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STUDY& ANALYSIS OF CLOUD BASED ERP SERVICES

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International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

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STUDY& ANALYSIS OF CLOUD BASED ERP SERVICES

Rajeev Sharma1 and Bright Keswani2 1M Tech. Scholar, Department of Computer Science & Engineering, Suresh Gyan Vihar University, Rajasthan, India

2HOD, Department of Computer Application, Suresh Gyan Vihar University, Rajasthan, India

*Corresponding Author's Email: [email protected]

Abstract

The purpose of this research paper is to explore the knowledge of the existing studies

related to cloud computing current trend. The outcome of my work will be demonstrated in

the form of diagram which will exemplify the ERP integration process for in-house and cloud

eco-system. It will provide a conceptual view to the new client or entrepreneurs using ERP

services and explain them how to deal with two stages of ERP systems (cloud and in-house).

Also suggest how to improve knowledge about ERP services and implementation process for

both stages. The work recommends which ERP services can be outsourced over the cloud.

Cloud ERP is a mix of standard ERP services along with cloud flexibility and low cost to

afford these services. This is a recent phenomenon in enterprise service offering. For most of

non IT background entrepreneurs it is unclear and broad concept, since all the research work

related to it are done in couple of years. Most of cloud ERP vendors describe their products

as straight forward tasks. The process and selection of Cloud ERP Services and vendors is

not clear. This research work draws a framework for selecting non-core business process

from preferred ERP service partners. It also recommends which ERP services outsourced first

over the cloud, and the security issues related to data or information moved out from

company premises to the cloud eco-system.

Keywords: ERP Service, Cloud Computing, Cloud Based ERP.

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

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1- Introduction

Essentials of cloud ERP

The principles of cloud ERP is originated from the term cloud computing. To explain

what cloud ERP means, it will be compulsory to first classify cloud computing and its

significance. Mr. Miller states that cloud computing are based on the computer terminology

Cloud which is seen to be several computers (thin & thick client) and servers connected

through World Wide Web (WWW) or internet. Computers can be personal computers

(PDAs, Mobile Devices) or network servers; they can be public, private or hybrid. Mr.

Jennings describe the term cloud computing means access remotely to computing services

offered by third parties (vendor of offering cloud based services).the term Cloud computing

was evolved due to the revolution of internet. Researcher published that cloud computing

gets its name as a symbol for the internet (as World Wide Web is life line for cloud services).

This statement was confirmed by Mr.Rittinghouse & Ransome, stating that the term cloud

has been used traditionally as a synonym for the internet based services. Most of scholar &

researchers agree that cloud based services has three layers. Group of researcher explained

these three layers as three inter-related stacks: Software as a Service, Platform as a Service

and Infrastructure as a Service as it shows in Diagram 1.1.

 SaaS web services and business applications (apps) are designed for end-users,

delivered over the www or internet.

 PaaS is the set of web services and tools structured to make coding and deploying

those services and applications rapid and proficiently.

 IaaS is the Information Technology Infrastructure (hardware and software part) that

empowers the organization to outsource these non core activities related to IT

Infrastructures e.g. operating systems, storage, routers, distribution systems, servers

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

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and networks to third party. Now, Organization can be focused in to core business

processes.

 CaaS – It is another flavor of cloud which facilitates the organization by outsourcing

all the communication need of particular business activities.

Figure 1: Cloud Eco System

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

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Federal Financial Institutions Examination Council Information Technology Subcommittee

(2012, 1) concrete the area of cloud computing: “….. the term cloud computing is a

comparatively latest terminology used to express diverse acknowledged business process

flows, technologies, and processing techniques. Even though, the cloud technology demand is

rising as per change in current business needs still there is no common definition. Several

business processes, strategies, technologies, platforms, frameworks and architectures are

suggested as cloud computing. Generally, cloud computing is a scheme of immigration from

in-house resources to shared resources in which customer employees get enterprise services,

on demand, from third-party service vendors by WWW or Internet. These lines present a

specific definition of cloud phenomenon…..”.

The National Institute of Standards and Technology (NIST) (2011), presented the

terminology in a different words:”…..As per report it is a model of web services distribution

using flexible, low cost and easy available platform. Hence, the model empowers

convenience, sharing of pooled IT Infrastructure as per business demand or situation permit.

It provide computing resources (e.g., enterprise products, networks, servers, storage, business

applications, and readymade services), that can be consumed instantly as trend changes in

business and free with negligible management effort or service vendors communication”.

Additional the report, described the cloud services from usefulness or the relation with user´s

viewpoint.

The cloud based web services are used through internet (WWW) from a dedicated server

that manage and store all related web services within a cloud. If the computer crashes due to

some calamity or other reasons, the report created will be saved on the server that hosts the

package of web services which can be accessed through web by other users as well.

Correspondingly, if we think of ERP packaged services being stored in a dedicated server in

the cloud, the ERP system is used through web with predefined access rights. So, cloud ERP

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

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is an ERP system which is hosted over the cloud platform by service provider. It will offer

equivalent modules & services that are in the standard ERP package that is implemented on

the organization’s locations. There are many advantages if we look cloud ERP as a software

project. Group of researcher believed in these advantages when they recommend applying

cloud computing to project management. These advantages consist of faster ERP

implementations, minimal operating costs with superior flexibility, scalability, profitability,

malleability and consistency to the organization´s business and dependent activities. Cloud

services are a type of web applications or software; it provides solutions that can be

accessible at any time, in any location with no physical boundaries in the world and by any

person with accessing rights [3] [4].

Now we can acknowledge that cloud services will change the way of working patters of

different ERP users around the globe, they will not be limited by working location or time as

long as they are connected to web. Mr. Rittinghouse and Ransome published that different

electronic service (e-services) based on website was recognized earlier in 1999 by Mr.Marc

Benioff (former Oracle executive), who have given the notion of offering enterprise services

and solutions through a simple web site. Though, there are four diverse types of Clouds

Diagram 1.1, as suggested by Mr.Huth and Cebula , users can opt any type of given clouds

depending on their unique requirements [20]:

“As a small business owner and personal user will generally use public cloud services”.

1. Public cloud - Easily accessed by any user with a connection to the internet and

access to the cloud eco-system.

2. Private cloud - It is established for a particular group or company and limits access

to just that group.

3. Community cloud – It is shared among two or more organizations that have

analogous cloud necessities.

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

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4. Hybrid cloud - It is a mash up of minimum two Clouds, where the Clouds included

a mix of public, private or community”.

Most of other researchers and ERP providers SAP (2013), Oracle (2013), Ramco (2013),

categorize cloud types mainly in four categories: public cloud, private cloud, community

cloud and hybrid cloud. As diagram 1.1 is showing that community cloud is a part of public

cloud if it does not necessitate any particular access rights, or else it will come under private

cloud with the specific access rights.

2- Research Outcome

(The decision has been made by the text mining results of the Rapidminer Data mining tool

version 5.3)

Which Enterprise services can be outsourced over the cloud ERP?

As per outcome of various published articles, web-blogs and interviews of many IT

experts in ERP services and domain experts in manufacturing firms; there are not a major

differences between in-house ERP and cloud ERP; together will satisfied the customers

(SMEs from different industry verticals) need once these needs are recognized. The majority

of SMEs in all vertical are still hesitant in replacing in-house ERP to the cloud by

implementing cloud ERP as Software as a service (SaaS). However, there are numerous

organizations which have personalized cloud ERP as conversion from in-house to the cloud.

A group of SMEs prefer to stay with in-house style. Other group of SMEs have took decision

to use both flavor of ERP enterprise services, the in-house version of standard ERP generally

installed in central offices of the parent company; this happens when the organization has

several subsidiaries in other geographic locations.

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

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In favor of newly launched SMEs they will implement or have implemented cloud ERP

services in starting of business, they are suggested to delay in outsourcing cloud ERP services

because intensive research work is required. In-house ERP and cloud ERP have same

modules and services in general. SMEs may outsource any enterprise services whenever they

required particular expertise in non-core business process which cannot provide by their own

employees. Hence, the below described services can be outsourced over cloud ERP as

discussed.

HRM (Human Resource Management) activities:

I propose outsourcing HRM module as primary step toward outsourcing to the third party.

almost every organization need either to hire new workforce as their existing ones retire or

simply leave for vacation or due to other reasons (e.g. family condition, better opportunities

etc.). Identifying the right skills and capable workers is difficult exercise; it consumes lot of

time and resources. In other hand, SMEs should search their workforce in right time before

retirements or to fill short-term open positions which can be due to sick or maternity leave.

Due to HRM outsourcing over the cloud ERP the organizations will have a prospect to

appoint the required capabilities in short time. After taking first lap, the SMEs will have an

experience that how the outsourcing works for cloud environment. This HRM services

procurement will be the learning phase in the direction of outsourcing other ERP modules in

cloud eco-system.

Critical data storage and server maintenance activities outsourcing:

This research work is in context of SMEs (small and midsized enterprises in manufacturing

domain) hence the cloud based ERP service that can be outsourced should not be part of the

manufacturing activities, such as production, product design in terms of know-how that give

a competitive advantage for the company over their competitors e.g. Tata steel out sourced

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

382

non-core IT infrastructure processes to TCS. On the other hand, using cloud ERP based on

SaaS model will necessitate in special to buy cloud ERP storage in specific case where the

actual ERP will take place, in other words the cloud ERP provider may offer cloud storage as

well. The storage space over the cloud can be rented from ERP vendor or from various cloud

service providers. However, cloud storage will contain organizations data (master and

transactional data) and will require regular server maintenance which can be outsourced as

service in cloud eco-system. Yet, outsourcing data storage services can be in other countries

which have different laws than the home country of SMEs. The upsetting issue is that the

majority of firms do not necessary know where their data is stored although the provider is in

same country of the SMEs. There is no guarantee that clouds vendor’s necessarily own the

cloud. SMEs have to know the geographic physical location of their data storage, possibly in

same country where the law is well established. The law has to protect customer’s data

ownership.

Payroll functions outsourcing:

This is an essential business activity of any organization and it can be consider under non-

core business processes and planning services. Payroll outsourcing practice has been

experienced by every second company in business scenario and it has been advantageous in

terms of low outsourcing cost. The SMEs can outsource payroll using cloud based ERP

services under finance module. The organizations with the help of new platform or

technologies and using the expert view of IT consultant can link their cloud ERP to niche

third party partner. This will empower the manufacturing firms to stay away from payroll

trained employees in their premises simultaneously saving the costs of the software licenses

needed to process payroll activities. In addition to that payroll outsourcing can release the

burden of tax calculations and other lawful rules that can be complex to SMEs but can be

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

383

easily maintain by specialized third party vender by fulfillment of payroll business process

with the legislation rules.

Logistics and supply chain activities:

It is a part of supply chain management module and several activities in logistics are

necessary to facilitate the flow of manufacturing product from point of origin (raw material

exploration) to point of sell (where consumer buys the finished goods). Cloud ERP contains a

separate module that is reserved to logistics business processes. Many of them do not have

own transportation vehicles to transport their raw materials and products. Hence, outsourcing

this enterprise non core business process over the cloud can be more advantageous in terms

of money and time saving. There is one more non-core business process which can be

outsourced within logistics modules is the inventory management (compulsory in

manufacturing domain) including warehouses and raw material storage.

By adapting this business decision, the manufacturing firms can benefits from raw

material, toll charges, fuel and market price forecasting. The forecasting (predicting market

trends) can be build in cloud based ERP services in sort of added apps and can be embed in

dashboard apps that facilitate visual real time information for management associates. The

real time information can be verifying on dashboard apps, like raw material availability from

different suppliers, locations and prices discount offers. The moving of firm’s material can be

tracked by implanting RFID in trucks; it can facilitate Just-In-Time (JIT) delivery of raw

material and finished goods.

Outsourcing of marketing related activities:

Cloud ERP facilitates marketing by a separate module on this. As it is already mentioned

in point 4 that marketing activities will help manufacturing firms to get response from their

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

384

existing regular & irregular customers, reach new customers and new ideas on how to be

pioneer in new markets (in last quarter Hero Moto Corp launched its flagship bike splendor in

African countries which are new market for the Hero). Innovation can be achieved by

improving existing products and services or inventing new products and services. Hence

manufacturing firms can outsource marketing services over cloud ERP.

Outsourcing marketing to the third party is typically expecting intervention of social

media platforms which are rich of customer’s information. The information can be:

customer’s expectations, judgments, and complaints about the organization’s or competitors

products, new ideas for new innovation; we are living in era where customers drive changes

through social network platforms. All this information can be crucial in shaping the

manufacturing companies competitive advantage. But the puzzle here is: how can

manufacturing firms select the right marketing partner? Special business consultants (e.g.

Boston consulting group) may solve this puzzle.

Data service management:

Outsourcing need arise to this module usually when cloud ERP partner offer only standard

ERP system over the cloud. It will necessitate securing and protecting data over the cloud by

using third party services. The third party service provider will ensure the data security,

safety, control, availability, and accessibility around the clock and data ownership as

discussed in point 4. For securing data the service provider generally uses masking or

encrypting of the master data, for making leak proof environment for data services provider

generally uses discretionary access control (DAC) or Mandatory Access Control (MAC) in

combination with encryption algorithms.

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

385

Added-On applications:

These apps can be the extra tools or add-on service offering that are not included in the

standard cloud ERP. All SMEs will not utilize same cloud ERP modules with same service

offerings; each one practices its own methods of manufacturing processes in a different way

even though they might produce same or identical products. One example of these added

apps can be dashboards or intelligent user friendly GUI that enables management associates

to access real time information with greater transparency. Hence outsourcing services

offerings over the cloud ERP appear quite complex and interfered with each other. As cloud

ERP is based on SaaS model, the cloud ERP services consumer need only the internet

connection and computer or any mobile device that enables users to log-in with their ID’s or

usernames and passwords. Physical presence on particular premises does not matter here, so

the third party service provider will have their own ID’s and passwords. They can use ID’s

and passwords only for the task they should perform. Similar, to the in-house ERP users from

different departments have their own ID’s and passwords.

Users can pay and use the needed ERP modules according to their business demand. HRM

modules will be handled with HR expert, logistics will be handled with logistics experts and

so on. None of these enterprise services will hinder with other activities, users will not

necessary know each other. ERP systems integrations are used in complex organization

structure and carefully taken into consideration; it will involve enormous work to convert

data to be companionable with all diverse ERP systems. Hence forth before outsourcing

services, firms are suggested to select the right cloud ERP that will be companionable with

their partners ERP systems it would be easy if the group of partners create alliances that use

same ERP system and allows them to avoid the burden of ERP system integration that might

consume a considerable time and human resources (e.g. Reliance is using SAP ERP Services

across all the business verticals).

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

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Figure 2: Typical scenario of SMEs in Cloud ERP eco-system

SOURCE: Based on my ERP experience & research work

In the Fig. 2, the locks and keys shows that each user from different third party has own

ID and password that allow him or her to log in the cloud ERP system. All the data will

remain in private cloud of the manufacturing companies. The intelligent system used for

monitoring the cloud eco-system in order to ensure the safety and security of the

implemented system.

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

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3- Which ERP data can be kept in-house and which can be moved to the

cloud?

Cloud is latest buzzword in computer system terminology and platform, the area is widely

researched by information system management (ISM) researchers also. According to ISM

researchers the cloud is misunderstood technology but still it gained attraction from different

industries and communities. On the other hand, the cloud concept is new notion for various

SMEs (small and medium size enterprises). The majority of small and midsized

manufacturing firms see that moving data to cloud and will be a challenging, confusing and

worrying task. The below given data is recommended to remain in the company’s location:

Data of Core business processes:

The data is life-line for any manufacturing company and cannot be shared at any cost. The

core data comprises design of core business processes, data related to raw material cast, profit

margins, future plan related to new product offerings, planning to grab market in

geographical location etc. This type of data is the most receptive data also known as master

data. Most of the SME in manufacturing domain will agree that manufacturing secrets or

patented process must remain in the house so that nobody can re-engineer the process and not

able become competitor in the same domain. These secrets consist of the manufacturing of

products or spare parts and services related to them. The secrets can be designs, secret

insights of product recipe, cheaper raw material source, skills and own dynamic capabilities

who carry the actual tacit knowledge. All these manufacturing secrets constitute the

organization’s core businesses and competitive advantage drivers.

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

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Data of daily transactions:

The data generated on daily basis or due to regular tractions comes in this category. A

competitor can analyze any business turnover and average daily limit of product supply on

the basis of this data. It is also known as transaction data. This kind of data is another

susceptible data generated on daily basis e.g. trillions of bank tractions happen in worldwide

bank like Citibank. It contains data that supports the daily operations of manufacturing

companies (e.g. transaction related to raw material uses on daily basis). This data is generated

regular basis by cloud or in-house ERP’s application systems or other in house applications.

Since most of transactions are made online, so most of organizations are having fear of losing

this data, provided that there are well established security platforms (e.g. Axis Bank is using

dual authentication technique to secure its electronic transaction, Reliance is using RSA

Algorithm based authentication technique to access their systems on-line.).

Contracts data (personal data related workforce and partners):

The data is also generated on regular basis, because nobody can assume organization

without human resource or intellectual assets. This data comprise of suppliers, logistic

vendors, third party, employee’s contracts and legal related activities. For the employee’s

contracts it should be kept in-house and confidential. Previously, I recommended outsourcing

HRM over the cloud, the role of HR here just to find the right person for the company; the

contract step will be performed and will be kept in-house. The data related to vendors,

suppliers and third party contracts that contain legal duties of each part, should remain in

house of each part involved in company’s businesses activities. Here all parts involved as

partners should protect each other’s information from any leak are peeping from outsiders or

competitors. Each type of data and their interchange transactions will need to be managed

between all cloud ERP modules. That is why companies have to implement risk management

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

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solution for master data. The next point will deal with this problem. The below mention data

is recommended to be moved to the cloud:

Customer’s data:

customer’s data encloses information about the organization’s customers it should be

protected when it will be moved to the cloud due to confidentiality and ethical reasons.

Usually, customer’s data contains customer’s names, addresses, mobile numbers, email IDs,

purchase history. Not all customers accept that their information will be available for public

use or used by other unknown parties. The customer’s information should be secured by the

organizations and their third parties. That is why SMEs are suggested to use private cloud for

their cloud ERPs. Policies should be maintained regarding safety and leak of customer data.

Internal employee’s data can be moved into the cloud under authoritarian conditions:

This data can be related to the organization’s core and valuable business capabilities. It

was suggested that the manufacturing companies should outsource HRM and payrolls

activities to third party; this will force the company to send information about their existing

employees and new required ones to the third party. As a result, the companies here must

build a trustful relationship with their third party partners, especially HR partners. This is

possible by setting special rules that will prevent the leak of information from one company

to the other through employee’s movements. This may occur when an employee decides to

join workforce of the competitor for better salary. In well developed countries there are rules

that protect company’s rights in such cases.

International Journal of Mechatronics, Electrical and Computer Technology

Vol. 3(9), Oct, 2013, pp. 375-396, ISSN: 2305-0543

Available online at: http://www.aeuso.org © Austrian E-Journals of Universal Scientific Organization

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Data warehouse and cloud storage:

Data warehouse is a need of every SME because this era belongs to information. The data

stored in ware house usually contains historical data resulted from transaction data and other

source of data. Therefore, data warehouse is updated regularly through online transaction

processing. On line analytical processing and transaction processing is the famous tool used

for data mining which lead for decision making. Data warehouse is gather data from different

ERP system and inter-transaction of used modules; this type of data might be moved to the

cloud only in case if the cloud is having strictly policies related to data security. I

recommended to SMEs to use only private cloud, the data warehouse can be moved to cloud

as well [11] [13].

4- How secure is cloud ERP services as compared to in-house ERP?

The scenario of using cloud based ERP is analogous to moving in-house ERP to the cloud.

Therefore, before starting data migration process from in-house to the cloud, SMEs have to

think about what will happen to their data centers and its repositories in the cloud. The most

tormenting issue that kept various organizations from migrating to the cloud is security and

safety of the cloud. Many incidents of data (master and transactional data) theft or leak have

happened in recent year before the cloud concept born. Cyber attacks or Cyber warfare

recorded plethora of on-premises data leaks that belong to large organizations. The data has

been either destroyed or exposed to public.

These attacks may cripple the manufacturing network with their partners causing major

damages such as sending products or raw materials to wrong location or simply delay an

important business processing transaction [14][19]. By the data collected during an interview

with few SMEs in manufacturing domain, IT ERP consultants and ERP providers, I

concluded that the safety and security concern is the precedence of their businesses.

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Numerous cloud ERP vendors offer only the ERP system without cloud or security related to

it. But they have their co-partners who can offer either cloud or security or both as it was

pointed out in point 4. Other cloud ERP providers offer almost everything what small and

midsized manufacturing organizations need. The security of the cloud ERP compared to in-

house ERP can be study and implemented by using Data risk management. As per this thesis

research work the data risk management includes not only the SMEs, but all their partners

and co-partner who look after of the non-core business services. These partners are linked to

the SMEs through cloud ERP models according to their outsourced businesses they expect to

offer.

Organizations and their co-partners have to safeguard all data traffic that will occur in the

cloud ERP modules during various business processes e.g. procuring raw material and selling

finished goods. Safety of data (master or transactional) is the accountability of the SME’s and

all partners who assist their businesses core and non-core business processes. Data risk

management comprises these important data security terminologies: data control,

accessibility, data recovery, availability and flexibility. The data control comprises of the

ownership of data. The owner must have a full control of his or her data. In this case the

SMEs will have the administrative data control in the cloud ERP, for the reason that the cloud

ERP belongs to manufacturing organizations. Hence cloud provider can use access control

mechanism to handle this data base (Mandatory Access Control – MAC, Discretionary access

control - DAC).

Since the data risk management involves the third parties responsibility, the cloud

provider has to offer data recovery in case of unwanted disaster (e.g. Tsunami, Earthquake

etc.). Cloud provider has to make data accessible from right owner (including data protection)

and available 24/7 for the users of the SMEs. The most important point is that organizations

have to ensure the availability of the cloud provider. In worst case, if the cloud provider

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decides to shut down his or her business or went bankruptcy: in this case organizations and

cloud vendor have to make sure that their cloud ERP and data related to it is save and can be

moved to other provider. Generally, the security is related to local legislation, defining the

cloud vendor and cloud’s physical location is important aspect to take in contemplation when

the organizations will outsource cloud storage. Legislation in other countries may not give

safety and security to the data. Due to this premier reason organizations need to have cloud

provider and cloud storage location in countries where the law protects their rights related to

security of data in the favor of SMEs.

As data security is one of important concern for SMEs. So forth, data safety over the

cloud here are numerous suggestions of securing own data. In order to protect data over the

cloud, SMEs are suggested to create confusing or bogus data. Once the cracker or intruders

tries to crack the false data the system sends warning to third party co-partner who is taking

care of security then they will have to take the essential safety measures. The bogus data

might contain real Id and passwords that allow hacker to get access to bogus data after hard

work. The bogus data will be used as hurdle to protect the genuine data. The safety for

genuine data must be tight, using new techniques of data protection e.g. using encryption

algorithms, Hash Functions or Digital signature for authentication. The protections

algorithms and methods must remain top secret.

The basic property of cloud ERP is to be handy from any location thorough the globe,

here the SMEs is suggested to build an intellectual system admonition that can recognize

ERP user’s manners. Further, the intellectual system will identify user’s admittance

according to time and geographic locations. If an organization user gets admittance to cloud

ERP, let’s say: from Bangalore, India and he will log off from the cloud ERP services after

he or she end his or her job. In a limited period, with the identical ID and password another

user gets admittance to the cloud ERP services from geographic location that is remote from

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India, let’s suppose: Far North or China. So, it does not make sense that the user from India

will move fast in short time to Far North or China, therefore the intellectual system will

involuntarily terminate the user’s ID and password. The intellectual system will be made

based on time, locations and optimization of user’s movements from their last access to the

ERP system. In any case of cloud ERP users will shift from their customary location they

must notify the accountable person for administrative authentication rights [16] [17]. On the

other hand, the security of cloud ERP in comparison with in-house ERP seems to be more

susceptible due to all parts mixed up in it.

However by the use of emerging refined technologies there are systems services that can

supervise the inner ERP user’s manners and outer user’s system threats. The safety of cloud

ERP must be handled by special experts in system security domain. Implementing the most

excellent conventional security solutions is not enough to give assurance of the safety and

security of the cloud ERP system. As my research work recommend here that the SMEs

should have their cloud ERP installed in private cloud, but still the organizations need to

safeguard the flow of the transactional and master data transmission from and to diverse ERP

modules; keeping in mind that this traffic of the transactional and master data comes from

diverse outsourced partners and co-partners. The outsourcing co-partner may not have

analogous ERP as the SMEs; for central monitoring of data flow will require data integration

between different partners in cloud eco-system.

5- Importance of QoS for SMEs and Cloud ERP Provider

Quality is a multidimensional word which uses to measure the satisfying level of

consumers/clients. In relation with enterprise services if a package of cloud services improves

return on investment (ROI) then the package is having higher quality as compared previous

product. So it means it is a qualitative term for judging any services or products. So, to

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facilitate the service companies and manufacturing firms standards of quality are set in the

form of Quality certificate. This is an effort by intellectual communities for measuring

quality in quantitative manner. Outcome of these efforts are certificate like six sigma, CMMI,

ISO certification etc.

Two famous Quality Standards are:

Capability maturity Model Integration (CMMI) for software industry

Six Sigma for Manufacturing Industry

When strategy is designed by lead firm to outsource IT services from vendors then alignment

of business process quality is measured and equate with vendor’s quality of service (QoS).

In current competitive business scenario every successful organization wants to achieve

quality in their products and services. Better quality products can be success formula for any

existing or new business. To achieve this, organization use to outsource their non-core

activities from third party and some time it become reason for collapsing the whole

organization. If outsourced business processes are not compliance with quality standard then

how they will give better result to lead firm. So there should be matching of quality standard

in both the partner. As example a six sigma compliance manufacturing firm can procure

services from Level-5 compliance IT vendor [5] [7].

Conclusion and recommendation for further research

Cloud ERP and in-house ERP basically have similar enterprise concept oriented modules

and functions. The cloud based web services are predicted to grow in the future. The

trepidation and the economic crises have halted the momentum of cloud based services

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deployment. It will be fascinating to perform researches work in field of Cloud ERP vendors

and there business strategy for stimulated the need of cloud based enterprise services. The

research therefore should focus on most of the business verticals, industries behaviors and

their reactions. Future scope can identify latest technologies and platforms which facilitates

cloud eco-system in decade to me e.g. new version of AJAX - Asynchronous JavaScript and

XML and virtualization. New technical and business alliances will be formed, in particular

field of data security and ERP systems in order to overcome the issues of ERP systems

integrations. The service outsourcing and customization of service offering will be reshaped;

the legislation related to cloud outsourcing will be developed as well. The research work can

be carried out with people from different domain e.g. technical, management, law and finance

vertical. These researchers can be technical engineering students, law student, finance experts

and business oriented students.

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