For full ERP benefits, use cloud infrastructure and cloud applications.

Cloud ERP Benefits ChalkboardCloud technology creates infrastructure and improves software applications.

Cloud ERP Benefits ChalkboardCloud technology creates infrastructure and improves software applications.

In the ERP software industry, the difference between “cloud infrastructure” and “cloud applications” has been blurred by software vendors who want to take advantage of cloud marketing. In this article we clarify the differences.

Cloud Infrastructure

Cloud infrastructure consists of things that exist in datacenters. This includes virtualized servers, cloud monitoring applications, multi-tenant provisioning systems, and other components that contribute to infrastructure as a service (IaaS). Cloud infrastructure may extend to the operating system. In this scenario, the service provider delivers a multi-tenant operating system and delivers platform as a service (PaaS).

The core capabilities that initiated the cloud datacenter revolution include broadband internet availability and the widespread adoption of virtualization software from vendors such as VMware, Microsoft, and Parallels. As a result of virtualization:

  1. The efficiency of server utilization increased, thereby reducing datacenter costs.
  2. The ability to manage server resources improved, allowing administrators to assign resources to applications on the fly.

Software applications benefit from the Cloud infrastructure improvements. “Bursty” applications can grab and release resources as needed. Applications can be billed according to resources consumed on a pay-as-you-go basis. All applications benefit from lower operating costs regardless of whether they are multi-tenant cloud applications or standard client-server applications.
A definition of Cloud ERP Infrastructure has been supplied by the National Institute of Standards and Technology (NIST) in a September 2011 publication entitled The NIST Definition of Cloud Computing.

The benefits of a cloud infrastructure plus the availability of broadband internet enable the efficient delivery of applications as a service. A cloud infrastructure combined with an application is called software as a service (SaaS).

Cloud ERP Applications

Cloud applications are not as tidy to define as cloud infrastructure.

Cloud confusion is most often associated with applications that are called “cloud” because they run on a cloud infrastructure. These are legacy applications and client-server applications that are deployed on a cloud infrastructure, but are not written to take advantage of the cloud architecture. Non-cloud applications deployed on a cloud infrastructure achieve some of the benefits offered by the cloud, but fall short in areas of rapid deployment, maintenance costs, and cross platform compatibility.

“Cloud ERP customers need to understand that a legacy application running on a cloud infrastructure offers fewer benefits than a cloud application running on a cloud infrastructure.”

Further confusion occurs when legacy applications offered on a cloud infrastructure are called software as a service (SaaS). Technically this is correct because legacy ERP applications can be accessed via the internet and display as many aspects of the NIST definition of cloud computing as cloud-based ERP applications. Cloud ERP customers need to understand that a legacy application running on a cloud infrastructure offers fewer benefits than a cloud application running on a cloud infrastructure.

A cloud ERP application is different from a standard application. Key aspects of a cloud application include statelessness, web-based software, and in some cases multi-tenancy.

Brief History of Web Applications

Prior to the cloud, wide acceptance of web-standards developed by the W3C, IETF, ISO, and others caused network devices to adopt the use of the web browser. Initially web browsers were used to gather information from centrally managed servers located on the internet. As developers used the same web standards to create more interactive applications, individuals began to contribute content, laying the groundwork for Web 2.0 and more sophisticated business applications. Advanced caching and communications protocols improved the experience so that by 2005, web-based applications could rival desktop applications in terms of functionality, performance, and visual appeal.

While the web was exploding in popularity, virtualization and broadband internet drove the cloud infrastructure revolution which reduced the cost of operating centralized web-applications.

Cloud Applications and Cloud Infrastructure Benefits

Cloud infrastructure developments, combined with web software proliferation created a new opportunity for the development of the next generation of application software. The chart below describes different benefits received from cloud infrastructure versus cloud applications. This chart expands on ideas presented in the ERP Cloud News “Cloud ERP and Web-Based Software” article.

Cloud infrastructure and application benefits

In the table, note that the highest value comes from combining the benefits of cloud applications and cloud infrastructure. The combination not only delivers the benefits of cloud infrastructure and cloud applications, but also achieve new benefits that are not inherent in either.

For example, with both infrastructure and application technologies in place, you can involve everybody in business processes. Involving everybody helps companies automate, share, and collaborate. If only accounting personnel are using the system, then benefits are limited because tasks such as time and expense reporting are not fully automated. Cloud applications and infrastructure allow everybody with a browser-enabled device (employees, temp workers, contractors, customers, vendors, investors) to participate in real-time collaboration and workflow. The more people you have contributing and connected to your ERP system, the more timely, accurate, and complete your view of your operations becomes. See Metcalfe’s Law to understand the n2 relationship between value and connected users.

ERP Cloud News Recommendation

Take full advantage of the cloud by purchasing software that run on the cloud and is built for the cloud. Make sure you involve everybody in your organization (including infrequent users) so you can maximize the benefits and value of your system. As more and more people use the system – more and more clever uses of the technology will begin to emerge.