Vinsun Infra Engineering: Erp on Premise or on Cloud

   VINSUN INFRA ENGINEERING: ERP ON PREMISE OR ON CLOUD

INTRODUCTION

VINSUN Infra Engineering Pvt. Ltd. was founded in 2002 by Sunil Satav. Starting as a small start-up company, it has grown from a small to medium sized enterprise (SME) with 60 employees. It specializes in providing electrical and civil services to its different set of clients which includes service industries, commercial and  residential buildings and other institutions and campuses. The company was focused around Indore and serviced more than 40% of the cold storage plants in that area. Stability in the business had allowed the company to make forays in civil engineering projects in telecommunications in conjunction with installation projects. They were also in a position to diversify into electrical work for commercial building, residences and hospitals, while exploring new segments for the company to move in to. With this expected growth, Satav was also looking to increase the number of employees within VINSUN.

This expected growth however creates a problem that Satav needs to address, the management of information. VINSUN currently use Excel files to store and manage all their information which has resulted in an accumulation of a large number of files across the company. This has led to issues such as data integrity, redundancy and incompleteness. Errors in data management such as these had impacted VINSUN whenever they won a bid for a new contract as Satav discovered that pricing information would be out dated, incorrect or not readily available, leading to a negative net present value (NPV). He also discovered that data backup was being poorly managed. This prompted Satav to search for an alternative solution to manage VINSUN's data in order to become more competitive to allow the forecasted growth in business. During a stakeholder meeting, Satav suggested that employing an ERP (enterprise resource planning) system could be the answer to solving their problem but he was met with a very mixed reaction. Satav put Chief Information officer (CIO), Ruchira Kulkarni in charge, to investigate this proposal further given her previous experience with ERP systems.

CHALLENGES FACING VINSUN

One of the first challenge that the company is facing is that of information overload which has subsequently made information management difficult. Information overload happens when the transmission of new data goes beyond the receiver's capability to store, manage and access it easily (Bettis-Outland, 2012). Secondly the input cost calculation is outdated since the data calculations are done in MS Excel which requires compilation to be done manually, thus requiring a lot of time and effort in gathering data from different sources. Then there is also the issue of lack of data integrity, redundancy and incompleteness which is frequently encountered by the employees and have resulted in negative NVPs for Vinsun. Furthermore, carrying out data analysis was a near impossible task since most of the historical data was limited due to its size. Also there is no proper means of maintaining back up data which is posing major challenges for VINSUN in terms of retrieving data.

The other important challenges that the company is facing is regarding the dilemma of convincing the employees for implementing changes in its current data management system. This particular problem has emerged due to the resistance of change from the employees and a satisfaction within them with respect to the existing situation of the company. However, the most important dilemma faced by the company includes the selection of various options to improve its IT sector so that information could be quickly and easily available to the company in order to make decisions with regard to different projects. VINSUN is faced with three options, firstly whether to adopt ERP on cloud, secondly, whether to adopt ERP on premise or third, which is to adopt a customization solution.

Furthermore the company is also faced with the problem of choosing the company for implementing the ERP system. There are two options available to VINSUN, The Bluechip Corporation and Codeautomations which have proposed the quotations for the implementation of ERP. Bluechip Corporation is an experienced and a major ERP solution provider, whereas, Codeautomations is a start-up firm having limited knowledge of ERP implementation but is less costly than the former. Moreover, due to the huge investment needed in the implementation of ERP and taking into consideration that VINSUN is a medium sized enterprise, the company needs to make a right decision in order to avoid any type of failure which may result in decreased profitability for the company.

OPTIONS AVAILABLE TO VINSUN

ERP is described as having the ability to capture, process, store, and distribute data and information, enhancing managements decision-making significantly(Beard & Sumner, 2004). Today, enterprise resource planning (ERP) systems are one of the most significant business software investments being made in this new era (Beard & Sumner, 2004). ERP systems have the benefit of providing organizations with a distinct, integrated software system that links core business activities, i.e. operations, manufacturing, sales, human resources, and inventory management etc. (Lee & Lee, 2000).

There are two options that are available to VINSUN. First is whether to go for ERP in Premise of to go for ERP in Cloud.

On-premise ERP is software based in-house instead of ordering a product for delivery through the internet or using a vendor hosted ERP system. ERP software can encompass several different products, ranging from payroll and accounting to systems that evaluate or simulate business processes to controlling inventory and other issues in the supply chain. A big argument for the use of on-premise ERP relates to the type of in depth use that a business may want from a software package. The general idea is that cloud systems often restrict the client users’ ability to modify or enhance the software in specific ways. However, on-premise ERP systems on the other hand, has the potential to allow in-house IT staff to adjust, improve or even customize the software for a particular use within the business.