ERP in the Hybrid Cloud: What You Should Know

The transformation of the enterprise resource planning (ERP) system as a driver of enterprise-wide digitization can be complex but critical to the success of many businesses.

Companies record and manage all business-critical data and information via their ERP system for material, people, processes, and products. As the basis for continuous process optimization, it plays an essential role in successful digital transformation.

ERP solutions must be able to adapt to future business models. In addition to legacy capabilities, customers today also want flexible bookable “services-as-a-service.” They no longer buy machines, for example, but their uninterrupted runtime.

And any company that meets these requirements must be able to expand traditional ERP services to the cloud. Furthermore, each cloud model brings its advantages and challenges.

Public Cloud: Availability Meets Innovation

A significant advantage of the public cloud as an operating environment is its availability. In the case of internationally positioned companies, supply chain processes are often distributed across numerous global locations. The cloud is ideal for providing each with 24/7 access to the central ERP system.

In addition, workloads can be scaled quickly and flexibly. If a special billing run or another resource-intensive process occurs at short notice, additional capacity such as computing power or storage space can be scaled quickly. For example, since billing is based on usage, once a large order has been completed, the resources are cost-efficiently scaled back to normal operations.

Along with the infrastructure advantages, the public cloud drives innovation and efficiency. Hyperscalers offer numerous services, and some are tailored explicitly to ERP systems. Internet of Things (IoT) networks provide real-time data from end-user devices and increase the transparency of processes relevant to planning. And technologies such as data lakes, machine learning, or artificial intelligence (AI)-based analytics uncover inefficient processes and enable informed data-driven decisions.

For example, if a machine fails where the customer only pays when running, any downtime means a direct loss of revenue. Thanks to cloud-based solutions for IoT and intelligent data analytics, this situation can be avoided with the help of predictive maintenance and controlled efficiently by the ERP.

Private Cloud: Flexible and Individual

The infrastructure advantages of the public cloud are based on its high level of customization. However, ERP systems often reflect company-specific or industry-specific requirements and legal regulations. Sometimes these custom processes cannot be squeezed into a predefined format. In addition, many companies still use legacy third-party systems that are not cloud compatible but support relevant business functions.

This is where the private cloud scores. It offers a high degree of scalability and availability. And it has a more flexible architecture. It can more easily manage custom processes.

Compliance and data protection are also essential factors. Sensitive personal and company information from all areas and departments converges within the ERP system. Industry-specific and company-specific rules and legal regulations can preclude the storage and processing of this data in the public cloud.

ERP in the Hybrid Cloud: An Ideal Combination

If you want to combine the advantages of public cloud and private cloud without restrictions, it is best to use both models in the form of a hybrid cloud. A hybrid cloud creates the ideal balance between flexibility and adaptability.

In a hybrid model, sensitive information can be stored and processed in the private cloud per compliance requirements. Less sensitive data like incoming and outgoing goods, orders, warehousing, and the like can be stored in the public cloud. This is where innovative cloud services add efficiency, such as linking ERP, IoT, and sensor data to map processes digitally or AI-learning and machine-learning supported analytics. This functionality can provide a clearer picture of the company-wide value chain, including untapped optimization potential.

With the support of an experienced partner, the hybrid cloud can be expanded to include enterprise-relevant legacy systems that run on-premises. The relocation of these systems to a private cloud would be too time-consuming and costly. Still, a hybrid cloud solution offers an ideal combination of individual customization and dynamic provisioning.

Conclusion

ERP systems are at the heart of your internal company processes and therefore play a central role in successful digital transformation. Companies must migrate to the cloud to succeed, at least in part.

The public cloud scores with availability and value-adding services, while the private cloud can be adapted more closely to individual specifications. A one-size-fits-all approach does not work for all environments. In many cases, a tailored cloud solution is needed.

Those who rely on a hybrid cloud solution can align their ERP architecture according to industry and company-specific requirements. This creates the basis for continuous processes optimization and future-proof business operations. To learn more about ERP, visit our insights page, where you can access our whitepapers, webinars, data sheets, and much more.