BI, Cloud Computing and ERP

Varun Vasudevan K
School of Management Studies, CUSAT, Kochi-22 Email: varunvasudevank@gmail.com

Abstract: Enterprise Resource Planning (ERP) software is designed to improve and auto-mate business processes operations. However, there are many unnecessary administrative, procedural costs and delays often associated with this practice. Business intelligence (BI) mainly refers to computer-based techniques used in identifying, extracting and analyzing business data. BI technologies provide historical, current and predictive views of business operations. Cloud computing is a topic that has gained momentum in the last years. In this paper we discuss the phenomenon of cloud computing and its importance for the operation of ERP systems. We also discuss how combining ERP and BI solutions can be more cost effective and efficient. The three levels of cloud computing and their impact on ERP systems operation are also discussed. Key words: ERP, Cloud computing, Business Intelligence

1.0 INTRODUCTION

World is changing very fast in terms of enterprise systems and industries need very specialized solutions. Industrial problems are very complex and need lot of money and efforts. Availability of expertise and skills causes another problem in the industry .Enterprise resources management solutions are one of the example for this kind of problem. The complicated project of an ERP system implementation in industry results in large changes in the systems. Organizations that face an ERP implementation project have several risks to consider in order avoiding problems that cause failures. ERP software brings users economic benefits during a companys operational management. All the data and information resources are managed by Enterprise Resource Planning Systems in the business organizations. This information is stored in centralized and shared data stores. Nowadays information is a priceless tool for organizations and through this perspective it is important to reach all the data of a company IT system in real time. The key is the mobility of the ERP system. ERP system can be integrated with the concept of business intelligence or that of cloud computing to make it more cost effective and efficient. These concepts are discussed below.

2.0 Enterprise Resource Planning

Enterprise resource planning (ERP) systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application. Their purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. ERP systems can run on a variety of computer hardware and network configurations, typically employing a database as a repository for information. ERP (Enterprise Resource Planning) systems typically include the following characteristics: An integrated system that operates in real time (or next to real time), without relying on periodic updates. A common database, which supports all applications. A consistent look and feel throughout each module. Installation of the system without elaborate application/data integration by the Information Technology (IT) department.

Traditional ERP has a methodology that consists of four components. The software component is the expression of the ERP. The process flow is defining the flow of information among the ERP. Customer mindset set the work flow of an organization. This work flow set up will be done by compromising in between the before implementation way of work and after implementation way of work. Lastly, change management needed different state of ERP i.e. customer attitude resistance and any kind of business process changes.

3.0 CLOUD COMPUTING

As with most emerging technologies, cloud computing have numerous definitions, depending on the party defining it. Wikipedia defines it as Web-based processing, whereby shared resources, software, and information are provided to computers and other devices (such as smart phones) on demand over the Internet. The multiple delivery networks are: Public clouds via the internet Private clouds via private networks (in-house or hosted) Hybrid clouds - via a combination of public and private networks

The type of cloud computing can be categorized into three classes, the public cloud, the private cloud and the hybrid as depicted in figure 1. The idioms public, private, and hybrid do not impose location. Whereas the term public clouds are naturally out of organization on public sites on the Internet and private clouds are positioned on premises, a private may be hosted at a collocation facility as well. Third parties are responsible for running the public clouds outside the organization. Various customers applications can be grouped together on the cloud servers memory and network. Public clouds basically hosted on a remote place which is away from the customers location. And they play a major role in reducing the customers risk and cost by extending the enterprise infrastructure. Private clouds are basically hosted for a single client. They offer better security, quality of service and utmost control over the data. Every organization will have its own infrastructure and the way in which applications are organized. Enterprises datacenter or a collocation facility can be used to deploy the private clouds. Hybrid clouds are the result of combination of private and public clouds. They provide on-demand, externally provisioned scale. The resources of a public cloud can even support private clouds to maintain high service levels with respect to rapid work load fluctuations. This clearly shows the use of storage clouds to support Web 2.0 applications. In addition to these, even hybrid clouds also help to maintain planned workload spikes and even public clouds can also be utilized to perform periodic tasks. Currently most companies utilize a hybrid approach, but few have a coherent strategy and architecture that defines their direction and associated controls for cloud computing. Cloud computing providers offer their services according to three fundamental models: Infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS) where IaaS is the most basic and each higher model abstracts from the details of the lower models.

Fig.1 Types of cloud computing

3.1 Infrastructure as a service (IaaS)

In this most basic cloud service model, cloud providers offer computers as physical or more often as virtual machines , raw (block) storage, firewalls, load balancers, and networks. IaaS providers supply these resources on demand from their large pools installed in data centers. Local area networks including IP addresses are part of the offer. For the wide area connectivity, the Internet can be used or - in carrier clouds - dedicated virtual private networks can be configured. In this model, it is the cloud user who is responsible for patching and maintaining the operating systems and application software. Cloud providers typically bill IaaS services on a utility computing basis, that is, cost will reflect the amount of resources allocated and consumed.

3.2 Platform as a service (PaaS)

In the PaaS model, cloud providers deliver a computing platform and/or solution stack typically including operating system, programming language execution environment, database, and web server. Application developers can develop and run their software solutions on a cloud platform without the cost and complexity of buying and managing the underlying hardware and software layers.

3.3 Software as a service (SaaS)

In this model, cloud providers install and operate application software in the cloud and cloud users access the software from cloud clients. The cloud users do not manage the cloud infrastructure and platform on which the application is running. This eliminates the need to

install and run the application on the cloud user's own computers simplifying maintenance and support. What makes a cloud application different from other applications is its elasticity. This can be achieved by cloning tasks onto multiple virtual machines at run-time to meet the changing work demand. Load balancers distribute the work over the set of virtual machines. This process is transparent to the cloud user who sees only a single access point. To accommodate a large number of cloud users, cloud applications can be multitenant, that is, any machine serves more than one cloud user organization. It is common to refer to special types of cloud based application software with a similar naming convention: desktop as a service, business process as a service, Test Environment as a Service, communication as a service. The pricing model for SaaS applications is typically a monthly or yearly flat fee per user. On other hand the hardware as services (Haas) hardware as a service (HaaS) is an approach to permits an organization outsources to maintain business components such as servers, storage and networking equipment. Figure 2 depicts the Architectural layers of cloud computing.

Fig 2 the Architectural layers of cloud computing

4.0 CLOUD COMPUTING and ERP

ERP systems are integrated software packages with a common database that support business processes in companies. Cloud computing is a new paradigm in which computing resources such as processing, memory, and storage are not physically present at the users location. Instead, a service provider owns and manages these resources, and users access them via the Internet. For example, Amazon Web Services lets users store personal data via its Simple Storage Service (S3) and perform computations on stored data using the Elastic

Compute Cloud (EC2). The business will be definitely benefitted by making use of this kind of computing platforms. Some of the benefits could be less initial capital investment, a smaller amount of time will be required to start new services, maintenance and operation costs could go lower, effective utilization through virtualization and the most important thing is simpler disaster recovery. All these points make cloud computing a striking option. Cloud computing has a profound impact on the entire IT industry as a new business model. Integrated into all sectors of business applications, cloud computing will reflect the value in a deeper level. With the rapid development of cloud computing, it can help enterprises to access high-performance IT services with lower cost, and also conducive to small and medium-sized enterprises to access high-performance IT services like large enterprises. At the same time, the reduction of IT burden can help enterprises to concentrate on its core business. The process optimization which based on cloud computing can achieve throughout a large-scale reconstruction of the industry, and enhance the overall IT standards and competitiveness. Another advantage of cloud computing is it offers good advantages to the communicators. And these advantages are: the availability of large quantity of software applications, access to terrific processing power, abundant storage, and power of easily sharing and processing of information. All this information can be found in the browser anytime, anywhere through accessing the internet. It means computing ability also can be a kind of commodity, as gas, water and electric, easily use and cheap cost. The parties that need to be discussed when looking at cloud computing as an operations model for ERP systems are the following: 1. User company (the company that uses the ERP system for their daily business processes) 2. ERP vendor (the company developing and selling licenses for the software) 3. ERP implementation partner (the company that supports the user company with the implementation), and the 4. Cloud service provider (the company running the cloud environment). When using IaaS for the operation of an ERP system the user company rents the computing resources from a cloud service provider. In this setting the user company can still freely choose the ERP vendor of the ERP system and buy the licenses for the software. The market already indicates that this will be a viable operations model and ERP vendors (or implementation partners) and cloud service providers are likely to form alliances offering the user company a combined service. Vertical integration happens when the ERP vendor offers IaaS themselves and become a cloud service provider. The second level of the cloud model is not really suited for the provision of an ERP system. Platform services provide resources in a pre-defined software environment that are attractive for software development, testing, or the distribution of software but not for the actual operation of an ERP system. In the Software-as-a-Service model the ERP system is provided by the cloud service provider. The roles of cloud service provider and ERP vendor are merged in this setting (vertical integration). ERP systems are critical to successful businesses because they integrate, automate, and create processes that capture how the business works. It is therefore important to ensure the data is correct and that there is adequate computing resources and bandwidth to provide timely results. An ideal environment would have the company concentrating on the data and off-loading the infrastructure to a cloud provider. Another topic is business diversification. If a company is highly diversified and is active in various different industries it might turn out that a

SaaS cloud solution that offers the needed ERP functionality on an on-demand basis over the Internet is simply not available. This makes sense, as the nature of Cloud Computing is to optimize, standardize, and reduce costs, rather than offer process integration and diversification that is typical in ERP environments. Technically Cloud ERP is simple to deploy, organization need not to bear additional server and other dependent costs. It is also easy and quick to implement an ERP to a business organization. On the other hand, traditional ERP experience a challenge to deploying and maintenance. Traditional ERP is very much controllable by the business organizations, because it is under their supervision. Again cloud ERP controlling depends on the support of the vendor. Vendor can ensure the control of ERP on be half of business organizations. Traditional ERP has an easy accessibility both technically and user prospect. It does not depends on internet rather intranet. Alternatively, cloud ERP depends on internet. So if the internet bandwidth is low or its technically departed then support cloud ERP is in trouble.

5.0 Business Intelligence

Business intelligence (BI) mainly refers to computer-based techniques used in identifying, extracting and analyzing business data. BI technologies provide historical, current and predictive views of business operations. Common functions of business intelligence technologies are reporting, online analytical processing, analytics, data mining, process mining, complex event processing, business performance management, benchmarking, text mining and predictive analytics. Business intelligence aims to support better business decisionmaking. Thus a BI system can be called a decision support system Business intelligence systems combine operational data with analytical tools to present complex and competitive information to planners and decision makers. The objective is to improve the timeliness and quality of inputs to the decision process. Business Intelligence is used to understand the capabilities available in the firm; the state of the art, trends, and future directions in the markets, the technologies, and the regulatory environment in which the firm competes; and the actions of competitors and the implications of these actions. The emergence of the data warehouse as a repository, advances in data cleansing, increased capabilities of hardware and software, and the emergence of the web architecture all combine to create a richer business intelligence environment than was available previously. BI assists in strategic and operational decision making. A Gartner survey ranked the strategic use of BI in the following order: 1. Corporate performance management 2. Optimizing customer relations, monitoring business activity, and traditional decision support 3. Packaged standalone BI applications for specific operations or strategies 4. Management reporting of business intelligence

6.0 Business Intelligence and ERP

In this highly competitive and volatile economic environment, it is essential to be able to improve operational efficiency but at the same time be able to reduce costs. For this more and more organizations turn to either ERP or BI. But a combination of both would be the ideal solution. Not only do businesses operate at an accelerated pace today, forcing the need for speed in decision-making, but decision-makers are also forced to deal with an increasing amount of data. Never have we been inundated with more data sources, both unstructured (via the news,

the web, and other sources) and structured data in enterprise applications, with data from ERP squarely at the hub. In spite of all the data that resides in ERP and other enterprise applications, executives, line managers, and business analysts still rely heavily on spreadsheets for business intelligence. Today almost every ERP solution and many other enterprise applications as well, have the ability to export data to spreadsheets. There is an inherent risk in providing this capability, populating a familiar tool with enterprise level data. Best-in-Class companies make sure that in extracting data, the spreadsheet doesn't take on a life of its own apart from the enterprise application. There is a tradeoff between being able to access and work with the data offline, and making sure that it always reflects the most recent version (which requires that the user remain connected). In addition to being an effective reporting mechanism, spreadsheets can be a collaboration tool used to share data across applications, companies, or partners, and therefore a source of data and input. The trick is to import the data from the spreadsheet through the same controls and input mechanisms of the enterprise application, making sure to provide all the same data checks that ensure security and data integrity. An alternative is making the enterprise application itself look and feel like a spreadsheet, thereby supplying the same comfort level without adding risk and opening the door to exploration beyond those adept at writing macros, creating pivot tables and other advanced spreadsheet manipulations. Of course, this requires the BI tools to be embedded within the application and demands innovation from your ERP solution provider, but it relieves the burden on the end-user. ERP provides the fiscal and operational system of record upon which you run your business. It serves to standardize, streamline and automate and add visibility and transparency to business processes. BI transforms data into intelligence for faster fact-based decisions. Each individually brings value to any organization. The marriage of the two produces a synergy by which the total value far exceeds the sum of the parts. Enterprises of all shapes and sizes today are sitting on mountains of data. Relying on BI alone to aggregate data from multiple disconnected systems will limit the value that can be derived from it. While ERP solutions are at the very core of this transactional data, the volume and complexity of that data grows as ERP is surrounded by applications that extend its reach into areas such as Customer Relationship Management, Supplier and Supply Chain Management, Product Lifecycle Management and others. Increasingly, ERP customers have come to realize that the value from ERP investments can be increased dramatically through analysis of the consolidated data captured within and at the edges of the ERP system. BI users value having a single source of that data producing a single version of the truth. ERP can transform data into information, but BI tools are required to complete the transformation from information to intelligence. The synergistic relationship between ERP and BI can indeed be the perfect storm, igniting improved performance and visibility.

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