With the advent of latest technologies, the whole concept of Enterprise resource planning is taking a holistic turn towards a highly sophisticated cloud based systems. However, before appreciating the cloud ERP concept as a path-breaking break through, one should equally focus on the issues, concerns and management related nuances of this technology in the areas of information privacy, systems security and trust.
This paper is an effort to divert the concentration on those issues, considered from the point of view of both technology providers and users. In addition, significant effort is made in deriving satisfactory solutions for each of those concerns. Introduction to Cloud ERP system Enterprise resource planning (ERP) Systems Enterprise resource planning is a cross-functional enterprise system driven by an integrated suite of software modules that supports the basic internal business processes of a company.
Enterprise resource planning systems or enterprise systems are software systems for business management, encompassing modules supporting functional areas such as planning, manufacturing, sales, marketing, distribution, accounting, financial, human resource management, project management, inventory management, service and maintenance, transportation and e-business. The architecture of the software facilitates transparent integration of modules, providing flow of information between all functions within the enterprise in a consistently visible manner.
Corporate computing with ERPs allows companies to implement a single integrated system by replacing or reengineering their mostly incompatible legacy information systems. ERP systems are now ubiquitous in large businesses and the current move by vendors is to repackage them for small to medium enterprises (SMEs). ERP vendors and customers have recognized the need for packages that follow open architecture, provide interchangeable modules and allow easy customization and user interfacing.
Organizations consider the ERP system a vital organizational tool because it integrates varied organizational systems and enables flawless transactions and production. The concept of the ERP system can be diagrammatically illustrated as shown in Figure 1. Figure 1: ERP System Cloud Computing The term cloud has been used historically as a metaphor for the Internet. This usage was originally derived from its common depiction in network diagrams as an outline of a cloud, used to represent the transport of data across carrier backbones (which owned the cloud) to an endpoint location on the other side of the cloud.
Service delivery models There are three delivery models in which cloud computing can be subdivided (Xu 2012): Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS). Even though cloud ERP systems apply to the SaaS model, it is important to also have an understanding of the underlying ser-vice delivery models in order to fully understand the cloud concept. Software as a Service (SaaS) It targets the end user or business. It concerns the delivery of an application to multiple customers via an underlying database and object code.
This is the category to which cloud ERP solutions belong. Other examples include Google Apps, ZOHO CRM and Apple’s iCloud. Duan, Faker, Fesak and Stuart Platform as a Service (PaaS) It is the delivery of middleware targeted towards developers with a platform that incorporates the entire development cycle, including hosting, testing, and deployment of web applications. Examples include Google App Engine and Zoho Creator. Infrastructure as a Service (IaaS) It is the delivery of computing power (i. e. processing power, storage space, and infrastructure throughput) targeted towards administrators.
This service promotes a usage based pricing structure, where a customer only pays for the amount of capacity that is used. Amazon’s EC2 is an example of this service model. Service delivery types Another subdivision that can be made is that of public versus private clouds. In public clouds, the respective service is accessible by anyone via the Internet, and infrastructure is shared by multiple tenants. Because of this, public cloud poses a higher security risk. For a private cloud on the other hand the service is located on (virtually) separate infrastructure, which gives the user full control over data and security.
A third variant is a hybrid cloud model, where the more business sensitive parts of the service are hosted privately, while less sensitive data is outsourced to public cloud providers. Why Cloud? Some good reasons are as follows Agility – improves with users' ability to re-provision technological infrastructure resources. Accessibility – access any system that can be accessed via the Internet – PC or phone Easy – web access means that the platform is less of an issue, and there is less hard coding.
Reduced Infrastructure costs – most server environments run at less than 35% capacity you buy system capacity for the one a month peaks. Cloud allows you to rent the capacity – so saving money. Maintenance – cloud systems are designed for on the fly updates and upgrades. Innovation & Flexibility – it is changing the way that IT departments look at developing new systems, taking the reduced effort in running systems and applying them to building new systems quickly. Cloud based ERP system Cloud ERP system is nothing more than hosted ERP on a Cloud provider.
By answering the flowing questions, we can find out why Cloud ERP is important for organizations, especially small and midsize organization that we call them SMEs. How we can improve organizations capabilities to use ERP? How we can improve ERP mobility and agility? To answer these questions, first, we should find out what the cost of ERP implementation is, these costs include software, hardware, advisor, training, implementation and maintaining. The reduction of these costs depends on the reduction of organization’s IT infrastructures costs.
These infrastructures include software, hardware, storage, network and other infrastructures. We can outsource hardware’s and software’s. Outsourcing is a deposit of control, maintaining and providing IT infrastructures needs by some company outside of an organization. Some of its infrastructures are Software including Applications, Management, Services and Hardware including Computing Power, Storage, Backup and Networks. How can we outsource? In the first way, companies outside of an organization provide the hardware and software and these companies do all works about maintaining and management.
Organizations can access these services by using dedicated line provided by telecommunication companies or using VPN connection over the internet. The second way is using services that are provided by Cloud providers. Cloud ERP is nothing more than provided ERP by Cloud providers. In business world, we have two kinds of Cloud ERP, in the first one, ERP software is presented as a collection of software in the SaaS term. These services are called ERP on SaaS, and because of low investment cost in this service, SME’s or small and midsize Enterprises that have financial problems can use the benefits of ERP on SaaS.
On the other hand, we should consider the limits of this kind of services. In this kind of implementation, organizations are faced with limitation on business process re-engineering in organization and customization of ERP. It is highly recommended to do BPR (Business Process Reengineering) by using service providers experience and standards to ensure the organization process flow and ERP structure match. Besides, because providers have access to all organizational data, we are faced with security and privacy problems.
Some of these problems include reputation fate sharing, access to information for some problems like sanction and disasters. Now let us move to main topic of the paper. In this we are going to look into issues and concerns related to the trust, information privacy and system security of cloud based ERP system. Also we will take a look at various measures to manage trust, privacy and security in cloud based ERP system. Trust in Cloud based ERP system As cloud-based ERP services are still new to the market, some companies remain wary.
Other primary concerns include restricted functionality and customization, and perceived data risk. Cloud computing in ERP has opened up a new frontier of challenges by introducing a different type of trust scenario. Today, the problem of trusting cloud computing is a paramount concern for most enterprises. It’s not that the enterprises don’t trust the cloud providers’ intentions; rather, they question cloud computing capabilities. Yet the challenges of trusting cloud computing don’t lie entirely in the technology itself.
The dearth of customer confidence also stems from a lack of transparency, a loss of control over data assets, and unclear security assurances. In assessing cloud computing provision in ERP, mechanisms to provide dynamic technological-based trust need to be used in combination with social and technological mechanisms for providing persistent trust: if software processes provide information about the way in which information is stored, accessed and shared within a cloud, that information can only be trusted if entities that are trusted vouch for the method of providing the information and assessing the information.
Depending upon the context, these entities could be consumer groups, auditors, security experts, regulators, companies with proven reputation, established CSPs, etc. Moreover, trust relationships can be very much at the centre of certain security and privacy solutions: for instance, in particular for key escrow and other forms of key distribution and secret sharing, audit and compliance checking.
There is also a strong link with policy development: if personal or business critical information is to be stored in the cloud, trust attains a new level of importance and CSPs need to embrace such an approach Limited Functionality and Availability So far, vendors of cloud-based ERP systems have focused on delivering core ERP functionality such as general accounting, purchasing, and accounts receivable and payable.
They continue to invest in developing new functions like statistical forecasting, constraint based planning, social media, and production management—but these offerings have not caught up to the advanced functionality of traditional on-premises and hosted ERP offerings. Furthermore, cloud based applications are currently confined to certain geographies, in part because they cannot yet support the financial reporting requirements of every region in which a company might operate.
Reduced Customization and Integration Compared with traditional on-premises and hosted applications, cloud-based solutions typically offer a limited range of configuration options. That makes cloud options most appropriate for companies that use highly standardized business processes in areas like sales, purchasing, and accounts receivable. Cloud-based ERP may not be able to handle the needs of companies with either highly tailored business processes or highly developed application architectures (such as those involving multiple points of integration across a variety of legacy IT systems, highly customized software, or packaged software).
For example, SAP’s current on-demand ERP system for small and medium enterprises offers only standard connections via Net Weaver and integration with common applications such as Salesforce. com. Perceived Data Risks Companies choosing a cloud-based ERP system must be willing to trust a third-party provider with sensitive company information, such as financial data or customer orders, where it may be mingled with that of other companies. But cloud providers, including Oracle and SAP, have invested heavily in state-of the-art security that may exceed what a hosted solution, or even an on-premises solution, can provide.
Some of them are even willing to guarantee that the data will stay in the same national jurisdiction or in a specific data center. Moreover, many providers of human resources software already host and manage sensitive employee data for companies that compete with one another. Organizational Resistance IT organizations at most companies have already put in place the teams and developed the skills needed to operate their ERP environment, including data-center hosting, support, maintenance, and ongoing application development.
Like any outsourcing decision, moving ERP to the cloud can create significant organizational disruptions that must be taken into account when considering the options. IT organizations with a strong culture of pride of ownership of technology solutions, or those that are new to application and infrastructure outsourcing, are likely to feel threatened by moving ERP applications into the cloud. Researches about Cloud Computing and it's usage in ERP implementation, only focused on advantage of Cloud Computing. In some advantage of Cloud Computing is discussed. In different aspect of traditional ERP and Cloud ERP is compared.
In different implementation method of ERP system on Cloud Computing is focused. But in none of the disadvantage and barriers of Cloud Computing that will be affecting this new technology is discussed. On contrast Cloud Computing has security & privacy issues that limits its application so our suggestion is focused on using advantage of Cloud Computing while with consideration it's problem and suggest a new way for enterprises and company to choose this new technology. In the below table, we mentioned some problems and compared these problems between traditional ERP and cloud based ERP.
