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Cloud ERP taking off but confusion persists around security and control topics

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Moving ERP workloads to cloud environments appears to have reached the proverbial tipping point. However, well-worn concerns around security and control continue to exercise the minds of IT and business executives.

Cloud ERP

Cloud ERP

Cloud ERP- Whether enthusiastically or begrudgingly adopted, cloud infrastructure and services are a significant part of the IT fabric at most organizations. Nevertheless, as business leaders continue to rightfully fret over data security and potentially introducing new risks, it’s reasonable to conclude that critical systems like ERP might be some of the last to move. That’s not necessarily the case.

As other diginomica writers have detailed, there is a healthy and vibrant market in cloud ERP software and as a new independent survey from the Cloud Security Alliance (CSA) details, these vendors are vying for a growing customer base as more organizations plan cloud deployments.

Cloud ERP vendors pitch cloud benefits such as rapid access to new features, financial efficiency through avoided capital spending and lower operational overhead coupled with the ease of supporting globally distributed workers and business partners. However, the CSA survey suggests that business and IT executive worry about infrastructure and data security and the complexity of complying with a hodgepodge of global data protection regulations when using third-party infrastructure. The clash between cloud convenience and fiduciary and operational realities will significantly shape how the cloud ERP market evolves and grows.

While data from surveys like that conducted by CSA are useful in helping set vendor and buyer priorities, even more important are concrete guidelines for securely operating and using cloud ERP environments. Moving critical business systems to the cloud without such security and governance measures in place is a recipe for future financial and operational disaster.

First, the numbers

The CSA survey is interesting because it doesn’t come from a non-profit standards organization, nor a vendor driving an agenda. However, its numbers jibe with other surveys. While at 60 percent most organizations still deploy ERP systems on-site, 40 percent already use SaaS ERP, another 15 percent are actively planning SaaS deployments and 34 percent are considering cloud ERP. These numbers are consistent with an Oracle 2018 ERP Trends report showing that two-thirds of respondents have or are actively planning for a cloud ERP deployment.

Note that for my purposes, cloud ERP means a SaaS product, not using cloud infrastructure, IaaS, to run a private ERP instance.

Since the survey choices weren’t mutually exclusive and we are in a transitional phase, many organizations already have a foot in both locations, on-premises and in-cloud. The report notes that of those with on-premises ERP systems, 42 percent also have a cloud (SaaS) deployment.

Conversely, of organizations primarily using SaaS ERP, two-thirds also have on-premises systems. Unfortunately, as I’ll discuss later, the data reported doesn’t indicate how CSA ascertained those “primarily focused” on SaaS or on-premises. Although the data show substantial interest in IaaS and PaaS as ERP destinations, I don’t consider these true cloud ERP products and agree with the definition in Gartner’s MQ that the product must provide “a core financial management suite as a cloud service.” That, after all, is the historical basis for most ERP deployments as understood in the enterprise arena.

To no one’s surprise, the CSA survey found that SAP and Oracle are the most commonly used ERP products, particularly among large enterprises where SAP had greater than 70 percent overall market penetration. Coming in third overall, but tops with SMBs is Microsoft Dynamics, with no other product having a meaningful share. Sadly, the report doesn’t break out usage by platform, but given that the majority of respondents primarily use on-premises systems, SAP’s leading position isn’t surprising. The survey would have been much more enlightening had it filtered for those using cloud SaaS products like Oracle ERP Cloud, Microsoft Dynamics, Oracle-Netsuite, and Workday.

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Article Credit: Diginomica

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