South African enterprises are moving to the cloud. According to George Etheredge, ICT research analyst at Frost & Sullivan, the local cloud market is worth $140 million and growing. South Africa is way ahead of other African markets, with the necessary data centre resources and connectivity to have rapid adoption for cloud computing in the corporate sector.
ERP cloud offerings are growing in demand because they enable companies to reduce upfront development costs, scale systems up and down easily and speed up deployment times. Unlike traditional ERP systems, which are installed on dedicated servers located on a company’s premises, cloud-based ERP systems are installed on third-party servers and software and accessed via the Internet. While businesses can run their ERP in public Software-as-a-Service (SaaS) models or as private self-managed ERP cloud installations, we are seeing an increasing trend towards a hybrid cloud computing model where core ERP processes are being deployed in the cloud while some best-of-breed solutions are still hosted on-premise in the company data centre.
Public or Private?
Both public and private clouds provide scalability, instant provisioning, virtualized resources and an ability to expand the server base quickly, but each type of configuration has its own advantages. Private clouds are easier to control and customize, while public clouds are more resource efficient.
Public clouds deliver services over a network that’s shared by other businesses in a multi-tenant fashion, making the service more cost effective while leveraging investments in advanced technology by giants such as Amazon, Microsoft, Oracle and Salesforce.
The pay-as-you-go scalability of public clouds is ideal for heavy or unpredictable traffic and when there is a need to implement a single set of operational and administrative processes globally across several locations or subsidiaries of a large multi-national corporation.
Private cloud services are maintained on a private network protected by a firewall. Private clouds provide enhanced security and ultimate control with more data visibility which can help organizations meet data security regulations for health and financial organizations. An externally hosted private cloud provides the cost advantages of hosted services with more privacy than public clouds.
A hybrid cloud includes both cloud and on-premise solutions – often from multiple providers. Hybrid clouds offer flexibity, so companies can pick and choose which aspects of their business are better off in a public or private cloud versus on premise. In addition, if users want to scale computing requirements beyond the private cloud and into the public cloud, they can switch resources quickly – otherwise known as “cloud bursting”.
A hybrid cloud can also involve on-premise ERP systems and integration to cloud-based third-party applications. For example, Stellar, a leader in the Engineering and Construction Industry, uses Magic xpi to integrate their on-premise Oracle JD Edwards ERP system with an F1 Field Service Management system in the cloud.
A hybrid two-tier ERP model in which companies run more than one ERP system, often a primary one at headquarters and additional cloud ERP services at subsidiaries, is popular with many customers of cloud ERP vendors.
The Integration Challenge
However all the different cloud computing models mixed with on-premise solutions creates confusion as to where integration should reside. For example, it’s possible for a company to run JD Edwards on Oracle private cloud, SAP ECC HANA in the private cloud and a separate Salesforce.com SaaS application in a public cloud that integrates to both ERP environments.
By Kerry Hope, Business Development Manager, Magic Software South Africa