Cloud ERP can play role in attaining sustainability goals

Going to cloud ERP

Airsys Cooling Technologies, a manufacturer based in Greer, S.C., provides cooling systems that help companies such as data center providers, telecoms and semiconductor manufacturers run more sustainably -- and it wanted to run its own operations more efficiently.

One way to get there was to move its ERP from a variety of legacy on-premises systems to a cloud ERP from Rootstock, according to Yunshui Chen, founder and CEO at Airsys. The company is growing rapidly because of new data center demands driven by AI.

There are a lot of benefits from these consolidated platforms -- for example, we are able to move things around more efficiently.

"As we are building a global supply chain network in the U.S., Asia and Europe, we wanted to consolidate into one ERP platform," Chen said.

Airsys recently implemented Rootstock for its operations in Asia and is rolling the system out to its facilities in the U.S. and Europe.

Chen expects the efficiency gains of running in the cloud versus its own on-premises servers will help reduce Airsys' energy footprint. Rootstock also has supply chain functionalities for processes like sourcing and planning that help it operate more efficiently.

"There are a lot of benefits from these consolidated platforms -- for example, we are able to move things around more efficiently," he said. "In the data center world, most of the customers are global accounts, so they may have data centers being built in Asia, U.S., Europe, and they need a very orchestrated operation from us."

Rootstock ERP is tightly integrated with Salesforce CRM, as it is built on the Salesforce platform, which will improve the efficiency of field service management, Chen said.

"We manufacture and service our own equipment, so the integration between the Salesforce CRM and Rootstock ERP allows more efficiency in processes like service dispatch, with troubleshooting on the CRM side, and spare parts and supplies management being handled by Rootstock," he said.

Airsys also uses an internal IoT platform that monitors all the energy consumption from various operations, which are then rolled up into sustainability reports that will be managed in Rootstock, Chen said.

Better efficiency leads to better sustainability

Running cloud ERP systems more sustainably and ensuring financial profitability are inexorably linked, according to Claus Jepsen, chief product and technology officer at Unit4, a provider of cloud ERP systems for professional services organizations.

The more sustainable a cloud ERP system is, the more efficiently an organization's operations can run, which leads to greater cost savings, Jepsen said.

"When you use more compute and storage, you pay more, and this increases your energy usage," he said. "But the less you use, the better those parameters are."

Focusing on the intersection between sustainability and efficiency can also bring together ESG decision-makers and financial executives to agree on this one thing, Jepsen said.

"Even though they want two different things, the goals they're seeking are similar, and having positive outcome for both makes sense," he said. "You can position this as both a sustainability topic, and you get better sustainability using these architectures, but you can also prove that it's better financially for the company to be sustainable."

Unit4's multi-tenant cloud system, ERPx, is designed to run as sustainably as possible, Jepsen said. For example, the software is built in small, granular subsets of microservices that can run only when the customer needs them.

Unit4 runs on Microsoft Azure, which Jepsen said has made efforts to operate more sustainably through actions like reusing the water for cooling and using the optimal level of electricity.

Migrating Unit4's customers from traditional on-premises ERP systems to the cloud has in and of itself brought sustainability benefits through efficiency gains, he explained.

"You also have to take into consideration the hardware required, including building and disposing all of the hardware [needed to run on-premises systems]," Jepsen said.

There are definite sustainability advantages for moving from on-premises systems to the cloud, agreed John Case, CEO of Acumatica, a cloud-first ERP vendor focused on manufacturing.

"Many on-premises organizations are working on multiple systems or separate servers that we can consolidate into one vertical business management system that runs on one cloud," Case said. "It's not just one server to one instance -- a lot of it is multiple servers to one instance."

The sustainability gains that organizations might get by moving from on-premises to the cloud is a selling point for Acumatica, he said.

"In some ways, this can help the customers justify the cost of doing the migration," Case said.

However, Case acknowledged that such moves are not always inherently sustainable, as Acumatica's infrastructure on Azure has a large carbon footprint itself. But the company is taking measures to operate its cloud ERP as sustainably as possible.

For example, Acumatica participates in the Science Based Targets Initiative, a United Nations-backed project that scores organizations on their carbon reduction performance, Case said. The ERP provider is also subject to examination by third parties like EcoVadis, which grades the company every year on how efficiently its cloud runs.

Acumatica also runs its cloud on used hardware, he added.

"We're not building all new racks of servers. We're buying someone else's hardware to run our cloud," Case said.

Threading sustainability through cloud ERP

Organizations want sustainability features threaded throughout ERP modules, including manufacturing, supply chain and enterprise asset management, according to Kevin Miller, CTO for the Americas at IFS, a manufacturing-focused ERP vendor.

"It can no longer be looked at as this extra ESG add-on, where you have to go in and configure all this stuff and have a separate system monitoring," Miller said. "Customers want to go to a dashboard and look at the KPIs that the system has automatically been tracking, as those things have been interwoven throughout the different functional stacks."

While some customers might not be looking for this kind of functionality, if they can operate more efficiently, then better sustainability becomes a byproduct, he said. For example, if you pitch sustainability goals to a company with a large team of field service technicians, they might understand the benefits, but not prioritize sustainability as a goal.

"But if we say we can optimize the schedule to minimize drive time for your techs, or you could get two or three more service tickets in for that tech per day because their driving is more efficient, their mileage, that speaks to the business with real-world value," Miller said.

The business case for greater sustainability is clear, he said.

"Boards and investors are still saying that they want to do this, and the smart investors have realized that with efficiency comes a natural dovetail into sustainability efforts," Miller said.

Jim O'Donnell is a news director for Informa TechTarget who covers ERP and other enterprise applications.