Can ERP Keep Up with the Speed of Business?

Thanks to the web, today’s local startup can become tomorrow’s global competitor—literally. A good business idea and a strong web strategy can create a new market almost overnight. At the same time, that good idea can be quickly swamped by more nimble competitors if it has to drag an outdated ERP infrastructure along behind it.

Conventional on-premise ERP software, originally designed in the 1990s or earlier, has a hard time keeping up with the global aspirations of many of today’s aggressive organizations. Asking an older ERP architecture to support a new, aggressive subsidiary with multiple online sales channels and a dynamic, multi-warehouse logistics organization is asking for trouble. It may require rolling out a new instance, a version upgrade and/or hiring new development and maintenance staff.  It may take many months, and the budget may go well over expectations.

By contrast, a cloud-based ERP system brings flexibility and cost-predictability that conventional ERP designs can never hope to achieve. Because it’s cloud-based, the software is automatically kept on the latest version, and because it’s web-friendly, a new office setup requires little more than a user laptop—or even an iPhone—for access.

And because its financial, inventory management, ecommerce, CRM and other applications are integrated and delivered only as needed via the cloud, it doesn’t force users to pay for more processing power than they need, so it doesn’t penalize growth with a large up-front capital investment.

Called the fastest-growing company in history, Groupon is an example of a how an aggressive company can leverage cloud ERP for growth. Groupon, whose revenues expanded to more than $700 million in 2010 from $30 million in 2009, needed to add one country every three weeks to meet a one-year growth plan. It selected NetSuite cloud ERP to replace its Microsoft Dynamics GP software so its financial processes wouldn’t be sacrificed to keep pace with growth, and its ERP system would stay in alignment with the company’s aggressive growth strategy.

Another company, Olympus, chose NetSuite ERP to power a new subsidiary in India, rather than deploy an up-to-date version of its SAP central ERP system based in the company’s Japan headquarters. A major reason for the selection was the company’s need to bring the new subsidiary online quickly. The installation beat Olympus’ own nine-month installation objective by 33% by going live in just six months, and it now serves as a prototype for future two-tier ERP installations at Olympus.