By Len de Goede, Vice President Systems Integration at T-Systems in South Africa
It is widely acknowledged that ERP solutions deliver significant benefits, including improved productivity and business insight, improved process standardisation, efficiency, and adaptability and reduced risk. However ERP operations are not a core strength for the majority of organisations. In order to leverage the true value from ERP solutions and services, it makes sense to outsource these to a professional provider that understands the intricacies and has the breadth of experience from working with multiple clients that all experience different scenarios and challenges.
Outsourced application operations for ERP solutions enable organisations to gain access to high quality ERP services tailored to their business requirements, as well as access to a pool of specialist skills and resources to draw on when necessary. This also ensures that organisations are always up to date with the latest technology, and provides greater flexibility with regard to cost structures.
ERP environments can be enormously complex to run, entailing much more than simply provision of infrastructure. These environments consist of several layers, from infrastructure to basic operations, products and provisioning to application management services and system integration services. This often requires additional services to ensure smooth operations and consistent service provision. ERP application operations can enable organisations to outsource any or all of these layers to ensure they are getting the most out of their ERP solution.
An outsourced ERP solution should always include as a first step a governance model, which clearly defines touch points between the customer and the outsource provider. Services should be ITIL compliant, and all processes and procedures should be underpinned by best practice methodology. Once this is in place, the various layers of an ERP environment can be considered in a modular or holistic approach depending on requirements.
Underlying ICT infrastructure should be run on an open, industry standard platform that supports all operating systems. This infrastructure includes all aspects of ICT, from fire protection systems and backup power generators to air conditioning, racks, servers and processors. Network services, desktop services, mobile device integration, storage on demand services and firewall services should also be included to ensure that a comprehensive infrastructure-centric solution is offered.
Operations consist of all computing activities carried out in conjunction with the provisioning and operation of an ERP environment. These include IT infrastructure service such as consulting, configuration, installation, start-up and monitoring. Key tasks that can be outsourced here include hosting, storage and database management as well as ERP services. By outsourcing these aspects organisations can gain access to highly trained specialists who will be responsible for monitoring, reporting, adherence to Service Level Agreements (SLAs) and provision of second and third level support.
The ERP applications layer is one which is quite commonly outsourced, both in terms of technical infrastructure and software, with a view to cutting costs and enabling organisations to focus on their core business. Application operations provide organisations with the ability to become more flexible and agile with their ERP applications in regard to changing requirements. Outsourcing this service enables organisations to leverage the specialist skills required to modify applications to meet dynamic business conditions. These skills are often too expensive to maintain in-house, as application modification is not often a full-time requirement and is not a core business function for most organisations.
On top of these layers it is also possible to outsource application management and modernisation (AMM) and system integration services, which include application development, upgrading, maintenance and modernisation of existing applications. Consulting services are another commonly outsourced area, helping organisations to optimise their ERP operations and system configurations and update landscapes.
ERP, as with all ICT services, should be fully scalable in line with the dynamic and constantly changing modern business environment. This makes outsourcing an attractive option, as this model ensures that services and resources are supplied on demand, offering greater flexibility and value for money.
From a financial perspective, outsourced ERP applications operations have the potential to save organisations money on a sustained basis, turning CAPEX into OPEX and reducing the financial risk that is often associated with operating an ERP environment. Added to this the complexity of the ERP environment and the need for performance, security, transparency and cost-effectiveness, and the argument for outsourcing to a skilled and experienced partner is a compelling one.