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Traditional ERP systems provide various kinds of benefits such as a 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.
Moreover, cloud computing is a modern trend that reveals the next-generation application architecture. In this paper, based on a literature study, we identify and classify the benefits and drawbacks of cloud-based versus tra- ditional ERP systems.
Then we analyze and compare the features of cloud-based, hosted, and on-premises ERP. Finally, we discuss the revealed controversies of the previous research and reasons why or why not cloud-based ERP might be more of interest to SMEs than to large enterprises.
Cloud-based ERP solutions appear to provide a number of benefits related to sizable cost savings and competitive advantage en- hancements.
It has also been stated that the cloud-based enterprise systems are more suitable for small and medium enterprises, primarily because of the subscription based pricing schemes that typically re- quire significantly lower upfront investments Forrest At the same time the benefits and drawbacks of cloud-based ERP in comparison with on-premises ERP and, especially, hosted ERP do not seem to be investigated and classified sufficiently as yet.
The reasons why or why not cloud-based ERP might be more of interest to SMEs also has to be identified and clarified more comprehensively. Therefore, we consider further research on actual benefits, limitations, and risks of cloud-based ERP to be of interest to enterprises and research communi- ties.
In this study ERP systems are subdivided into two main categories: Within the traditional ERP system the distinction is made between hosted and on-premise solutions. Our purpose is to investigate the proven advantages and disadvantages of cloud-based ERP sys- tems in comparison with traditional ERP systems.
For this, we will have the following research questions: Investigation on this matter is supposed to identify and classify respective bene- fits and costs, limitations and risks. The structure of drivers for cost savings enabled by cloud- based ERP is expected to be clarified. Duan, Faker, Fesak and Stuart 2.
Are the foregoing benefits and drawbacks more relevant for small and medium enterprises or not and why?
Answer to this question also implies identifying whether there are some cloud ERP benefits and drawbacks pertinent only to SMEs.
In section 3 the methodology for our research is explained. In section 4 we present our results, which are subsequently discussed in section 5.
Section 6 lists conclusion and limitations of the study, as well as possible directions for future research. To start with the most obvious one, ERP is a product in the form of computer software.
Furthermore, ERP can be seen as a development objective of mapping all processes and data of an enterprise into a comprehensive inte- grative structure. Third, ERP can be seen as the key element of an infrastructure that delivers a solution to business Botta-Genoulaz et al.
Currently, the overall resources of the firm can be integrated through ERP. The most important modules or processes that an ERP system supports are: Within the traditional ERP a distinction can be made between two different solutions: On-premise ERP solutions are usually acquired via a license model.
The software is loaded onto servers and computers in-house. The enterprise also controls the infrastructure and platforms. Furthermore, the enterprise handles all maintenance and absorbs the costs of maintaining the servers and the space they require, as well as disaster recovery WAC Consulting Group This means that the enterprise itself has to maintain the servers and the required space.
A hosted ERP is defined as a service offered to an individual or an organization by a provider that hosts the physical servers running that ser- vice somewhere else. The service is most of the time offered through a direct network connection that may or may not run via internet Fripp Traditional ERP vendors are responding in various ways to this new development, with some offering hosted versions of their ERP applications as an alternative.
While hosted ERP solutions deliver some of the same benefits, enterprises need to appreciate the significant differences which is more explained in the results section. Cloud and hosted ERP have overlapping benefits, but prospective customers should carefully consider their options to ensure the solution they choose deliver the business value they expect Scavo et al.
Duan, Faker, Fesak and Stuart Cloud computing in general Since cloud computing has become popular there have been many attempts to formulate a complete defi- nition that captures all of its characteristics Vaquero et al.
But even the most rigorous attempts fail in distinguishing clouds from cloud systems or emphasizing the abstraction of infrastructure complexity.Supply Chain Management 1 SUPPLY CH AIN M AN AGEMENT For undergraduate curriculum in business, major in supply chain The MBA program is a credit, non-thesis, non-creative component curriculum.
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2 THEORETICAL BACKGROUND Traditional ERP systems The Enterprise Resource Planning (ERP) concept can be studied from different perspectives.
To start with the most obvious one, ERP is a product in the form of computer software.