required tobuild applicationsand services(softwaredevelopmentenvironment) to acustomer by anoutsourcing provider.Typical use scenariosare applicationdesign, development,testing anddeployment.Velte2010, p.132Infrastructure as aService(alsocalledhardwareas aservice)(IaaS)The provision ofcomputing resources(CPU cycles,memory, storage,network equipment)to a customer by anoutsourcing provider.In this service modelit is possible to sharea server among multitenants. The serviceis typically billed ona utility computingbasis (resourceconsumption).Velte etal. p. 153PrivatecloudThe provision of acloud computingenvironment that isbased on a collectionof physical serversIyer andHenderson2010, p.119;
  • Dr. Bright Keshwani, Rajeev Sharma/ International Journal of Engineering Research andApplications (IJERA) ISSN: 2248-9622 www.ijera.comVol. 3, Issue 3, May-Jun 2013, pp.1130-11361133 | P a g ethat are exclusivelyrun for one customer.When referred to inan outsourcingscenario, thecustomer rentsphysical servers as adedicated resource.Velte2010, p.317;Iyer andHenderson2010, p.119;MellandGrance2009, p.23PubliccloudThe provision of acloud computingenvironment that isbased on a collectionof virtual serverswhere multiplecustomers share aphysical hardware. Inthis outsourcingmodel the customerrents virtual serverson demand.Iyer andHenderson2010, p.118;Velte2010, p.318;Iyer andHenderson2010, p.119,MellandGrance2009, p.23HybridcloudThe provision of acloud computingenvironment thatcomprises two ormore clouds (publicand/or private). Inthis outsourcingmodel the customeroperates (on premise)or rents (off premise)a base set of physicalservers and addsvirtual servers ondemand.Iyer andHenderson2010, p.120;Smith2010, p.25;Iyer andHenderson2010, p.120,MellandGrance2009, p.23Community cloudThe provision of acloud computingenvironment that isshared by severalorganizations andwhich is managed byeither a participatingorganization or aIyer andHenderson2010, p.119;Smith2010, p.18; Iyerthird party. andHenderson2010, p.119;MellandGrance2009, p.23InternalcloudCloud network thatexists entirely withina company’s own ITinfrastructure (onpremise)Barnatt2010, p.953ExternalcloudCloud network that isprovided to acustomer by a cloudservice provider onthe provider’s ITinfrastructure (offpremise)Barnatt2010, p.95Table . Definitions of termsIII. ERP Solution in the CloudEnvironmentIn the Software-as-a-Service model the ERPsystem is provided by the cloud service provider.The roles of cloud service provider and ERP vendorare merged in this setting (vertical integration).There are a number of new players coming up withofferings in the last years (in Europe e.g. e-conomicand Scopevisio). Some “traditional” ERP vendorshave developed new versions that can be deployedin the cloud (e.g. SAP Business ByDesign,Abacusvi). This allows user companies to choose theirpreferred operations model (e.g. running the ERPsoftware in their own internal cloud or in anexternal private cloud).Given its natural suitability for privateconsumers and small companies, it is surprising thatmany publications on cloud computing focus on thepotential of big companies and do not discuss smalland medium-sized companies (SMEs). It is easy tosee that the provision of Web 2.0 functionality gainsincreasing attention in cloud computing. Web 2.0features are usually geared at communication andsharing.[1][3][14]The data stored in or with such services isusually not confidential or sensitive to attack.ERP systems, on the other hand, need customizationwhich may eventually always require a private cloud(or an ASP-like approach) where one instance of theprogram is individualized for a specific company.Multitenancy is difficult if the adaptations are tooextensive. This is easier in the area of CRM andexplains the big success of Salesforce.com with itsCRM solution.ERP systems are different from CRMsystems in that they support all core business
  • Dr. Bright Keshwani, Rajeev Sharma/ International Journal of Engineering Research andApplications (IJERA) ISSN: 2248-9622 www.ijera.comVol. 3, Issue 3, May-Jun 2013, pp.1130-11361134 | P a g eprocesses of a company – not just one area. Theirdatabases store the necessary master data aboutcustomers and products as well as the transactionaldata about the daily activities. This means that mostof the data represents company assets and is thuscritical to company operation and success.Managers are not likely to move this data and theprocessing power into the cloud when it is notguaranteed that confidentiality of the data is assuredand that the system performs at least at the samelevel as a comparable on-premise solution.There are the following big players in theERP systems market (with approximate marketshares): SAP (30%), Oracle Applications (21%),The Sage Group (18%), Microsoft Dynamics(14%), SSA Global Technologies (7%). Inaddition, there are hundreds of smaller ERP systemvendors targeting mostly the small and midsizemarket. The big players have different sales modelsand channels. Microsoft, for example, uses anindirect sales channel and has built up anecosystem of implementation partners for theirDynamics Suite.The indirect sales channel limits thepossibilities for cloud services for ERP systemvendors. They would cannibalize their owndistribution partners if they offered cloud servicesdirectly to customers. Their role is limited tomaking sure that the ERP system meets thetechnical requirements for virtualization andmultitenancy. It would be the natural role of theimplementation partners (ISVs and VARs) to offerthe actual cloud service to the customer.However, it is important to note, that thereare a number of start-up companies (such as e-conomic or Scopevisio) who have entered the ERPmarket with innovative SaaS offerings. Thesecompanies still have to prove the viability of theirbusiness model over the next year. Due to theirsmall service fees, they require a large amount ofcustomers to be able to offer SaaS in a sustainableoperational and financial model. Looking at themarket development, the leading ERP vendorswould be well advised to focus their efforts on twothings:1. Making their product technologically ready forthe cloud (virtualization, multitenancy)2. Develop business models for ERP servicedelivery in the cloudAn important issue that user companiesare well aware of is that ERP systems are the corebusiness applications of the company and need tobe integrated with circumjacent systems. WhenERP software is obtained from the cloud theservice provider has to make sure that integrationcan be achieved through well documented andopen interfaces (e.g. Web services). This is acurrent trend in social software where I find anumber of open API specifications (e.g. OpenSocial API published by Google) [7]. In the area ofERP systems, however, it seems unlikely that ERPvendors will open their systems fully withoutkeeping a firm grip on their interfaces.Newcomers such as e-conomic, however,understand the new rules and follow the approach ofsocial software. This SaaS ERP system provider haspublished API specifications on their Website. Itremains to be seen if the leading ERP systemdevelopers will change their policy in the area ofinterfaces thus adapting to current trends from thesocial software movement.The cloud could, however, even bringadvantages to ERP user companies when it comesto data exchange across company borders (interorganizational systems, B2B integration).facilitation of the “the extended enterprise”. So far,integration requires ERP users to rely on theservices of a third party that manages contracts,infrastructure and exchange formats betweenbusiness partners (EDI gateways, B2B integrationproviders)[7]. Now, these functions could beprovided directly in the form of cloud services.AbaNet is a good example for an ERP integrationservice that has already been providing B2Bintegration for more than a decade for users of thestandard ERP system ABACUS.IV. Proposed Research AgendaFrom the relevant literature andpublications I identified these research areasdiscussed below.Business model for Cloud ERPEvery revolutionary paradigm shift bringsalong new opportunities for doing business andcloud computing is not an exception. Incumbents, aswell as new providers of IT services are positioningthemselves horizontally and/or vertically along thecloud computing layers. However one of the biggestquestions being asked is how to effectively price ITservices. Different pricing models have been studiedamong them e.g. fixed/variable, negotiating [5],SLA-related ones [4] or Pay-as-you-go. Developingnations are also seeing the opportunity of providingcheaper hosting services [9]; Iceland’s bid to attracthuge data centre operators to setup centers there,purporting to offer cheap, zero-emissions energysources is attracting huge interest, with Opera(developer of web browser software) alreadymoving its data centre there (The Datacenter 2010).Cloud computing predecessors (IT outsourcing andASP) have been studied using several theoreticalperspectives borrowed from the field of economicsin describing and explaining the outcomes and toprovide guidelines for practice. I believe there is aneed to look at cloud computing from such inter-disciplinary perspectives as well in order toestablish the viability of this model and provideguidance for practice. The problems faced by cloudservices providers of how providers can price
  • Dr. Bright Keshwani, Rajeev Sharma/ International Journal of Engineering Research andApplications (IJERA) ISSN: 2248-9622 www.ijera.comVol. 3, Issue 3, May-Jun 2013, pp.1130-11361135 | P a g einfrastructure in such a way that it may impactresource utilization. As per investigation therelationship between the SaaS software deliverymodel and the productivity of software vendors,comparing scale economies of pure SaaS firmsversus non SaaS and mixed SaaS firms.Cloud ERP as SaaSSoftware as a Service (SaaS) is promotedby IT providers to be mainly relevant for SMEs thatlack necessary IT capabilities and resources. Cloudcomputing is likely to prove commercially viablefor many small and medium enterprises (SMEs) dueto its flexibility and pay-as-you-go cost structure,particularly in the current climate of economicdifficulties.However, first empirical studies havefound that large enterprises also see considerableopportunities applying SaaS in different areas. Thesoftware level of cloud computing will benefit smallcompanies because it can lower the barriers to theuse of ERP systems in general. SMEs can haveaccess to full-fledged ERP systems without the needof running their own IT department or to hire anexpensive IT consultant. Analyses have beenundertaken from the perspective of serviceproviders. The need exists for analyses from theviewpoints of prospective organizational users andindividual users (Clarke 2010).Open issues for ERP Services through the cloudThere are certain challenges which stillneed to be addressed before cloud computing willbecome the leading paradigm of IT consumption.IDC - International Data Corporation namessecurity, performance, availability, integration within-house IT and the difficulty of customization assome examples (IDC 2010 Report).There is one more barrier to the extensiveadoption of cloud computing and SaaS isinteroperability amongst the different cloudproviders and lack of an industry platform. Intheory, one way cloud computing is said to differfrom traditional IT services delivery is the absenceof long-term commitments on the consumer side,enabling them to switch between providers at willand at little or no cost. In practice however, usersmight find themselves reluctantly tied-in andexposed to high switching costs by a provider whouses a proprietary format to store their data. Forcloud computing to rise to the level of an industryplatform, firms will have to open their technology toother industry players, including complementorsand potential competitors, rather than simply usingthe Web as an alternative delivery and pricingmechanism for what used to be packages softwareproducts.V. Conclusions and OutlookIn my paper I developed a reference outlinefor cloud computing providing terms and definitionsfor IS research. I discussed the importance of thephenomenon for ERP systems and suggestedresearch imperatives for future research. Alimitation of the paper is that it could only build onthe scarce body of academic literature that has beenforming since the emergence of the term in 2006[6]. In order to address this limitation and to baseour study on a broader basis, I included books andindustry studies in our analysis. It will be interestingto see if cloud computing will really lead to theadoption of a zero IT strategy in companies andwhat the influencing factors will be. However,while the market for cloud computing is furtherevolving, firms are well-advised to start thinkingabout formulating their cloud-based strategy forunique competitive benefits and researchers areencouraged to assist in the identification of thenecessary capabilities. Iyer and Henderson (2010)outlined seven capabilities of cloud computingfirms can use to develop their cloud strategies basedon their study of the cloud industry ecosystem.What may be even more interesting is the customerview on capabilities or factors that influence theirpossibility to use a cloud service offering.References[1] Babcock, C. (2010): ManagementStrategies for the Cloud Revolution: HowCloud Computing Is TransformingBusiness and Why You Cant Afford to BeLeft Behind, New York et al.: McGraw-Hill, 2010.[2] Barnatt, C. (2010): A Brief Guide to CloudComputing: An Essential Introduction tothe Next Revolution in Computing,London: Robinson, 2010.[3] Bensaou, M. (1993): Interorganizationalcooperation: the role of informationtechnology – an empirical comparison ofUS and Japanese supplier relations, ICIS1993 proceedings, 117-127.[4] Buyya, R.; Yeo, C.S.; Venugopal, S.;Broberg, J.; and Brandic, I. (2009): Cloudcomputing and emerging IT platforms:Vision, hype, and reality for deliveringcomputing as the 5th utility, FutureGeneration Computer Systems, 25, January2009, 599-616, available athttp://www.buyya.com/gridbus/papers/Cloud-FGCS2009.pdf.[5] Choudhary, V. (2007): Comparison ofSoftware Quality Under PerpetualLicensing and Software as a Service,Journal of Management InformationSystems, 24 (2), 141-165.[6] Clarke, R. (2010): Computing Clouds onthe Horizon? Benefits and Risks from theUsers Perspective, Bled eConference,2010, 569-590.
  • Dr. Bright Keshwani, Rajeev Sharma/ International Journal of Engineering Research andApplications (IJERA) ISSN: 2248-9622 www.ijera.comVol. 3, Issue 3, May-Jun 2013, pp.1130-11361136 | P a g e[7] Iyer, B. and Henderson, J.C. (2010).Preparing for the Future: Understandingthe Seven Capabilities of CloudComputing, MIS Quarterly Executive, 9(2), 117-131.[8] Johnston Turner, M. and Gens, F. (2009):White Paper: Cloud Computing DrivesBreakthrough[9] Kshetri, N. (2010): Cloud Computing inDeveloping Economies, IEEE ComputerSociety, 0018-9162/10. Lacity, M. andHirschheim, R. (1993): InformationSystems Outsourcing: Myths, Metaphors,and Realities, Wiley, Chichester, 1993.[10] Linthicum, D.S. (2009): Cloud Computingand SOA Convergence in Your Enterprise:A Step-by-Step Guide, Boston: PearsonEducation, 2009.[11] Mell, P. and Grance, T. (2009): The NISTDefinition of Cloud Computing, in: NISTWebsite (National Institute of Standardsand Technology),[http://csrc.nist.gov/groups/SNS/cloud-computing/cloud- def-v15.doc],10/07/2009. [Accessed: 05/12/2010].[12] OECD (2010): OECD InformationTechnology Outlook 2010, in: OECDPublishing,[http://dx.doi.org/10.1787/it_outlook-2010-en], 2010. [Accessed: 29/11/2010].Ovum(2010): Planning for Cloud Computing:Understanding the organizational,governance, and cost implications, in:Ovum IT Management and StrategyReport, November 2010.[13] Smith, D.M. (2010): Hype Cycle for CloudComputing, 2010, Stamford: GartnerResearch, July 27, 2010. Staehr, L. (2010):Understanding the role of managerialagency in achieving business benefits fromERP systems, Information SystemsJournal, 20 (3), 213-238.[14] Velte, A.T.; Velte, T.J. and Elsenpeter, R.(2010): Cloud Computing: A PracticalApproach, New York et al.: McGraw-Hill,2010.[15] Petra Schubert, Femi Adisa, CloudComputing for Standard ERP Systems:Reference Framework and ResearchAgenda, Arbeitsberichte aus demFachbereich Informatik 16/2011