Critical Success Factors In The Implementation Of Cloud

Based/Hosted ERPs

Abstract

Nowadays, business environment prefer moving their enterprise resource planning (ERP)
systems to the Cloud. Clouds based ERP would play the central role in organizations
especially for small and medium enterprises(SMEs) to work their business in a cost
efficient way(Gupta, & Misra, 2016). The goal is to identify the severe challenges in the
implementation of a cloud based ERP system( Gupta, Misra, Singh, & Kumar, 2017). The
most common challenges identified were security and privacy issues, organizational
change, costs, business intricacy, migration, legal issues, security, awareness, and
performance(Appandairajan, Khan, & Madiajagan, 2012; Gupta, Misra, Singh, & Kumar, 2017;
Peng, & Gala, 2014). Small and medium enterprises(SMEs) of India is one of the mostly
used adoption of ERP Packages. From the cloud point of view network, privacy, and
security plays a significant role in the implementation of cloud ERP(Gupta, & Misra, 2016).
Cloud ERP does not provide any enhancements on the version of the system for an
organization(Peng, & Gala, 2014). ERP is more difficult to maintain in a hosted
environment because of the control and privacy or security issues(Weng, & Hung, 2014).
There are many issues that must be consider when implementing cloud ERP systems.

Keywords: Cloud Computing, ERP, critical success factors, SaaS ERP, SME

1. Introduction

ERPs have been broadly executed by a large number of learning concentrated

associations, with any size (for example counting enormous organizations, yet in addition
small and medium enterprises or SMEs), in numerous parts (for example fabricating
firms, banks, colleges, and medical clinics), and in numerous nations (for example
Western nations like the USA and Europe just as Pacific Asian nations like China and
India). ERP is a framework that give capacities to help business and departments inside
an organization. In today's competitive market, companies are continuously looking for
ways to operate more efficiently and reduce costs. In order to attain these goals,
information technology (IT) can be a good option ( Muslmani, Kazakzeh, Ayoubi, &
Aljawarneh, 2018).

Cloud computing presently is a virtualized Information and communication

technologies(ICT) asset and gradually rearrangeable to meet the particular needs of the
adopting organization((Weng, & Hung, 2014)). Cloud ERP is very simple to dispose and
does not need broad IT foundation regarding hardware and software(Gupta, Misra, Singh, &
Kumar, 2017). Organizations doesn’t need to pay for additional server and other dependent
expense. The Cloud computing empowers enterprise to release their potential for
advancement through more prominent knowledge, innovativeness, adaptability and
proficiency, all at decreased cost(Weng, & Hung, 2014). Some cloud programming are
generally acknowledged and actualized by organizations. Successful implementation for
ERP framework is a key factor to keep the enterprise developing and extending. While
adopting an ERP in SMEs, there are many success factors and implementation constraints
that are created in context of each SME’s business.( Venkatraman, & Fahd, 2016) Cloud
ERP utilizes the thoughts of utility processing.

For the implementation of an ERP, a few details for hardware and software are required
to effectively install and run the system. From getting new servers, to licenses, updates
and other required particulars that is stated by the software vendor. These prerequisites
expend time and costs and may rise the time duration for implementation of ERP
systems, further more difficulties that implementers may face during the
implementation(Gupta, Misra, Singh, & Kumar, 2017). Though, ERP on Cloud were
introduced also called as SaaS (Software as a Service). There are many critical success
factors (CSFs) that have an influence on the performance of a small and medium
enterprises (SME). These critical success factors can play a serious role in the
implementation of cloud ERP. ERP may not automatically integrate with legacy systems.
Even if the SME has waged extreme attention to the CSFs, faulty services of cloud
vendor can negate the successful implementation of cloud ERP( Purohit, Jaiswal, & Pandey,
2012). Another problem with the implementation of cloud ERP is that it is fully
dependent on the internet to function.

2. Ontology of Cloud ERP

As to create an application, it is essential to have an infrastructure collected of three

layers: the hardware, the operating system and a cloud software infrastructure. The
hardware HaaS (Hardware as a Service) is the lowest layer, that delivers crucial power
capacity to the customer or the software developer. The operating system should be
appropriate for the creation of a cloud environment. A cloud software infrastructure is a
set of tools that are essential for the management of the power size(Lenart, 2011).

Cloud computing is characterized as an online type of figuring, like Web 2.0 where
clients can get to applications via a browser. Indeed, even the application is installed and
information is put on a server which isn't remote. Cloud computing states to both the
applications carried as services over the Internet and the hardware and systems software
in the data hubs that provide those services. In the SaaS model, clients pay for software
hosted by the vendor(Andročec, Picek, Mijač, 2018; Lenart, 2011).

3. Background

After the financial crisis in 2008, companies were looking out for ways and means to
reduce their IT infrastructure cost and also increase their return on investment (OECD,
2013). ERP helps to manage the various resources of the company by integrating the
information of various processes spread across the organization (Buonanno et al., 2005;
Laukkanen et al., 2007). There are benefits and drawbacks of on-premise ERP solution.
A company risks by investing heavily by installing on-premise ERP system and
maintaining the requisite IT infrastructure required to support this system (Lenart, 2011).
Cloud ERP makes companies with limited budget to have access to technology that
provides benefits of on-premise ERP solution in a more affordable manner. This ERP
solution is gaining popularity and both the SMEs as well as large companies are making
use of this cloud based ERP to reduce the cost and maintenance of IT infrastructure
(Klaus et al., 2000; Buonanno et al., 2005). There are studies that have suggested that
cloud ERP will take over the on-premise ERP model and cloud based systems are going
to be the backbone of organizations in the future (Marston et al., 2010; Benlian and Hess,
2011; Lenart, 2011, Aleem and Sprott, 2013; Arnesen, 2013).[2]

Cloud ERP is a comparatively new region of research and there is limited technical
literature identified with cloud ERP selection because of absence of academic studies.
Therefore figure out the literature review on the related areas such as trainings led on
adoption of new technologies, cloud ERP benefits, and challenges in implementation of
cloud ERP(Gupta, Misra, Singh, & Kumar, 2017). The ERP studies focus merely on
challenges related to on-premises systems and are now receiving someway extremely
generous. ERP studies in the new cloud environment are hardly found in the literature.
Also cloud researchers just observed at problems of cloud computing in general, but
abandoned the changes and exclusive features fixed in different types of cloud
applications and services, such as cloud ERPs. Yet cloud applications, also known as
Software-as-a-Service (SaaS) applications, can take many different forms, extending
from simple personal document storage tools (e.g. Google Docs), to corporate email
systems (e.g. Google Apps Email), to enterprise-wide applications (e.g. cloud ERPs)
(Peng, & Gala, 2014). ERP has involved very large attention from both the industry and
the academe during the last two years. Also the problems faced by cloud vendors can
straight influence the performance of the SMEs. Now SMEs not only takes care of the
many issues that affect the implementation of cloud ERP but also it has to take into
standard of the various challenges that a cloud vendor faces. Cloud user and cloud service
providers need to work couple with one another and in this manner if any one of the two
is not performing appropriately, it will have an effect on the overall implementation of
cloud ERP services(Gupta, Misra, Singh, & Kumar, 2017; Peng, & Gala, 2014 ).

4. Critical Success Factors for Cloud ERP Implementation

CSFs are important as it is essential to successful performance in a modest business
environment. The numerous CSFs considered for a cloud user are grouped into three
wide categories. They are namely, organizational factors, people factor, and technological
factors. Tactical goals and ideas cover the path for a SME to attain the desired objective.
It is important for a company to have straightforward objectives so that all the work
principles to the fulfillment of objectives. Organization confrontation has been a factor
that the SMEs face when moving from traditional means of leading the business to cloud
based ERP. The organizational culture must be liberal, so that the employees of the
company do not attack in learning the new ways of performing the same work. Report
within the company must be transparent and specific, so that there is no ambiguity in the
understanding of the various job roles of employees(Gupta, & Misra, 2016).

It is much for an organization to effectively involve the employees during the adoption
and implementation of cloud ERP. Convenience of the cloud solution can reduce the time
delays in the completion of work. Employee’s skills should be updated frequently so that
he can have the field skill. Selections of vendor is a critical decision that every SME
needs to make so as to move to cloud based services. Selection of ERP should be
carefully made so that it bouts the requirements of the business process. The result should
be on numerous cloud layers like SaaS, PaaS, and IaaS. Also, the distribution model of
cloud ERP must be in sync and related to the nature of business(Gupta, & Misra, 2016;
Bhatti, 2005; Hasibuan, Dantes, 2012).

5. Challenges in implementation of cloud ERP

To list down the challenges, the study of factors that initiative the adoption of ERP
systems needs to be understood. They are cost, flexibility and scalability. The elementary
challenges of Cloud based ERP will be:

 Exertion of removing data from the cloud

  Guarantee on the Average Network Latency
 Business complexity
 Bandwidth & Traffic management through Internet
 Data security problems and absence of confidence
 Integration
 Issues as the reliability and performance of the cloud based ERP
 Risk of Open Access
 Customization issues
 Loss of IT Competencies
 Resource Scalability on recurrent and or incessant increase in demand
 Issues of the budget
 Legal issues and responsibility
 Security issues
 Data Extraction
 General monitoring, analysis and building trust in the implementation of
the cloud based ERP
 Approach to implementation
 Long term Cost
 Limited resource
 Issues related to the resistance complexity

Also some possible challenges in the implementation of cloud ERP :

 Monitoring: The administration and monitoring of very important resources (for

example, customers, procedures, the data of dealers, information of products and
dealings conducted on a daily basis) are not measured by the company using
cloud ERP segment. This can lead to loss of information or holdup as the vendor
has contact to the entire data of the company by using its hired services.
Companies that have been used to manage their assets on their private and find it
 problematic to give the sways of their in the know of information to be achieved
by cloud provider (Suciu et al., 2012). Cloud vendor must be able to validate to
their customers that their display place is secure and fulfills with the legal
standards set by the industry and the nation.
 Migration: Migrating from the on-premise ERP to cloud based ERP solution can
be costly as the information structure and the database of these two types of ERP
is changed. This migration can also be very time consuming as combination of
existing services of ERP used by the company, customization, and testing are vital
for level of transitioning. Businesses moving data to the cloud need to plan for the
vilest and confirm that their current business will not be impacted if there are
delays. Disparate on-premise ERP module, cloud ERP does not require several
advisors which act as an advantage while migrating to cloud ERP. Migration for
small and medium enterprise(SMEs) can be very easier as they are more flexible
to change and adapt themselves to the changing business needs. Migration can be
a challenge for huge companies to shift to cloud based services as the cost
involved to migrate is high. Money spent amid the relocation just as training of
the user to the new system can be remunerated by the profits of cloud ERP like
no IT infrastructure cost and less manpower obligation.
 Network Dependency
The most fundamental challenge of cloud computing is its dependency to the
internet infrastructure. Internet connection is needed in order to access the cloud,
and like anything connection based, it is disposed to outages and service
disruptions at any time. Companies which depend on real time transactions would
be severely dependent on the network speed and connectivity. Both large
organizations and SMEs would want to exploit the benefits of cloud based
services like real time transactions and data transfer. This means that it could
happen during a very important task or transaction, any delaying it or losing it
completely if it was time constrained.
 Change Management

The implementation of cloud ERP needs real investment in change management.

The impression that this change might have on your staffs should be managed
well and not undervalued. If you well prepare in advance, and start even before
the ERP migration process, your employees will know what to expect and how to
manage their expectations. Make a senior manager that is responsible for change
management. Deliver clear messages to involve users.

Responses(%)
Application Performance 40

Data and application security 20

Integration with other system 40

Meeting industry compliance requirement 0

Inability to cutomise the application meet business needs 60

loss of control over change made to the system 20

Risk of being locked in vendor's platform 20

0 10 20 30 40 50 60 70

Figure.1critical success factor when adopting cloud based ERP

6. Research Methodology

Data is collected from different papers on challenges of implementation of cloud

based ERPs. Also collected from different searches. In some papers the data
collected through questionnaire that was statistically assessed using data analysis
 software and techniques. The survey was passed out using web-based
questionnaire and was sent to all the segments including telecommunications, IT,
legal services etc. that are working cloud based ERP services. Defendants were
asked to complete the questionnaire by filling it with their answers and it
contained of multiple choice questions which made them easier and faster for
respondents to answer.

7. Critical Success Factors for implementation of ERP Compared

Across Various Countries

ID CSFs USA UAE India

1. Business Business and IT legacy Before going to ERP Cloud ERP can
and IT frameworks decide its level implementation, Libra Gas challenging when extend
complexity and organizational change consulted two external to numerous departments
essential for ERP companies in the similar large organizations
implementation achievement. industry that have ERP growing to new geographi
So the greater the complexity experiences. Lessons learned or new business lines. T
of legacy systems, the greater from those two companies’ business complexity in lar
the amount of technological issues and mistakes facilitated organizations is more th
and organizational change Libra Gas’s ERP project the that in SMEs.
required. To be effective, ERP extensively.
implementation efforts must
beat issues of complexity
emerging from business and IT
legacy systems.

2. Change Wee (2000) supported Libra Gas’s upper management Implementing a cloud ER
Management founding a support provided essential resources to system carries a lot
organization to meet users’ enable ERP implementation changes in the functioning
 needs and manage from the beginning. The the organization. SMEs a
organizational change. tactical planning for Pisces large organizations chan
Training, re-skilling, and Petroleum’s ERP project from each other. The reas
expert development of the IT specifically required top for this change is that
staff are also critical especially management’s assurance from large organization it is ve
in ERP software project and the beginning. All challenging and also ve
implementation methodology. departmental heads were time consuming to conv
An organization’s promise to intricate in ERP planning at all training to large numbers
change is imitated in its stages. employees in
persistence and determination organization. For sm
in facing implementation organizations this may not
problems (Shanks et al., 2000). the problem as handling
small group of employees
easier and adapted attenti
can be given to t
employees.

3. Monitoring Preferably, there might be early This factor was achieved by Cloud based ERP ha
and proof of success to manage weekly reports and ERP performance hazards that a
Performance incredulity (Rosario, newsletters spread to the entire correlated to unreliab
2000).Management needs company. Monthly meetings bandwidth speed, reliabili
information on the result of the were also detained to confirm and outage risks of netwo
ERP system on business ERP project meet its and constraints on da
performance, for which reports requirement and expectation. transfer (Kim et al., 2009
are essential to be designed. Insufficient performance
Users of the report applications cloud based ERP system
should be trained (Sumner, can have an adversati
1999). Regular reports and influence on the prese
project updates can help the decision making
management display the important economic a
progress of the implementation operational decision
 struggle. Performance of cloud bas
ERP system can be linked
the contribution co
involved as the lower a
basic services accessib
through cloud ERP can on
provide to some essent
solutions.

8. Conclusion
Cloud computing technologies may look like a comparatively new concept
because of the speedy adoption of late, but they are essentially an improvement on
present concepts that have been exist in business. Cloud computing states to both
the applications carried as services over the Internet and the hardware and systems
software in the data hubs that provide those services. Cloud based services have
become the preferred choice of SMEs in today’s world. The implementation of
cloud based ERP was studied in detail by examining the strategies for
implementation and the key challenges which will be faced during the
implementation. Most of the challenges, SMEs and large organizations were
different. They have different awareness about the specific challenge and the
challenges which do not have different awareness, shows that they have the
similar perception about the disturbed challenge. The defendants of SMEs and
large organization agree that the challenges they both find similar were business
complexity, integration, monitoring, security, limited functionality, performance
and honor of worker. The services presented by cloud ERP not only benefits the
SMEs but also it creates a system for the cloud vendors to exist in tandem. ERP is
among the more reasonable choices to keep in a hosted environment because of
the added levels of control and security that any business will be able to
implement. The main objective of this study was identifying challenges in
 adoption of cloud ERP implementation. The findings may help the organizations
to get a extensive idea about the challenges/factors which are serious for the
implementation of cloud based ERP.

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