Cloud-based SaaS ERP system adoption for small and medium businesses

¶ … Enterprise SaaS ERP system for workforce dynamics and better capital expenditure (CAPEX) saving and improved security: A proposal

The recent advancements in Information Technology coupled with the various inefficiencies and risks associated with the implementation of the traditional Enterprise Resource Planning (ERP) system has led several experts to suggest the need for small and medium business adoption of a cloud-based ERP system. The impact of cloud computing has been indicated by the work of Goel, Kiran and Garg (2011) to be great. This proposal presents a ubiquitous cloud-based ERP system for increased mobility and better capital expenditure saving among other potential benefits.

The problems with the traditional ERP systems

The problems with the traditional ERP systems includes; Complicated setup processes, too much room for the IT infrastructure needed, costly software, businesses cannot concentrate on their core businesses since IT maintenance would cost more and take much time and resources, lack of enterprise mobility, downtime and malfunctions as well as the need for continuous upgrades and updates. The modules in the traditional ERP system are also not able to talk to each other. At the end the traditional ERP system proves to be too costly to business enterprises.

2. Benefits of cloud-based ERP will provide to the organization

Cloud-based ERP system has several advantages over traditional ERP systems. Drumm (2011) presented the following advantages of Software as a Service (SaaS) ERP systems.

Cost cutting: SaaS ERP system is indicated to help in the reduction of operational costs as well as capital expenditure on the software licenses, hardware as well as implementation services.One also pays only for what they use. It also leads to an acceleration of the time-to-market as well as a reduction in the costs of maintaining a data center.

Scalable as well as elastic: SaaS ERP system is noted to help organizations adjust to the various changes to the levels of resource demands in a quick a fashion and with very little effort. This is because it can provide and de-provide its resources dynamically, lead to a reduction of the unused capacity as well as maximize the available resources for improved efficiency.

Efficient: The SaaS ERP system makes businesses to benefit from the shared hardware, familiar technologies as well as automated processes. This means that that system is able to effectively increase its peak-load capacity, provide access to organizational resources from almost everywhere via PC or any other internet enabled-devices. The system also leads to a reduction in the energy usage as well as the level of physical footprint.

Flexible: The SaaS ERP system can adapt to the changing business needs. This means that it can easily adapt to the ever dynamic nature of a distributed workforce.

Secure: The system is also secure due to the multi-level data security system which it employs

Business approaches

The business would therefore need to engage on a total overhaul of the traditional ERP system via a systematic business process reengineering.

Technological approach

The technological approach that will be used is cloud computing and more specifically SaaS-based ERP implementation.

3.The beneficiaries of the completed project

The implementation of the SaaS ERP system will target the entire organizations. The parts that will most likely be affected are human-resource, sale and marketing department as well as general management.

Milestone 1:

Background of the Company

Napoleon Foundry Works LLC is a metal foundry that manufactures different metal tool, motor vehicle parts (gears, nuts, bolts) as well as railway parts. The company sources its raw materials from abroad and then transports them to their main plant is Chicago. The final products are then manufactures and then sent to the distributors. The company uses has achieved a critical mass and it has come to appoint when it's necessary it to concentrate on waste-cutting activities as a better revenue-generation technique as opposed to concentrating in increasing sales.

Problem statement

Napoleon Foundry Works LLC has over the years managed to achieve good results in regard to revenue generation initiatives. The recent financial crisis that rocked the U.S. manufacturing industry as well as the increasing cost of acquiring raw materials and maintaining a healthy workforce has means that the company has to come up with a cost cutting strategy that would allow it to maintain a competitive advantage and profitability in its core business. Since it is quite clear that the company has already acquired a critical mass, it no longer places emphasis on increasing its sales. The increasing cost of doing business therefore means that the company must acquire the latest technology in its endeavor to cut-costs and reduce wastages. Enterprise Resource Planning (ERP) is the technology and technique that can be employed by the company in order to make profits and stay afloat in the harsh and turbulent manufacturing environment. One is for sure; it would be easier for the company to cut cost by 10% than to strive to increase sales by 10%.The other challenge that faces Napoleon Foundry Works LLC is attributed to its rapid growth over the years. This problem is caused by the general lack of good organization which is indicated to lead to several expensive errors as well as extremely poor levels of customer satisfaction.

The Solution

The solution to this problem is the use of an agnostic and yet ubiquitous cloud-based ERP system that would lead to increased mobility and better capital expenditure saving among other potential benefits.

What is an ERP system?

An ERP system in its basic definition is noted by Al-Fawaz et al. (2008) as an enterprise-wide information system which effectively integrates as well as controls all of the business processes within a given organization. Nah and Lau (2001) on the other hand noted that an Enterprise Resource Planning (ERP) system is a packed business software system that effectively enables a company to efficiently and effectively manage is use of resources such as human resource, material and finance through the provision of a total and yet integrated solution for the given firm's information-processing needs. The software effectively facilitates the integration of every aspect of functional information flow across the entire business enterprise into a single package that is well connected and having a common database. The ERP system therefore allows for the easy and yet immediate access to all sorts of information on customer, product, inventory as well as previous history as noted by Shehab et al. (2004). Initially an ERP covered just the routine transactions before expanding to cover external clients as well as suppliers as noted by Turban et al., (2006).The ERP to be implemented by Napoleon Foundry Works LLC must have both the capability and functionality to effectively facilitate the free flow of information across all organizational processes both internally and externally. The ERP systems are also noted to help in connecting customers, suppliers as well as distributors externally via e-business platform. For the project to succeed; it must be supported by Napoleon Foundry Works LLC's top management as top management support is indicated by Zhang et al. (2002) to be a prerequisite for the success of ERP adoption and implementation.

Benefits of coming with a solution to the problem.

An implementation of an ERP system allows for the standardization of business processes by ensuring that the information that flows through the organization is structured as well as useful. This is especially useful since the company has almost 10 different departments. The employees are also able access information across the organization in order to locate, store as well as share the information sourced from a centralized repository. This leads to more efficient processing as well as workflow with very few errors. The ERP can also help the management and the executive in acquiring a clear insight into the exact state of a given organization.

The essential characteristic of cloud computing

On-demand self-service: This characteristic allows the consumers of cloud computing services to provision the computing capabilities that they need like the server time as well as network storage on an on-demand basis automatically and without any form of human interaction with each and every service from the service provider.

Broad network access: This characteristic allows the availability of capabilities that are availed over the network as well as accessed via the standard mechanisms that are needed in the promotion of heterogeneous thick and thin clients such as mobile phones, laptops, tablets as well as workstations.

Resource pooling: This characteristic allows for the pooling of the service provider's resources in order to serve several/multiple clients via a multi-tenant model. This allows the dynamic assignment and reassignment of physical as well as virtual resources according to the client demands.

There is also a high sense of location independence due to the fact that the client has no level of control or even knowledge over the absolute location of the provided resources. They may however specify the location at a higher abstraction level such as country wise, according to sate or datacenter. The examples of computing resources are storage, memory, processing as well as network bandwidth.

Rapid elasticity: This characteristic allows for the elastic provisioning and releasing of the capabilities to scale either rapidly or inwardly in order to commensurate with the level of demand. To the client, the capabilities that are available for provisioning usually appear to be somehow unlimited and can therefore be appropriated in any given quantity and at any time.

Measured service: This characteristic is what allows the cloud computer systems to automatically control as well as optimize their level of resource usage by effectively leveraging a certain metering capability at certain level of abstraction which is appropriate to the specific type of service such as processing, storage, active use accounts as well as bandwidth. The level of resource usage can easily be monitored, reported as well as controlled. This effectively allows for the provision of accountability for the consumer as well as the provider of the cloud computing services.

The service models

The service model that will be used in this application is Software as a Service (SaaS).

The Software as a Service (SaaS) model's capability allows for the consumer to use various applications that are provided by the provider and running on the cloud infrastructure. The applications such as the ERP application is accessible from all sorts of client devices via a very thin client interface like a web browser or via a program interface. It is worth noting that the consumer has no control of the underlying cloud infrastructure such as the network, operating systems, servers, storage as well as the individual application's capabilities.

Milestone 3

Internet backbone

The internet will be used as an information superhighway for the rapid transmission of information within the cloud infrastructure.

SSL security

This will be used to encrypt the information that will be transmitted within the cloud infrastructure in order to prevent it from interception / eavesdropping.

Value of the chosen approach

The value of the chosen approach is based on its ability to reduce capital expenditure while allowing for mobility and access of the ERP system irrespective of the location and time.

The changes in business processes

The adoption of the cloud-based SaaS ERP system would cause a general reduction in the time take to allocate resources with possible consequences in job losses due to automation. The sales, human resource as well as accounting functions will be most affected.

Technology as well as business practices that will be required in addition to the ones described above

Technology as well as business practices that will be required in addition to the ones described above

Distributed networking

Distributed networking comprises of a distributed computing network which comprises of computer programming as well as data to be processes that are spread out over more than a single computer over a secured network.

Wireless technologies via VPN configurations

Wireless technologies include WiMax, Wi-fi, WLAN and the use of wireless routers, wireless hotspots, nanostations, voice and networking gateways, VL devices and base stations. The Virtual Private Network (VPN) is to be used for a secure and reliable tunneling of the ERP data/information.

Information system auditing processes

Information auditing system or department must be set up in order to evaluate the IT techniques that are employed in the project for security and effectiveness (Hall,2004)

Conclusion and recommendation

The SaaS-based ERP is an efficient and reliable and cost-effective technique of streamlining the organizational processes and achieving a remarkable level of cost-reduction within the organization. Napoleon Foundry Works LLC should therefore strive to implement the system as early as possible for them to begin realizing its advantages.

High level implementation plan

The implementation of the SaaS ERP system will target the entire organizations. The parts that will most likely be affected are human-resource, sale and marketing department as well as general management. The implementation will involve internal and external teams who will work together in ensuring that the SaaS ERP implementation and adoption is a huge success.

Summary of the project

The project involves the design and implementation of an agnostic and yet ubiquitous cloud-based ERP system that would lead to increased mobility and better capital expenditure saving among other potential benefits. The system is to have a standard encryption based on SSL and must be regularly audited for any vulnerability.