From On-Premise ERP to Cloud ERP

From On-Premise ERP to Cloud ERP

Karim Mezghani (Al Imam Mohammad Ibn Saud Islamic University (IMSIU), Saudi Arabia & University of Sfax, Tunisia)
Copyright: © 2018 |Pages: 10
DOI: 10.4018/978-1-5225-2255-3.ch259

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Introduction

With the development of cloud computing, a cloud-based ERP begins to emerge as an alternative to the on-Premise solution. According to Grabski, Leech and Schmidt (2011), “Cloud computing has the potential to radically change the ERP environment. The data and the application are no longer housed on-Premise; rather, a vendor provides access to the application which can be customized to meet the user’s needs and the vendor also hosts the data securely somewhere on the Internet…Many research questions surround this evolutionary approach to ERP systems”. Arnesen (2013) adds that ERP vendors “are in the process of developing hosted or cloud solutions as the market moves to a cloud environment”. Thus, according to Mezghani (2014), “cloud ERP seems to become a real substitute to on-Premise ERP and firms would be likely “pushed” to switch toward the cloud solution”.

One of the concerns linked to ERP implementation is alignment. Indeed, ERP systems affect almost all business processes and even some strategic choices of a firm. That is why many researches focus on alignment concerns when studying ERP implementation (Hong and Kim, 2002; Yaseen, 2009; Mezghani and Mezghani, 2014). Nevertheless, as reported above, firms are more and more interested in switching toward cloud ERP (Mezghani, 2014). By the way, “their business strategy, IT strategy, business processes and information technologies shall be re-aligned” (Li, Wang, Wu, Li and Wang, 2011). Indeed, in a cloud computing environment, misalignments can lead to decreased operating efficiency and losses for organizations (Géczy, Izumi and Hasida, 2012). However, “no cloud computing service vendor can satisfy the complete functional information system requirements of an enterprise” (Li et al., 2011). These authors add that “sometimes, enterprises have to simultaneously use software services distributed in different clouds in conjunction with their intra-IS. These bring great challenges for business–IT alignment of an enterprise in the cloud computing environment”. Also, with cloud ERP, data and applications are provider-hosted. So, the way ERP is managed may be redefined and, then, achieving alignment might be more challenging.

Thus, this chapter aims to expose the major challenges and issues linked to ERP systems alignment. Some tendencies and best practices are also proposed for firms to overcome the alignment challenges, mainly in a cloud computing environment.

Key Terms in this Chapter

Social Dimension: Related to the interactions between the business staff and the IT specialists (IT staff and providers).

Interpersonal Skills: The ability of a manager to work with a team, to understand, guide and motivate others.

Technical Dimension: Related to all kinds of customizations and adaptations needed to operate with the ERP system.

Enterprise Resources Planning (ERP): A software package that is composed of standard modules connected directly to a single database and could cover all business processes of a firm.

ERP Alignment: The coherence between the ERP requirements and the firm’s ones.

Cloud ERP: Putting ERP modules on a cloud so ERP software is offered as a service. The cloud ERP is managed by the provider.

On-Premise ERP: An ERP system installed locally in the firm’s servers and computers. Such system is generally managed by the IT staff.

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