Cloud Based ERP Still a Far reach for Retailers
Since their inception, the vast majority of ERP systems have been implemented on premise. Traditional ERP systems provide various kinds of benefits such as mature system functionality and abilities of greater customization and integration. In the past decade other software applications however have seen a shift to cloud computing that has become one of the fastest growing segments of IT industry.
Benefits of Traditional ERP over cloud ERP
Customization and Integration Limitations: Many cloud-based ERP systems have noticeable constraints on interoperability with home-grown applications and integration into existing application portfolios and IT infrastructures. Unlike on-premise and hosted ERP, cloud-based ERP may not allow extensive customization and complex integration with some third-party services and systems.
Strategic risks: Outsource such a business critical system as ERP, companies usually bear increased strategic risk of high dependency on the service provider. Security and confidentiality are reported to be at risk among the top concerns about cloud-based ERP.
Performance Risk: Leaving out pure integration issues, performance risks of cloud-based ERP are essentially related to threatened speed and reliability of network, outage risks and limitations on data transfer.
Compliance Risks: Cloud-based applications often face additional difficulties in complying with data, energy and environ-mental standards as these regulations are generally designed without regard to peculiarities of cloud computing
Functionality Limitations: Cloud ERP is based on not that mature systems as traditional ERP and may not be functionally rich enough to “satisfy the back -office needs of organizations in every type of industry”
Subscription Expenses: An explicit part of cloud-based ERP additional costs is widely used periodic subscription fees that do not depreciate over time, in contrast to capital investments in traditional ERP software
Cloud-based ERP generally might be considered as more suitable option for SMEs than for large businesses but additional quantitative research evidence based on recent cases could also be helpful in getting further insight into the progressive cloud world.