Infrastructure As A Service: The Best Of Both Worlds For ERP?

Carl Dubler

Part 3 in the “ERP Deployment Options” series

In Part 2 of this series, we highlighted three organizations that chose to run their ERP solution on a public cloud, Software as a Service (SaaS) solution. Their choices were due to the benefits inherent to public cloud deployments: reducing infrastructure and IT staffing costs, realizing the fastest time to value, and supporting business process standardization across the organization.

In this blog, we take a deeper look at the Infrastructure as a Service (IaaS) deployment model. Many IaaS vendors support running ERP applications, including Microsoft Azure, Amazon Web Services, and Google Cloud Platform. While the benefits of a public cloud SaaS deployment can also apply, IaaS offers unique advantages.

On-premise customization and control

SaaS solutions necessarily constrain flexibility in favor of standardization, and this is what allows a lower price and faster deployment. However, with IaaS, you can move on-premise ERP to the cloud – preserving years of effort and major investment in customizations and configuration. In addition, even though you don’t control the IaaS physical infrastructure, you do control the operating system, the databases, and the ERP application itself. This means you can perform updates and maintenance on your own schedule, just as your IT department did on-premise.

Cloud pay-as-you-go-and-grow pricing

Whether you’re running your ERP system on-premise or hosted in a third-party data center, you’re purchasing hardware and bandwidth at a price and capacity based on your highest demand thresholds. That means you’re buying a lot of extra infrastructure that you may rarely, if ever, use. By running on IaaS, you pay only for the infrastructure capacity you need as you need it. Then you increase capacity temporarily for demand spikes or increase it incrementally as you grow.

Success for early adopters

Many organizations are now deploying critical ERP processes and data in IaaS environments to achieve significant performance and savings benefits. Here are three examples of companies achieving success with ERP on IaaS:

Running finance on IaaS to support new business models

Facing market upheaval as a result of deregulation of the local electricity market, an electric utility in Asia needed to quickly develop and deploy new business models including more natural gas and renewable energy offerings. Unfortunately, its 20-year-old on-premise financial platform would need significant upgrades to address the coming reforms.

The utility has also relied on a private cloud environment to run its data centers and keep financial data secure, but experienced physical resource limitations in that environment that impeded expansion. By moving to an IaaS environment, the company no longer has physical infrastructure limits. IaaS helps the utility test and deploy next-generation ERP systems faster than ever before, and ensures that financial and other critical customer data remains highly secure.

Running procurement on IaaS to speed innovation

To meet its mission-critical need to speed up innovation cycles, a German global automaker wanted to overhaul its enterprise-wide procurement system that manages 400,000 different suppliers. The 90s-era on-premise system had grown in complexity as well as physical size, and as result, the IT team could update the system safely just twice a year.

By deploying a new, more flexible ERP-based procurement solution in an IaaS environment, the automaker was up and running in weeks instead of months, and it can now update its systems every day. What’s more, the company can “dial up” resources to meet demand spikes in just 30 minutes and no longer has to purchase extra, largely unused capacity. These, as well as other improvements, have reduced system costs by 50%.

Running ERP on IaaS to reduce cost, effort, and latency

A Canadian mining company needed to digitally transform to improve efficiencies in its operations and remain competitive with larger rivals. By choosing IaaS over other cloud deployments options, along with upgrading to a scalable, flexible ERP solution, the company’s small IT staff is able to focus on more strategic tasks. For example, instead of running instances on shared servers, IT staff could execute large-scale ERP transactions on dedicated single-tenant servers for a significant performance advantage.

What’s more, the IaaS platform gave the company’s IT staff much greater orchestration control between ERP applications and infrastructure. Now, they can automate complex business process and dynamically scale resources based on demand. The result? The company reduced maintenance cost by 40% while meeting growing demand for IT services at the same IT staffing levels.

Making the right choice

The choice of deployment depends on your organization’s specific requirements. However, one clear takeaway is that IaaS platforms can often deliver data security that’s just as effective as on-premise or private cloud deployment options. In addition, the choice of ERP solution that you are running in an IaaS environment also makes a big difference. In the examples above, companies chose flexible solutions that can run seamlessly across different deployment options, so that on-premise and cloud-based processes can be supported with a single ERP solution.

The next blog in this series looks at how organizations that run on-premise ERP are taking advantage of technology breakthroughs to also dramatically simplify physical and application infrastructures, and deliver more efficiency and speed to the business.

Carl Dubler

About Carl Dubler

Carl Dubler is a senior director of Product Marketing for SAP S/4HANA. With an IT career stretching back to the late 1980s, he has done nearly every role in the business. In his ten years at SAP, he also managed SAP’s first commercially available cloud product and first cloud product on SAP HANA.