Outsourcing and SaaS based models are the trends which globally organizations are valuing and implementing in to their organizational process management in order to ensure that they take advantage of potential benefits from such effective implementation. Development of cloud based ERP solutions has become an emerging trend that has been providing phenomenal results to the organizations which are implementing such solutions. In this research paper the focus is upon understanding the outlook of outsourcing, ERP systems, SaaS models and the cloud based ERP systems that could transform the business dynamics for the organizations. In addition to review of key attributes of cloud based ERPs also two successful implementations of such solutions in different companies has been analyzed and it can be stated that, if adequate care is exercised in choosing right kind of solution and reliable service providers, the organizations can reap marvelous benefits of implementing cloud based ERP solutions.
Globally businesses have become more competitive and with the advent development of technological trends, every organization is aiming at technological integration to their business functions in terms of leveraging the potential benefits. Also in the other dimension, the paradigm shift that is taking place in terms of managing the businesses, by focusing on the core business functions and values rather than managing every part of the business activity has led to new era of outsourced environment. (Carton, Frederic Adam, & David Sammon, 2008)
Globally, Outsourcing has become a trend, and right from big corporate to the small and medium enterprises, everyone is finding an effective solution in set of outsourcing methods. Also this has created a panorama of few countries being hot destinations for outsourcing activities as, the resource for managing such activities is much stronger and also the cost reduction in handling such services. (Deltek)
For instance, Philippines and India, has become a favorable destination for many multinational companies to outsource the partial job functions like the customer care departments, pre-sale support, or handling the back end services to these countries and are able to save huge proportion of costs that are incurred in their own location. (Bhasin, 2013)
All this has led to significant developments for the organizations, and globally many companies are outsourcing an imperative solution for multiple benefits like cost reduction, competent services and the resources can focus on core jobs and improve the value proposition for the customers. With the revolutionary technological advancements, even in the case of technological systems, the outsourcing model has picked up. The kind of revolution that the technological outsourcing has created changed the dynamics for the organizations. (Kelly, 2013)
Software as a Service (SaaS), Infrastructure as a Service (IaaS), and PaaS (Platform as a Service) has intensified the scenario of outsourcing. For many organizations right from startups to bigger organizations, this kind of technological outsourcing has become a great support in terms of technology, medium for business functions and significant cost savings. Even in the case of Enterprise Systems like ERP’s the SaaS based model has come in to foray, and this kind of services are offering potential benefits to the organizations. Despite of having significant benefits, there are also some kinds of issues that are considered to be key factors for the organization. The figure below indicates the outlook of ERP solutions that are being adapted on the cloud computing models that are benefiting the organizations. (Bhasin, 2013)
Figure 1 Cloud Based ERP Models
In this research report the focus and emphasis is upon understanding the outlook of outsourcing and how the SaaS has become an effective solution for organizations in terms of managing their businesses effectively. A detailed analysis of the outsourcing and the way SaaS based ERP systems can support the organization is discussed in detail in this research report.
The Enterprise Systems is one of the key solutions that the organizations depend upon for carrying out their business functions. Globally, many organizations are depending upon the enterprise resource planning systems to ensure that right kind of systems are in place to carry out the business operations smoothly. However, one of the critical challenges that are facing the implementation of the ERP systems is about the cost of development and deployment and the other is about the scalability of the usage. (Verbano & Karen Venturini, 2013)
Over a period of time, there were many service providers who have ventured in to the service of providing customized solutions, and today, there are tailor made solutions for almost every industry vertical. But the crux is about the cost of deploying such a solution for the organization and many organizations are encountering challenges in terms of budgets for using enterprise solutions. (Ojala, Inka Vilpola, & Ilkka Kouri, 2006)
With emergence of outsourcing models like SaaS, the service providers started offering enterprise systems too on the pay for usage basis and this has given potential benefits for small organizations too, to consider implementing the enterprise application systems. (Kelly, 2013)
There are various reasons why the organizations opt for outsourcing and there are potential benefits which the organizations envisage in terms of using outsourcing methods. Certainly there are some challenges too, which are encountered by the organizations, but in overall it has significant advantages on the organizations in terms of managing its core activities and other business functions. (deltek.com, 2012)
For instance, In the case of an organization which is in to manufacturing of a product or a service, the number of direct and indirect business functions can be classified. The functions like the production, supply chain, distribution and the retail management could be direct attributes for the business, whereas the other important functions like the digital marketing, back-end services, customer care hotline and such services despite of its importance to business, still doesn’t come in to main line functions. (Poba‐Nzaou & Louis Raymond, 2008)
In such scenarios, if the organizations outsource such services to third parties, organization can focus more on the core activities and ensure that there is overall development and process management. The other important reason why the organizations do prefer the outsourcing model is related to the core competency issues. There are many organizations, where in the multiple functions they carry, few of the specific functions are outsourced to third parties. For instance in the case of HR pay roll systems, for an organization, rather than having an full-fledge human resource department, organizations can focus on outsourcing it to good HR agencies and this will have significant savings for the organization in terms of costs and also time spent on these business functions. (Carton, Frederic Adam, & David Sammon, 2008)
Also there are certain challenges that are encountered by the organizations. The key issues are about choosing the right kind of outsourcing service partner, who has the competence to deliver the service, and the other major factor is about the reliability. Unless the service providers are reliable, the outsourcing of business functions might prove challenging for the organizations. (Bhasin, 2013)
The other major reason why the organizations shall opt for outsourcing model is that, by enabling the outsourcing model, the organization can have limited number of resources on their pay-rolls and it helps in reducing the infrastructure requirements and the overall administration issues too. Hence the organizations focus upon ensuring right kind of outsourcing partners to whom the services can be outsourced by the organizations. (Bhasin, 2013)
Even in the case of technological factors like the implementation of enterprise systems, organizations are eying on the outsourcing model and one of the key reasons why the organizations are using such models is, about scalability issues and the cost management. For organizations, it becomes much easier to use the enterprise systems at significantly lower costs, and they pay to the service providers only depending on the usage. However, in such models, the service provider owns the product and only provides access to the enterprise system as per the requirements. And also the other key advantage is that depending on the requirement of the organization, the number of users can be increased or decreased and accordingly the charges are paid to the service provider. Keeping in view such benefits, the organizations prefer to choose good outsourcing partners who can offer appropriate solutions to the organization. (Kelly, 2013)
SaaS model has become prominent and globally organizations are eying at the SaaS models for their project requirements. Information and Communication technologies has become an integral part of organizational business functioning and has predominant role in the functioning of many organizations. However, one of the major challenges for the organizations is about investing highly on the technical infrastructure and the cost of development of the systems and applications that are required by the organizations. (Kotiranta, 2012)
When we review the technical term of SaaS, “Gartner defines software as a service (SaaS) as software that is owned, delivered and managed remotely by one or more providers. The provider delivers software based on one set of common code and data definitions that is consumed in a one-to-many model by all contracted customers at any time on a pay-for-use basis or as a subscription based on use metrics” (Gartner, 2013)
The cost of project development and the application systems maintenance has significant cost impacts on the company, and also the other key challenge is the time consuming process for development of application along with the surge in the resource utilization and infrastructure management. Whereas in the case of SaaS, the third party service providers develop the application and provide user access to the organizations, and the companies pay to the service providers only for the usage levels. (Purohit, M.P. Jaiswal, & Surabhi Pandey, 2012)
There could be various terms and conditions, that both the service providers and the users might agree upon, but in holistic view, this benefits all the stakeholders of the business model. The organizations need not invest highly on infrastructure for development and maintenance. For instance, in the case of an organization, if they intend to develop an ERP application for their business process, the kind of cost of development, and the cost on infrastructure like the bandwidth, data servers and the resource costs for data server’s maintenance and the development costs might impact the budgets of the organization. Whereas in the case of SaaS model, they need to choose the right service providers, and the customized solution is ready for deployment and depending on the usage of the organization, the costs are paid by the organization to the service providers. (Purohit, M.P. Jaiswal, & Surabhi Pandey, 2012)
Hence it can be stated that for the organizations, to ensure that right kind of solutions are implemented without much of capital investments, and the hassles of scalability, SaaS model could be a potential solution which the organizations can rely upon for having smooth business process management. In overall, it can be stated that the leverage of flexibility, easy implementation, cost benefits and potential challenges are the key reasons why the organizations opt for SaaS model for their application systems requirements. (Ojala, Inka Vilpola, & Ilkka Kouri, 2006)
In the case of outsourcing models, both the service providers and the clients have equal responsibility in terms of data protection, smooth functioning of the systems and access controls. However, unless the boundaries are clearly defined and there is appropriate SLA’s in place, it might be challenging for the organizations to envisage success in terms of having quality service to the organization. (Gartner, 2013)
The research studies reflect the fact that in most of the scenarios, the responsibilities of the service providers and the clients are not being clear, and are leading to more complex scenarios when there are any alarming issues. The key issues which are pertinent to the services are about the uptime of the systems and servers, data security, reliability and the scalability. (Carton, Frederic Adam, & David Sammon, 2008)
The following are the key factors that are the responsibilities of the service providers.
One of the predominant challenges for the organizations, when they outsource their business is about the data security. Unless the organizations have a robust security for the data that is being managed in the enterprise systems it might be fatal for the organizations. The service providers have the preliminary responsibility of securing the data servers and monitoring on the network systems in order to ensure that the data security is not being compromised. (Kelly, 2013)
Organizations have many functions and processes that are dependent on the data transactions that are carried out in terms of ERP systems. And if the service provider is not working on deployment of robust systems, service back-ups, there could be so many complexities that the organizations might encounter and it could be challenging for the organizations if there is any down time in the systems or even in terms of frequent downtimes. This might halt the entire business process for the organizations and could have severe impacts on the business process. (Ojala, Inka Vilpola, & Ilkka Kouri, 2006)
For instance in the case of ecommerce organizations, if the entire back end processes like orders management, deliveries and the dispatch schedules are tracked thru ERP that has been outsourced on SaaS platform, and if they encounter system uptime issues, then the entire schedules might get to halt and might become challenging for the organization to envisage smooth process of business functions.
One of the critical challenges that the organizations faces is about the data compatibility and the solutions that the service providers offer should have adequate support to the customers in terms of data compatibility and hassle free data migration , if the clients switch from one solution to the other or from one platform of service to the other. One of the critical challenges that are envisaged by the organizations is about data compatibility issues when they migrate to the other platforms or applications. (Purohit, M.P. Jaiswal, & Surabhi Pandey, 2012)
Today Cloud computing has become a revolutionary trend, and has transformed the way the organizations can run their business functions. In addition to the dynamics of cloud computing, when the ERP solutions are offered on cloud computing platform, it has created a paradigm shift in the focus of the organizations towards optimum utilization of the technological advancements for better organizational process. (Vimalkumar, A. Rajamani, & P.Jayasubramanian , 2012)
The channel of ERP solutions on the cloud computing medium that is offered on SaaS is very effective to organizations that has their business operations across multiple locations, and has the need to connect the multiple departments, functions and the third party services like the customer care, HR administration, and distribution or delivery channels. (Vimalkumar, A. Rajamani, & P.Jayasubramanian , 2012)
Figure 2 Cloud Based ERP outlook
The figure above represents the outlook of Cloud based ERP solutions the companies can adapt. For instance in the case of manufacturing firms, in which the components are being developed in multiple locations globally and are brought to one location for assembling or in the case of ecommerce firms like amazon or flipkart, having an robust ERP solutions on cloud computing platform could provide significant impact on their business process and can support the overall development for the organizational process management. (Kelly, 2013)
The key benefit of having ERP systems on the cloud is about quality of service. The key advantage of having the cloud based solution is uninterrupted access to the system from any location, anywhere from varied computing devices and interfaces. The key benefit of cloud based ERP solution is about leveraging the potential communication systems, where the scores of information that is transacted in the ERP system is organized and are available to the users on real-time basis without interruptions or time consuming process. (Kelly, 2013)
User controls and Interface
Depending on the SLA’s and the user requirements, it is the responsibility of the service provider to ensure that right kind of user controls and any customized interface that has been agreed upon from the existing solution has to be duly provided by the service provider without any interruption. (Poba‐Nzaou & Louis Raymond, 2008)
Scope for Scalability and Reduction
Based on the SLA’s and the understanding on the requirements of the client, the service providers should facilitate the quantum of scalability like the data storage volume, increasing or decreasing the user licenses and providing hassle free functional environment is very essential for the success of organization. (Carton, Frederic Adam, & David Sammon, 2008)
The above are few of the key responsibilities of the service providers when they work towards delivering outsourcing solutions to the clients on SaaS models. However, one of the key challenges for the organization is to ensure that choosing right kind of service providers who can be relied upon for quality of service that is being delivered.
The other major support is about providing data access to the systems, from any location and systems. Needless to rely upon using it only from the organizational network systems, it could be facilitated in such a way, that the team can access the systems from varied locations using any suitable access systems. (Bhasin, 2013)
For instance in the banking scenario, the users can access their accounts from the net banking systems, ATM’s, Self-help Kiosks, Mobile Apps, or Tele banking etc., and it needs robust service environment where the banking systems can be accessed by the organizations in different ways. (Verbano & Karen Venturini, 2013)
The key risks that are associated with the system of having ERP in cloud are about the data security and the reliability of the service providers. Unless right kinds of service providers are chosen to provide quality support, it could be very complex and challenging scenario for the organizations to envisage success. The other few risks that could be attributed to implementation issues with ERP can be stated as
One of the Key risks that are faced by the organization is about making few changes to the existing ERP environment. There could be some risks in terms of switching the system from one scenario to the other environment without interrupting the ongoing processes and the scope of the existing systems and these factors has to be duly taken in to consideration while working on implementing the new system. (Vimalkumar, A. Rajamani, & P.Jayasubramanian , 2012)
There are always potential issues of change management which are encountered by the organizations when they intend for any process change or the systems change. The key stakeholders of the organization and also the users of the system should have sound understanding of the need for ERP to be cloud based implementation and the benefits of the same else, there could be some challenges of resistance to change. (Ojala, Inka Vilpola, & Ilkka Kouri, 2006)
Choosing right solution and having stricter deadlines for the implementation of the solution is also very essential and if the organization does not ensure that right timelines are adapted, it might impact the entire business process and the budget that has been estimated for the process. (Bhasin, 2013)
Mantacore is Sweden based organization that is in to developing solutions for Insurance sector and has been successfully deploying solutions for its customers in Sweden market, and once the company has developed a new platform in the year 2008, it has been successfully expanding is operations to global markets. In the recent past after the implementation of new solution, Mantacore was successful in acquiring new customers from the global markets. (Deltek)
Deltek, the ERP system from Ramco Systems that is offered on cloud environment is the effective solution that is used by Mantacore for developing their business solution, which has fetched them phenomenal results. Earlier the company used to rely upon stand-alone systems which had many constraints in terms of expanding their business operations. Also there were many challenges of business systems integration which made the things much complex in terms of managing the projects.
When the organization realized the importance of having robust solution based on the cloud computing, Deltek has been an effective solution that has the well-built systems that enable the company to work on maintenance of data, version updates, security monitoring, data back-ups and hardware upgrades. And finally, the solution is secure because infrastructure is wholly provided and supported by Amazon Web Services. (Deltek)
In overall, it can be stated that careful evaluation of the possibilities, and the choice of solutions available, Mantacore has been successful in choosing the right kind of service provider who could provide them the solution that is matching the requirements of the organization and it has eventually paid for the organization in terms of successful expansion of business in to various locations and gaining momentum to their business operations successfully. (Deltek)
The report depicts the fact that for “ Mantacore, moving to Deltek First meant having it all: its data in one place for higher project visibility, the real-time data for more informed decision-making, and tighter security to keep its data safe. “With our company’s fast growth and entry into international markets, we needed a cloud-based ERP solution that could truly and easily manage our business,” Svärdlång concludes. “Without a doubt, we would recommend Deltek First to other firms; primarily due to the best-practice processes the solution has right off the shelf!” (Deltek)
The above inputs from the reports only emphasize the fact that how effective the ERP solutions on cloud platform could be for an organization and also details the need for choosing right kind of solutions that could be resourceful for the organization.
Brunsing & Associates is an engineering firm which is specialized in to services of geotechnical engineering and environmental consulting firm, which is offering services to reputed clients across the world. The organization has been effectively using the ERP product of Deltek, to support them in their project and financial management. The key challenge for the organization was that the team is very small, and each resource has multiple roles to play, had significant challenges of managing the IT environment too. (deltek.com, 2012)
There were significant issues of managing the IT infrastructure by one of the key team members of the organization have become imperative. When the resource is out for other job, and the data servers are not accessible from remote access, the potential challenges have creep up for the organization. When the organization learnt of the cloud version the existing system that is used by the organization, they have implemented the solution which has provided them the leverage of accessibility from anywhere, and highly secured and processing real-time data to the users and has not much of complications and is being similar to the existing systems that are used internally in the organization. The key advantage of such an task is that the entire solution is managed for the organization by Deltek, and Client need not invest in hardware and software updates, data backs ups or the critical challenges of security monitoring of the system. (deltek.com, 2012)
This have eventually helped the organization in focusing on their business process without much of issues in terms of handling their data management systems. In overall it has helped the organization develop and ramp up its business operations due to the robust application service being in place to support in their project and financial managements.
The management of the organization describes that “Even while we have achieved new state-of-the art capabilities, we have reduced our monthly costs and that makes Deltek First Vision Essentials a clear choice”. This affirms the fact that when the organization has right kind of solutions in place that could support them to access from anywhere and also being secured, then it can support the organization in running its operations smoothly and ensure secured data and process management. (deltek.com, 2012)
Technological Revolutions has been transforming the way the business functions are performed. Enterprise Solutions has turned out to be a proven solution for the organizations to have robust process management systems and effective business process management. In addition to it, when the cloud computing has come up, it has facilitated the organizations to have seamless connectivity to the data and network systems from anywhere anytime and is secured and reliable solution. (Carton, Frederic Adam, & David Sammon, 2008)Over a period of time, when the service providers started providing ERP solutions on cloud platform, it has created a paradigm shift in the way the businesses can have seamless connectivity to the organizational network and the speed of functioning. The case studies that have been considered for review in this research report effectively depicts the benefits that the organizations could envisage by switching in to cloud based ERP solutions. Despite the fact that there could be some sort of risks and challenges of implementing ERP on cloud, if proactive measures are taken up, the deployment of cloud based ERP solutions could be a great support for organizations to improve their business process performance. (Purohit, M.P. Jaiswal, & Surabhi Pandey, 2012)
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