Thanks to the popularity of cloud based solutions, it is observed that cloud based ERP solutions are commonly offered by ERP vendors to their clients. However there is a vast difference between Cloud ERP and SaaS based ERP. In order to understand the major attributes of cloud ERP, one must get a thorough knowledge about the system to help facilitate selection of right ERP system. 

Understanding ERP system and its dimensions

ERP or Enterprise Resource Planning software is advanced software for management of different functions of a business. It facilitates organizations achieve success by enabling planning, allocation of resources, and designing project goals. ERP system brings about integration of processes by automating various components and provides valuable information regarding enterprise’s efficiency to achieve its objectives. 

One can find multiple variations of ERP systems that are being offered by merchants. Most of the ERP solutions are nothing but traditional ERP solutions that are being sold as hosted solutions. You can also find ERP systems that are offered in association with application management systems, which can be purchased under subscription licenses. This can boost outsourcing of some functionalities, in addition to simplification of management and ERP operations. 

While looking for a cloud ERP solution, one must focus on important features of cloud including dynamic scalability, elasticity, flexibility, automated upgrades and patching among others. 

We can classify Cloud ERP systems by considering their dimensions as given below.

1. Traditional or on-premise systems that include a hosted ERP system along with Application Management System. These can also be referred to as on demand or Cloud ERP. 
2. Combined Cloud and SaaS ERP systems are generally offered as multi-tenant solutions. 
3. Entirely cloud enabled ERP systems 

Key factors to consider while choosing the right ERP

There is a plethora of cloud characteristics offered by different cloud ERP systems. This can make selection of the right system an extremely confusing task because one needs to understand relevance of different characteristics of cloud in relation with individual organization’s goals. 

Since the features offered by cloud ERP vendors are strongly related to cloud hosting, one needs to have an in-depth knowledge about attributes of cloud. Suitability of different cloud ERP options such as single or multi-tenant, on-premise, or private and public networking needs to be understood in association with individual businesses. 

Choosing the right ERP system according to enterprise needs

Need to be more elastic and scalable- The two significant aspects of a customer focused online business are scalability and elasticity. Ecommerce business is governed by demand fluctuations in response to factors such as seasonality and sales promotion campaigns. In order to successfully cater to customers, one must be able to scale up or scale down in real time without impacting latency. Unpredictability of workloads underlines the need to adopt dedicated cloud resources that can be dynamically scaled up as and when needed. 

Metered billing- The method of billing that takes into account actually consumed resources by users is an ideal way to gain better control on cloud expenses. Metered consumption is closely associated with elasticity of services.

Technology sharing- Since there are multiple factors that need to be shared in an environment which is influenced by technology, users need to identify their security needs while allowing sharing of various data files and other resources. 

Providers of virtualized servers facilitate sharing of apps to enable sharing of hardware. This can lead to possibility of a crash of one of the servers and can severely impact ERP systems. 

This underlines need to understand level of sharing in terms of different apps or data since greater level of infrastructure sharing can threaten systems. Database tables can be safely shard by using encryption and by providing a logical partition between databases of different users. 

Types of licenses

Although, a mix of conventional subscription license and other application management services is a better option this can prove to be expensive in the longer run. One can also try another solution of leveraging subscription model temporarily if there is a greater requirement of elasticity. 

Evaluation of Total Cost of Operation for particular ERP software by taking into consideration all types of licenses, hardware replacements, and upgrades is essential for selection of types of licenses.

Ideally, a SaaS service provider is supposed to look after management and overall operations of the system. However as far as hosted cloud ERP is concerned, the entire gamut of services including Disaster Recovery, backup, system monitoring, and current operations fall under extra services. This calls for adoption of Application Management services to cater to adaptive, corrective, and preventive services. 

This underlines need to evaluate actual level of service as per the organizational needs. 

Physical location and processing of data

It is not easy to know the location of a data center that is being used for storing data of Cloud ERP user organization. The service providers are found to change data center locations frequently for catering to needs of load balancing. These can lead to conflicting situations in public sector enterprises. 

Ease of toggling different solutions

Users are expected to toggle different solutions or undertake data migration in the on-premise environments. You can expect your provider to assist you with several tools to support toggling. The same function can be highly complex in a cloud environment as against on-premise systems. 

Software and upgrade changes 

All types of changes in on-premise ERP environments are entirely under the control of licenses. In contrast, SaaS ERP operates in a totally opposite environment as compared with traditional on-site applications. The right of deciding the time and number changes rests entirely with the provider. Same holds true in case of deployment of new features to user’s system. 

It is better to create a broad assortment of automatic testing procedures and sets of test data to gain ability of identifying probable bugs in upcoming version. The results of tests can be leveraged for deciding on deployment or postponement of upgrade.
The above guidelines are related to recommendations by Gartner to help cloud ERP users chose the right option in accordance with requirements of the organization. 

Interesting Topic: Cloud ERP to the Resucse