By Arvind Agarwalla, an EO Singapore member and founder/CEO of
The number of changes technology has brought in our professional and personal lives makes it nigh impossible to keep track of them. Luckily for the Small and Medium Enterprise (SME) owners, some of these changes now make it possible for them to compete with large organizations.
A large part of this change can be attributed to Enterprise Resource Planning (ERP) Software. A little over ten years ago, ERP Software was a domain only for multi-nationals or large companies with deep pockets and long term IT investment plans. Today, this technology is within the means of SMEs, enabling a significant improvement in efficiency, productivity, service quality and reduced costs. As a result, more and more SMEs are embracing the positive impact of implementing ERP solutions to gear up for the brave new world, while pumping up the all important bottom line.
Of course, the implementation of any new solution can be tricky and no technology offers miracles. A company, irrespective of its size, needs to have an ERP strategy in place right at the beginning of the journey. This should keep in mind the requirements of the company and the kind of tools necessary to provide the desired improvement. Having a strategy in place makes implementation decidedly easier and any good ERP strategy starts with the selection of the ERP system itself.
The choice lies between a traditional on-site system and a Software-as-a-Service (SaaS) solution. In the first instance, the company buys the software license and installs it on a company-owned server. In a SaaS situation, the service provider hosts the ERP Software on it’s own servers and the company accesses it via the internet always and pays per use.
They both have their pros and cons. When the company buys the license and installs on it own servers, security is strong because firewalls and settings are controlled by one’s own IT department. Therefore, these firewalls can be as high and unreachable as possible. Data entry is also faster as the users access the software internally, over the wire.
SaaS solutions provide the latest information, with data being updated real-time. The drawback of SaaS solutions, however, is that data is much less secure as the service provider determines the level of security. There’s been sufficient debate about the security risk public cloud computing poses1 and public servers are known for leaving the majority of security issues to the user (informing the user of this in the finer print). For SaaS solutions with a higher level of security, businesses could always set up a private cloud, but in reality the cost of setting up a third-party private server is prohibitive for most SMEs.
There is, however, a third option, one that is a natural evolution from the first two – a hybrid solution. This is a combination of cloud and on-site applications, thus allowing SMEs to get the best of both worlds. A company adopting a hybrid solution does not need to invest on hardware since the application will be based on the existing on-site server. This means that security is at the discretion of the company, with firewalls and access being as restrictive or as inclusive as one likes. Furthermore, as long as the ERP solution is accessible via the internet, users will be able to log on and make changes wherever they maybe.
The key benefit of a hybrid solution for SMEs is cost. That alone becomes the key focus area for SMEs looking at implementing ERP. While SaaS solutions lack security or are too costly, on-site solutions, on the other hand, lack the real-time element. Hybrid solutions provide secure data which can be made easily accessible.
There is no doubt that ERP solutions can do wonders for an organization, but one needs to think through the ERP strategy – as the answers can often been found in simple solutions that one doesn’t even know existed.