In its short life, cloud ERP has come in three main varieties: Software as a Service (SaaS) natively written to run in the cloud; SaaS ERP “lite,” ported from on-premises systems and hosted by the vendor; and complementary modules such as CRM and payroll that are uniquely suited to Web delivery. Many have a reputation for being less functional and comprehensive than their on-premises counterparts.
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But Infor and Epicor, two midmarket ERP vendors with a solid presence in manufacturing, claim that the cloud ERP versions of their flagships -- including major releases this summer that will deliver the cost savings inherent in multi-tenant SaaS -- lose little in the translation. When pressed for details, however, both companies describe roadmaps that still market SaaS ERP to well-defined niches, and they readily admit that moving to the cloud can require manufacturers to ditch some legacy warehouse and shop-floor systems.
From on-premises to cloud ERP and back again
“We haven’t had to make a significant decision not to include something because of our architecture,” said Chad Meyer, director of product marketing at Epicor Software Corp., based in Dublin, Calif. “Our infrastructure team made a decision to add multi-tenancy to our core architecture six to seven years ago.”
The company waited several years to assess market and pricing conditions before releasing a multi-tenant SaaS version of its Epicor 9 ERP platform called Epicor Express in 2010, Meyer said. The software is geared to small and medium-sized businesses (SMBs) that lack the IT staff for on-premises ERP, he said.
Though Express shares the same code base with higher-end Standard and Enterprise editions, Epicor hid the features that U.S. SMBs typically don’t need, such as European Union tax support and manufacturing requirements planning (MRP).
“It’s the exact same database, the exact same database schema,” Meyer said. “If a customer wants to move from our Express Edition to our Standard Edition, it’s really seamless. We’ve had a couple of customers who have moved on-premise because they wanted more complex functionality.” But the move requires Epicor to “script out” data from the multi-tenant database to the on-premises database. “It’s essentially like for like,” Meyer said.
Bigger challenges await those whose on-premises ERP is integrated with shop-floor and warehouse work stations that must remain on internal networks or require “ancillary support” for their Citrix or Windows-based connectivity, according to Meyer. “There are other products out there that simply aren’t architected for SaaS,” he said. “You need to decide what you want to support and what you don’t.”
Epicor has made a point of ensuring SaaS integration for a handful of products that are widely used in manufacturing, including Altec’s global invoicing platform and Agile Network’s shipping manifest software. For other manufacturing software vendors, it swaps SaaS development plans to see if future integration is possible, according to Meyer.
In some cases, the interface between operational systems and SaaS ERP is provided by a middleman, such as UPS’ WorldShip software, Meyer said. Other platforms require no integration back to the cloud and can share data locally through CSV files. “They don’t need to do anything, and we don’t need to do anything,” he said.
If Epicor’s roadmap holds true, the upgrade from Express to the Standard or Enterprise editions can stay in the cloud when multi-tenant SaaS versions of both are released “within a couple of months,” Meyer said. The primary reason manufacturers give for making the move is to get the MRP system that’s currently unavailable in Epicor Express.
The company didn’t specify the savings users of the on-premises Standard and Enterprise editions can get from choosing the multi-tenant SaaS ERP option because it is still figuring its own costs. “There are definitely economies of scale,” Meyer said. “We are able to host a large number of customers in a shared environment. There are tradeoffs in what they want. If they go to this model, they do lose a little bit of control.” Users of Epicor’s single-tenant on-demand ERP option, in contrast, can change the source code while still having Epicor manage the system, he said.
Choosing among cloud ERP options
Infor tries to give customers a choice between hybrid cloud, pure SaaS and on-premises ERP, according to Andy Berry, vice president and general manager of the global distribution business unit at the New York-based ERP developer. “The customers should never know the difference. You shouldn’t have to give up functionality to do that. You should be able to run the same code base in many models.”
Berry said the next major release, Infor 11, will run on the new multi-tenant database in OpenEdge 11, a development platform from Progress Software, a maker of data integration tools based in Bedford, Mass. “Each of our customers will have a different database within the [multi-tenant architecture] but we wouldn’t have to rewrite our application to support it. Now we can have one cloud environment with one big database cluster [for] every customer that signs up.”
Berry claims manufacturers will notice little difference between the on-premises and SaaS versions of Infor 11. “Every instance we run into from a manufacturing perspective, the business logic is 95% the same. People don’t modify the database, but they do go into the application and modify the business logic.”
Infor 11 is running successfully on the company’s test beds and work is slated for the Web graphical user interface, according to Berry. So while much of the move to multi-tenant SaaS is going smoothly, thanks to OpenEdge, the ERP vendor has substantial work of its own to integrate Infor 11 with third-party applications, such as shipping software from FedEx and UPS.
“When you’re on-premise, that connection is very easy,” Berry said. “When you’re running in the cloud you have to make an IP connection over the Web.” Warehouse printers and barcode scanners also need similar new connections, and the software must also be written to keep warehouse operations going when the Internet goes down, he said. “It just creates some training needs for Infor. We haven’t had to worry about these things in the past.”
Cloud ERP’s next phase?
Midmarket ERP vendors are increasingly migrating their on-premises ERP platforms to multi-tenant SaaS, according to Colleen Smith, SaaS vice president at Progress Software. Epicor used Progress’ single-tenant OpenEdge 10 to develop Express Edition (Meyer said the company built its own database for the upcoming releases), and Infor is using the multi-tenant version for Infor 11.
Though Progress stands to gain from a boon in SaaS development, Smith has a useful vantage point working in a company that has most of the ERP vendors as customers. She says companies like Epicor and Infor tend not to compete in the large enterprise market dominated by Oracle and SAP, instead selling on-premises ERP to small customers that have similarly complex requirements.
“I think what’s stopping ERP vendors from going there is it takes 15 to 20 issues to truly louse up the functionality to run an enterprise,” Smith said. Tools like OpenEdge can help ERP vendors change the underlying infrastructure without disrupting the business logic. “SAP and Oracle struggle with this. Salesforce has figured out a way to move functionality forward without having to rewrite or rip and replace.”