Fact or Fiction: Hybrid ERP Deployments

With cloud computing and cloud ERP gaining additional attention in the marketplace, ERP vendors, resellers, and solution providers are quickly positioning their products and services as “cloud-enabled”.  However, in my humble opinion, to simply put ERP software on a hosted server and provide subscription-based pricing does not a cloud solution make.    A key value proposition for cloud ERP is the ability to support a truly hybrid ERP deployment.  In the next section we will discuss what is an ERP hybrid deployment including the opportunities and challenges this type of deployment presents.

What is an ERP Hybrid Deployment

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.

ERP Deployment Types

ERP Deployment Types

An ERP solution that can support a hybrid deployment must be architected in a manner to support multi-platform environments simultaneously.  In general, following are the opportunities that a hybrid ERP deployment can provide to customers:

Advantages for Hybrid ERP Deployments

Advantages of Hybrid ERP Deployment

Opportunity Description
Rapid Implementation A hybrid ERP model may give you the flexibility to quickly implement a new ERP module or feature set.  Even if you decide to deploy on-premise having a hosted site for prototyping and development can give you the opportunity to start design/configuration activities faster.
Shorten Maintenance Cycles As an IT Director I am faced with the reality that IT maintenance cycles are being reduced given increase demand for ERP availability by business users.  Given this fact, I am looking a cost-effective, on-demand IT infrastructure resources (ex. Infrastructure As A Service) to help shorten the ERP maintenance window.
Load Balancing As part of any ERP solution you will have both real-time and batch processing.  There are different performance requirements for real-time versus batch processing. A hybrid model may provide you the opportunity to have unique performance tuning configurations better suited for specific processes.
Greater Vendor Independence I’m not a huge fan of the “single point of accountability” value proposition because I have rarely seen it work.  If an ERP solution can truly support a hybrid ERP deployment then we all should have greater flexibility in choosing the right partners to be a part of our IT value chain to business users.

Challenges with ERP Hybrid Deployments

As the ERP industry moves to a true ERP hybrid model there are several challenges that must be addressed as we take to next evolutionary leap.

Challenges to address as we move to hybrid ERP

Challenges with moving to Hybrid ERP Deployments

Challenge Description
Coordinating Support Activities Coordinating software development and maintenance activities across the ERP platform.  Since ERP support business processes and business processes will cover multiple functional areas (modules), coordination and prioritization of ERP support activities will be critical to reliability.
Integration & Orchestration Integration is a given but business process orchestration will be extremely important to support a seamless business solution execution.
Seamless UI Simply stated, the end-user should not be able to see a notable difference in appearance and performance across the deployment models.
Master Data Management As long as an ERP hybrid deployment requires multiple database instances then Master Data Management will be a key enabler to keep instances in sync.

As one looks across the ERP industry we are observing some real signs of movement with hybrid ERP deployments.  However, at this point I personally would not conclude that the ERP industry has reached the final destination.  In the next section I will list a  few of the core characteristics for assessing an ERP vendor’s ability to support hybrid deployments.

Assessing Vendor Solutions to support ERP Hybrid Deployments

A hybrid deployment approach enable customers to have a more scalable ERP solution versus limiting their sizing options to a single deployment model. Four major factors determine how viable a vendor’s hybrid ERP deployment offerings are:

  • 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
  • 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?
  • 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?
  • Portability: Customers have the ability to move data and customizations from one deployment model to another as needed.

Summary

My view of a true ERP hybrid solution is a software solution that enables the customer the flexibility to deploy both modules and major features across multiple platforms seamlessly.

Hybrid ERP Deployment

Hybrid ERP Deployment Model

A hybrid ERP deployment is a great way to explore the cloud in an iterative, risk-adverse approach.  Hybrid ERP may provide the opportunity for greater innovation, rapid deployment, or isolating batch intensive processes from self-service applications.  The greatest value of a hybrid ERP solution is the additional flexibility it can provide customers to support business processes.  Let’s hope that the wait is not too long.

 

SI Partner for PeopleSoft ERP

Blog Sponsor – Cardinal Point Solutions, LLC.

Cloud ERP – New Dog, Same Fleas

I am very excited about Cloud ERP and the potential opportunities for customers, however, I like to speak to the minority opinion for a balanced discussion.  Just as ERP was deemed the panacea for all business automation pains, Cloud ERP is positioned as a revolutionary approach to deploying an ERP solution.  Cloud ERP provides a solution that is flexible, adaptable, scalable, efficient, and affordable.  Customers can enjoy painless upgrades, rapid deployment, and easy customization along with availability “anywhere at anytime”!  Practically speaking, Cloud ERP is just another deployment option available to customers.  The activities required for an “on premise” ERP implementation are also required for Cloud ERP.  The scope and responsibility for the implementation activities may be different but most assuredly they are still required.  Let’s further discuss the key impacts that a Cloud ERP deployment will have on the implementation.  For our discussion, we will refer to the following standard ERP life cycle.

 

ERP Phases

ERP Life Cycles

 ERP Life Cycle: Implementation

A repeated value proposition for Cloud ERP is a quicker implementation and deployment.  However, it is important to note that technology has a limited impact on accelerating implementations.  The deployment approach for cloud will naturally encourage a fixed, limited implementation scope – however, this is not unique to Cloud ERP.    I agree that from a technology perspective Cloud ERP offers a faster installation timeframe.  Nevertheless, it is important to note that Cloud ERP is only one component of a business solution.  There are still multiple disciples required for a Cloud ERP implementation – especially organizational change management.  Cloud ERP can provide very robust functionality but if the organization is not prepared to properly use the software then the value of Cloud ERP will quickly dissipate.  Also, note that data conversion and the quality of the data converted will have a significant impact on both the speed and value cloud ERP can provide.  Third, integration will be a greater challenge in a Cloud ERP model versus an on-premise ERP model – if only because the Cloud ERP will be outside the company’s internal network.   Now, let’s consider the impacts Cloud ERP will have on the maintenance life cycle.

 ERP Life Cycle: Maintenance

 There are two areas of consideration for the Cloud ERP deployment model: customizations and integrations.  These two areas are impacted based upon the cloud model.  Following is a summary of the most common cloud models.

 

Key ERP Cloud Offerings

ERP Cloud Models

The key consideration is whether the customer has a dedicated software instance or a shared software instance.  In general, a customer will have greater flexibility with integrations and customizations if the customer has a dedicated instance.  If multiple customers are on single software then the Cloud ERP provider may limit the level of integrations and customizations because the software changes may have an adverse impact on all the customers on a shared instance. 

ERP Life Cycle: Upgrade

ERP upgrades are necessary for software maintenance compliance and generating opportunities for greater return on investment.   The responsibilities may shift for performing the technical upgrade, however the customer must provide resources for providing input to the delta fit/gap process, conducting organization change, testing, and validation.  Another key consideration is if the customer has any flexibility on the frequency and timing of ERP upgrades.   Lack of flexibility may result in the customer managing to the Cloud ERP vendor’s timetable. 

ERP Life Cycle: Decommission

In general, the typical ERP life span is 10 years.  As most customers are “going concerns” focused on growing and becoming more successful, it is important to consider the options available to move across delivery models.  Consider the following illustration:

 

ERP Deployment Options

ERP Deployment Model

There is a relationship between customer size, integration requirements, customizations and ERP deployment models.  As a customer matures and grows there will be a need for greater integration and customizations to address unique competitive requirements.  Customers must balance cost and flexibility in selecting the right ERP deployment model.

Summary

Cloud ERP is providing additional opportunities for customers to leverage ERP as a viable option to support business operations – especially for smaller businesses with limited resources that require out-of-the-box functionality.  However, it is important to remember that Cloud ERP is not a short cut to success.  Responsibilities may change but the same activities are required to ensure a successful solution.  As with every deployment model, there are advantages and disadvantages to consider.  It is in the customer’s best interest to consider all phases of the ERP life cycle when selecting the appropriate deployment model. 

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