Vinsun Infra Engineering: Erp on Premise or on Cloud

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Cloud ERP packages are provided through a Software as a Service (SaaS) platform. Some ERP packages are promoted as cloud based, however, many are actually hosted ERP solutions (Scavo, et al., 2012). These systems are typically accessed via a common browser over an Internet connection, allowing access that has little dependency on client configuration. An examples of this comparatively new category would be SAP Business ByDesign, which was coded independently from its current on-premise offerings.

Within ERP in Premise and Cloud, the CIO of the company, Kulkarni has narrowed down VINSUN's options to two companies. One is Bluechip Corporation and the other Codeautomations. Although Bluechip only provides solutions on ERP in premise, Codeautomations provide solutions for both ERP in Premise and ERP on Cloud. However both these options has its own advantages and its disadvantages. These have been evaluated further below

ERP on Premise(Advantages and Disadvantage)

ADVANTAGES-Firstly, ERP on Premise works on intranet therefore no internet connection is required. Due to this the connectivity and speed has no effect on the operational capabilities of the ERP. Secondly, ERP can be heavily customized to suit the needs of the company as every control on the feature can be transferred onto the buyer once the ERP is bought. Then it is also advantageous in terms of data security, since on premise the data can be secured on the company's firewall mechanism and is not in the hands of the service provider. Finally in the long run, since VINSUN has aimed towards increasing its organization, ERP on premise will be a wise option as data security and use-as-you-wish feature will be an advantage.

DISADVANTAGES-Since VINSUN is a small to medium sized business enterprise with around 60 employees, so in order to implement the ERP on Premise solution it would require a huge initial investment from VINSUN which could have huge negative effect on their cash books since the maximum budget they can allocate for IT is 3% of their annual revenue. Secondly since the ERP on Premise would require customization, this in turn would require additional training for its employees. However presently the employees have a repulsive attitude towards ERP. Therefore this would pose a major challenge for VINSUN. Then there is also a case that this ERP platform would lead to Business disruption for VINSUN since the ERP package is designed by the company. This would involve doing the testing, training and bug clearance which can lead to business disruption. Therefore the loss of working hours could be comparatively high in this platform.

ERP on Cloud(Advantages and Disadvantages)

ADVANTAGES-For this ERP Platform the entire cost is bored by the service provider since no infrastructure is required. The only expenditure that VINSUN will have to carry out is for the first installation and the contractual cost. Secondly the features provided in this platform is standard and has been used for many times, therefore this would result in less bugs and errors in this ERP. This platform would be beneficial to VINSUN since it allows focus on core competencies – ''Cloud-based ERP and other enterprise applications allow focusing the resources that would be used to maintain an IT department on other essential areas of business'' (Castellina & Nick, 2011). Since this ERP is a ready-to-use one therefore it will require less business hours which in turn will result in less business disruption. Then there is also no infrastructure setup cost incurred in this solution. Finally this ERP solution is highly accessible therefore work can be done from anywhere and anyplace since ERP is available on cloud.

DISADVANTAGES-One major concern in this platform is that of data security and its privacy. It would completely be dependent on the trust of the service provider. If the service provider is not trustworthy enough it could result in data leakage to VINSUN's competitors which would result in loss of competitive advantage for the company. Secondly if a cost benefit analysis is carried out this ERP would turn out to be a more costlier option since the yearly maintenance cost incurred in this will be higher than that in Premise. Furthermore this ERP solution will require an internet connection to work so the speed and connectivity will always affect the work. So no connectivity or low speed will result in no ERP and hence no work. Finally in this ERP platform there is lack of clear service level agreements . In many cases it is rather hard to accurately define Service Level Agreements (SLAs) negotiated between cloud service provider and their corporate clients (Kuyoro, et al., 2011). Does the service provider accept liability for aspects such as confidentiality and integrity?

BLUECHIP CORPORATIONS(Advantages and Disadvantages)

Bluechip is a major established player as a ERP solution provider. It has a proven track record of successful implementation and at the same time it provides customization options. It will provide a very versatile solution, which would meet the needs of the company effectively. However it is only offering its services in ERP on Premise and the cost of customization is way too costly and well over VILKIN's planned IT budget for implementing ERP. This was known after carrying out a analysis of its initial roll out cost which has been explained in the analysis section. Furthermore, Bluechip's ERP on Premise includes fixed asset management and fleet management, which are surplus to current and near future requirements for VINSUN.

CODEAUTOMATIONS(Advantage and Disadvantages)

They provide ERP solution on both Premise and Cloud therefore VINSUN will have more than one option to choose from. The cost associated with roll out in both Premise and Cloud is well within its IT budget. However the risk associated with Codeautomations is that it is a start-up company which does not have a lot of experience in ERP solution like Bluechip. Therefore there is a significant amount of risk associated with failures in Codeautomations. Adding to this, VINSUN will also incur substantial annual data storage cost if it goes ahead with ERP on cloud platform since a substantial amount of VINSUN's IT budget will have to be dedicated to it every year.

ANALYSIS

For decision making process, VINSUN need to assess the Total Cost Options for both the initial setup costs and the continued operational and maintenance. These costs are displayed below and combine the initial set up costs and the continued costs for the next 5 year period.