cognizant 20-20 insights
on-premise ERP system, the core IT team is sobusy mending and tweaking that they have littleor no bandwidth to roll out the system to new sub-sidiaries, divisions or processes.A two-tier ERP approach helps organizationsswitly deploy and integrate new processing capa-bilities at subsidiaries or smaller business unitsthat can be seamlessly integrated into the coreon-premise ERP backbone. This approach sig-nicantly reduces the time and cost required toimplement, support and maintain ERP capabilities.Two-tier ERP does not replace on-premise ERP butinstead complements it with more agile, fexibleand lower-cost cloud-based ERP. On-premise ERPstill provides the standardization and consistencyor back-oce systems o record or processessuch as make-to-deliver and record-to-reportthat are vital or ecient operations, regulatoryand legal compliance, and consistent quality(see Figure 1).In short, embracing cloud ERP while maintainingexisting on-premise enterprise applications canhelp organizations do the ollowing:
Penetrate new markets and geographies, whileretaining business agility and fexibility, as wellas lower total cost o ownership and adoptstandard processes.
Quickly link newly acquired businesses into —or separate divested business rom — existingERP systems.
Increase ocus on core business processes bykeeping them on-premise while enabling mar-ket-acing processes via cloud ERP.
Shit spend over time rom Cap-Ex to Op-Ex.
Cloud ERP: Best Option or Two-Tier ERP
Today’s ERP must improve an IT organization’salignment with the business rather than orcethe business to t its processes into a portolioo applications. IT organizations need to innovateand implement fexible systems to support andautomate new processing capabilities or businessagility. Such systems should acilitate globalvisibility, process eciency and standardization.Even as businesses ace these new and urgentchallenges, innovative technologies have creatednew ERP delivery channels that help meet thoseneeds. Since ERP systems were rst deployed,organizations have increasingly turned to virtu-alization. This entails a services approach to ITdelivery and the use o cloud-based systems toreduce costs and quickly add new capabilities,while giving users personalized content and con-sumer-like ease o use.Cloud ERP uses this new computing paradigm toprovide almost all the capabilities o on-premiseERP systems, but in a consumption-based modelthat is considerably less expensive, easier andaster to deploy (and downsize) than on-premiseERP. Cloud ERP eliminates upront Cap-Ex costsand drives better user adoption and value witheasier-to-use interaces.By enabling easier collaboration and inormationaccess, cloud ERP acilitates the rapid pilotingo ideas, easily scalable solutions and aster,lower-cost expansion into new markets. It alsoprovides customer service via digital channelsand makes it easy and less expensive to supportlocal language, tax code, currency or regulatoryrequirements.Cloud ERP provides dierentiated ront-oce“systems o engagement” or unctions such as“procure to pay” or “hire to retire.” This createsvalue by providing superior user experiences anddelivering customized inormation or processfows that support local business needs in areassuch as sales, marketing or customer service.
How Two-Tier ERP Helps the Bottom Line
A two-tier ERP strategy can help companiesovercome key technology challenges, such as:
Application modernization (i.e., end-of-lifeERP migration):
Enterprises considering anapplication modernization strategy can usetwo-tier ERP to continue operating ecientlywhile adapting to rapidly changing businessneeds.
Organizationscan deploy on-premise ERP to support corecorporate unctions while deploying cloud ERPor market-acing unctionalities.
New application requirements:
Cloud ERPcan complement on-premise ERP with next-generation disruptive technologies, such asWeb services and process integration libraries,to enable applications that operate anytime,anywhere.
Cloud ERP shits responsibilityrom the customer to the vendor or upgrades,patches and other unctions. Cloud ERP alsoreduces total cost o ownership by eliminat-ing the need to purchase servers, storage andnetwork capability or on-premise systems.