What's Next for ERP? Tear Down the Walls

Few systems are more efficient at managing internal data than enterprise resource planning (ERP), but business today happens between companies, and when it comes to managing external information and relationships, ERP falls short. To fill this gap, many organizations are turning to open, hosted platforms that can be more easily accessed and shared.

By Tim Minahan
Mon, August 15, 2011

Network World — This vendor-written tech primer has been edited by Network World to eliminate product promotion, but readers should note it will likely favor the submitter's approach.

Few systems are more efficient at managing internal data than enterprise resource planning (ERP), but business today happens between companies, and when it comes to managing external information and relationships, ERP falls short. To fill this gap, many organizations are turning to open, hosted platforms that can be more easily accessed and shared.

If you have ERP in place, you've heard about the cloud connection. There's cloud-based ERP, cloud add-ons, widgets and processes where you can take your existing structure, migrate it to the cloud and live happily ever after. And the reason to migrate is becoming increasingly compelling. Constellation Research concludes that moving to a third-party provider could free up cash to install SaaS products that add new juice to the legacy system.

STUDY: Sharp rise in ERP users mulling support alternatives

But where do you start? A recent CIO study identified a few areas where the cloud can help an ERP platform break out of its shell. These areas leverage a network-centric model to connect multiple business partners and automate shared businesses processes, especially purchasing and financial transactions across multiple systems. And enterprises of all sizes are using them across functions to streamline processes and accessibility for a variety of initiatives, including ERP. Here's how:

* Spend management. ERP systems allow a company to issue purchase requests, route approvals and generate orders. But they stop at the end of the enterprise with the generation of an approved order that must be routed through various channels that are disconnected, and often only semi-automated -- from fax and email to proprietary and costly EDI networks and point-to-point portals.

In cloud computing, services and technologies are delivered over the Internet in real time. The supporting infrastructure is separate from the customer's IT environment. The customer sends the data it needs to share with partners to the cloud, where partners can access and respond to this data. When cloud-based supply chain management applications are integrated with ERP systems, buyers and sellers benefit from a robust network that enables more efficient trading relationships and collaboration across a shared community, regardless of which back-end systems a party uses.

* Financials applications. ERP systems excel at managing financial transactions within the organization. But processing an invoice involves collaboration between buyers and sellers. Cloud-based financial solutions can support this multi-enterprise connectivity and collaboration, and allow companies to better manage the electronic settlement process, such as enabling suppliers to convert paper-based purchase orders and invoices into electronic ones, delivering detailed remittance with electronic payment, and enabling dynamic or sliding-scale early payment discounts.

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