ERP systems are always business-critical and therefore not the first systems to be transferred to the cloud. Medium-sized manufacturing companies are still reluctant, especially when it comes to their core processes. However, if companies play for time, they may lose the productivity benefits that a cloud ERP offers. As the average age of an ERP installation is more than eleven years and many SMEs are due for a replacement, a hybrid cloud architecture is a good place to start. Six strategic questions show how SMEs can approach the ERP cloud step by step.

1. which cloud approach is ideal?

If a company decides to use ERP in the cloud, the question of the optimal cloud approach arises. Is the company in a development or modernization phase? Then a standardized Software as a Service (SaaS) solution is a good choice. If an existing ERP is to be migrated to the cloud in full or in part, then a hosting model is a good choice. To test live operation first, companies can also opt for temporary "implementation hosting". This is an individually replicated on-premise system.

2. does the entire ERP have to go into the cloud?

Not everything that can be in the cloud has to be in the cloud! A hybrid architecture offers the option of running applications partly locally and partly from the cloud. This sensible combination of both worlds currently provides the greatest added value for medium-sized manufacturers. The rule of thumb is: the closer an application is to a company's core processes, the more sensible it is to operate it in a cloud. Conversely, this means that the further away an application is from the core processes, the more sensible it is to migrate it to the cloud, for example for e-procurement solutions.

3. how to ensure smooth data exchange to and from the cloud?

In manufacturing in particular, other specialist applications are often used in addition to the ERP system, such as for production control or the design of technical solutions, which cannot simply be transferred to the cloud. These can continue to be used on-premise. They can be easily connected to a cloud ERP via a standardized integration platform, such as an Integration Workbench (INWB). The only requirement is that a clearly addressable interface exists in the target system. The data transfer itself takes place via a highly secure VPN connection.

4 When to outsource other applications?

Many downstream applications are ideal for use in the cloud, especially if they support mobile or cross-location working methods for employees. For example, it may be a good idea to host Office applications in conjunction with the ERP system. Other applications such as VoIP telephony, EDI, Exchange, a web store or B2B solutions are also suitable. The cloud ERP remains at the center of the company's IT infrastructure and acts as a data hub.

The author: Michael Bzdega is Solution Architect Business Cloud at proAlpha

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5 Which basic architecture for hosting?

To ensure a high level of acceptance by employees, the front end of a hosted ERP cloud solution should be simple and intuitive to use. If no new ERP system is to be introduced, it makes sense to adopt the established and familiar interface of the previous on-premise system 1:1. The front end must meet all the requirements of a secure, mobile, flexible and virtual workplace. This includes location-independent access at any time and with any end device, high performance and a fast user login.

6 What about data security and provider compliance?

For many companies, a cloud environment offers higher overall security standards than in-house ERP operations in their own data center. One indicator of a provider's careful handling of productive data is the operation of a second data center in the cloud for security purposes as well as certificates, such as ISO 27001 for information security management. In order to comply with the strict German data protection regulations, there is no way around cloud data centers in Germany.