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A Guide to Hybrid ERP Solutions


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A Guide to Hybrid ERP Solutions

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A Guide to Hybrid ERP Solutions

  1. 1. February 16, 2012 topics: Information Technology Operations Enterprise Resource Planning ERP Business Agility Cloud Computing Hybrid Cloud Computing Focus Research ©2012 All Rights Reserved Focus Experts’ Briefing: A Guide to Hybrid ERP Solutions
  2. 2. Focus Experts’ Briefing: A Guide to Hybrid ERP Solutions 2Focus Research ©2012 Focus Experts’ Briefing: A Guide to Hybrid ERP Solutions February 16, 2012 by Brett Beaubouef, Dana Craig, Jonathan Gross, and Garry Wood topics: Information Technology Operations Enterprise Resource Planning ERP Business Agility Cloud Computing Hybrid Cloud Computing Executive Summary Enterprise Resource Planning (ERP) solutions come in many shapes and forms. When evaluating these systems for purchase, one important criterion lies in whether customers are looking for an on-premise ERP solution, a cloud-based ERP system, or a hybrid combination of the two. Dana Craig, CEO of Quickstone Software, explains that hybrid solutions mix “cloud or SaaS solutions with on-premise ones.” Companies can tailor a hybrid ERP solution to address factors such as cost, security, and mobility. There are definitive benefits to having certain business functions located on-premise, such as core financial applications that must be securely protected. In addition, deploying applications in the cloud allows corporations to easily take advantage of new software installations while adding options for mobility that integrate into their current configuration. But because hybrid ERP systems are not necessarily a “one size fits all” approach, it is important for buyers to carefully evaluate how vendors’ products will integrate within their corporation. Craig believes that businesses “should consider how a potential vendor’s deployment method promotes or inhibits the business objectives. When looking at department level information or processes, businesses may find conflicting answers and this is when a hybrid model may need to be considered.” In this report, Focus Experts Brett Beaubouef, Dana Craig, Jonathan Gross, and Garry Wood focus on the benefits, challenges, and best methods to evaluate hybrid ERP solutions. After reading this guide, be sure to check out the entire discussion and join the conversation: Contents: What is a Hybrid ERP Solution? The Benefits of a Hybrid ERP Infrastructure The Challenges of a Hybrid ERP Infrastructure Four Things to Take Into Account When Evaluating Hybrid Solutions
  3. 3. Focus Experts’ Briefing: A Guide to Hybrid ERP Solutions 3Focus Research ©2012 What is a Hybrid ERP Solution? Brett Beaubouef, IT director of NTT America, writes that, “A hybrid deployment method has the potential to enable customers the flexibility to deliver ERP capabilities in the most cost-effective manner to users. Hybrid deployments would allow for an optimal mix of the major ERP delivery models: • On-premise • Hosted • Public Cloud • Private Cloud” Jonathan Gross, vice president and corporate counsel of Pemeco Consulting, explains, “From a 40,000 foot perspective, a hybrid ERP deployment refers to a situation where ERP functionality is provided through two or more delivery models. Most commonly, we see this where a company uses on-premise ERP for certain functions and SaaS ERP for others.” The Benefits of a Hybrid ERP Infrastructure Jonathan Gross states, “A major benefit to a hybrid approach is that companies can take the SaaS model for a test drive without having to put the heart of their operations into the cloud. Under this model, businesses can wade into the SaaS game by testing peripheral functions. We see many businesses trying this with sales, field service, HR, and business intelligence (BI) functionality. “One reason these areas make good test cases is that they’re often tied to mobile access needs. And, a SaaS-based delivery model facilitates any time, anywhere access. So, a salesperson might be able to place a sales order from a customer site. A field service technician might be able to check inventory availability while repairing equipment at a customer site. Travelling employees might be able to log expenses. And, travelling executives might be in a position to stay on top of company performance while doing road-shows. “To the end-user business, a major benefit relates to the timeliness of the transactions. Inputting key data in near real time improves the business’ ability to forecast and manage cash flow, among other things. In a nutshell, it gives the business an opportunity to become more agile, more responsive. “Another the key benefit of on-premise ERP–as compared to SaaS-based ERP–is that companies generally retain a greater flexibility to customize or personalize the software to meet key business needs. In other words, companies are less likely to be faced with situations that require them to sacrifice core business processes for the sake of limited software functionality. When looking at hybrid, companies can get the best of both worlds. On one hand, they can use on-premise for core, nonnegotiable processes that aren’t supported by SaaS-based applications. On the other hand, they can use SaaS-based modules for standard processes and functions.” Focus Experts’ Briefing: A Guide to Hybrid ERP Solutions
  4. 4. Focus Experts’ Briefing: A Guide to Hybrid ERP Solutions 4Focus Research ©2012 Dana Craig, CEO, Quickstone Software, LLC writes, “The benefits of a hybrid model include being able to offer best-fit solutions for certain parts of the organization rather than forcing a one-size-fits-all approach. For example, members of a mobile workforce (sales, service providers, executive teams) can be more effective and informed when they can access accurate, timely data outside of the office. Cloud solutions, delivered over the internet, already include the infrastructure to support this. Depending on whether or not private or public clouds are used, additional layers of security may be required, but if the benefits outweigh the other considerations, then this can be a good way to go. “When cloud solutions are delivered as a SaaS model, it can also be easier for businesses to scale up and down without having to carry high licensing costs when demand doesn’t warrant it. For example, for an organization whose remote workforce ebbs and flows on a regular basis, cloud pricing and its ability to scale quickly can be compelling reasons to consider hybrid ERP solutions.” The Challenges of a Hybrid ERP Infrastructure Garry Wood, program manager of Taylor Companies, points out, “Hybrid ERP solutions are a mixed bag for the end users. While best-in-class services and solutions can be leveraged, the back office and field end users can be left with ETL issues and if not fully understood in the developmental stages, a huge challenge to meet accounting, operations, and sales system integration . . . Challenges include getting common data formats and accounting across the systems, ensuring service standards are understood and acceptable across the systems (for example, latency does not cripple data flowing between systems or there is a single point of failure that brings all the systems down), and having multiple vendors not working together to solve issues with equal urgency.” Jonathan Gross adds “Businesses that deploy ERP in a hybrid fashion not only position themselves to experience the benefits of both methods, they also set themselves up to experience the costs and risks of both methods. “From a financial perspective, a business might ultimately pay more to support a hybrid approach than it would otherwise pay if it settled on one delivery model. For example, a company might have to incur the heavy up-front infrastructure investment to support on-premise ERP and, at the same time, pay the vendor subscription fees for SaaS ERP that includes the vendor’s own infrastructure costs. Contractual risk is another area that should be evaluated. An end-user company will have to manage multiple contracts or, if the same contract, very different terms governing each of the deployments. The tricky part is figuring out how the obligations are shared among the parties. For example, in many cases the end-user company assumes certain responsibilities for on-premise systems that are assumed by the SaaS vendor. At precisely what point do these responsibilities shift? When is the hand-off made? Before moving to a hybrid approach, businesses would be well advised to structure an appropriate allocation of rights and obligations.” Dana Craig comments “While some ERP vendors offer both flavors (cloud and on-premise) of the same solution, many have put their feet firmly in one camp or another. Or perhaps the vendor started out on-premise (the traditional approach) and has recently released a cloud offering. In either case, it’s critical to understand how one interacts with the other. Are
  5. 5. Focus Experts’ Briefing: A Guide to Hybrid ERP Solutions 5Focus Research ©2012 there delays, limitations, hidden fees to improve the integration? Beware of software that doesn’t play well with others. All the promised benefits of the hybrid approach will quickly disappear if the integration isn’t seamless. “Security is another concern. A large part of ERP data isn’t transient in nature. It’s a significant business asset, and it needs to be secured as such. Proper data modeling can help organizations identify data that is deemed to be mission critical and perhaps shouldn’t be shared or modified outside the immediate enterprise. On-premise solutions aren’t immune from data security concerns, of course, but the more an organization ‘splits’ a solution, the more security needs to be a part of the discussion. Understanding where the gaps may be and how best to fill them is essential to providing a safe and beneficial solution to the business.” Four Things to Take Into Account When Evaluating Hybrid Solutions Brett Beaubouef recommends looking at the following items when evaluating hybrid solutions: “1. ERP architecture: Is the ERP solution constructed in such a way that allows software components to reside in multiple delivery platforms (on-premise, hosted)? Integration and orchestration of ERP activities are key software enablers to support hybrid delivery. “2. ERP partner ecosystem: Does the ERP vendor have consistent, reliable partners with a portfolio of hardware/ software and professional services to support multiple hybrid delivery models? “3. ERP pricing model: Does the ERP vendor allow customers to utilize multiple delivery methods concurrently? Are there any price penalties or legal restrictions imposed on customers from moving between delivery models? “4. Portability: Customers have the ability to move data and customizations from one deployment model to another as needed.”
  6. 6. Focus Experts’ Briefing: A Guide to Hybrid ERP Solutions 6Focus Research ©2012 Contributing Experts Brett Beaubouef, PMP, CISA IT Director, NTT America Dana Craig CEO, Quickstone Software, LLC Jonathan Gross Vice President and Corporate Counsel, Pemeco Consulting Garry Wood Project Manager, MirGroup About this Report Focus Experts’ Briefings are sourced from Focus Experts who have exhibited expertise in the particular topic. Focus Experts’ Briefings are designed to be practical, easy to consume and actionable. This briefing was originally commissioned by Sage. Sage had input into topic selection, but had no editorial control over the final content selections. About Sage North America Sage North America is part of The Sage Group plc, a leading global supplier of business management software and services. At Sage, we live and breathe business every day. We are passionate about helping our customers achieve their ambitions. Our range of business software and services is continually evolving as we innovate to answer our customers’ needs. Our solutions support accounting, operations, customer relationship management, human resources, time tracking, merchant services, and the specialized needs of the construction, distribution, healthcare, manufacturing, nonprofit, and real estate industries. Sage North America employs 4,000 people and supports more than 3.2 million small and medium-size business customers. The Sage Group plc, formed in 1981, was floated on the London Stock Exchange in 1989 and now employs 13,400 people and supports more than 6.3 million customers worldwide. For more information, please visit the website at or call 866-996-7243. Follow Sage North America on Facebook at: and Twitter at: About Focus makes the world’s business expertise available to everyone. At the heart of Focus is a network of thousands of leading business and technology experts who are thought leaders, veteran practitioners and upstart innovators in hundreds of different topics and markets. You can connect with the Focus experts in three primary ways: Q&A, Research and Events. Personalize your experience by following specific topics and experts and receive the Q&A, research and events of interest to you. Focus is easy to use and freely available to anyone who wants help making better business decisions.