Lawson’s New Amazon Cloud-Based ERP Supports Customization

April 6, 2010 Alex Woodie

Lawson Software plunged into cloud computing in a big way last week when it announced its complete line of ERP software will be available as a service hosted by Amazon‘s Elastic Cloud Computing (EC2) platform starting in May. Lawson says its cloud service, which is believed to be the first full-featured ERP solution available via EC2, will help customers by eliminating server sizing concerns, reducing IT headcount, and providing a predictable subscription-based payment model–without compromising the capability to customize the ERP environment.

As part of its External Cloud Services offering, Lawson disclosed that its three main product lines, including the S3 and M3 ERP suites and the Talent Management system, will be generally available next month from Amazon. Lawson employees will install and manage the software, which will run in virtualized X64 servers running the Windows operating system.

In exchange for gaining access to ERP or Talent Management, Lawson’s cloud customers will be required to purchase a contract that will last “a little more than one year,” according to Jeff Comport, Lawson senior vice president of product management. The subscription fees, which were not disclosed, will be based on the number of employees in the organization; will include right-to-use, product maintenance, and application hosting fees in one bundle; and will be “comparably priced but not necessarily lower” than other cloud-based ERP offerings, Comport says.

If Lawson’s cloud customers are happy with the software at the end of the contract, they’ll be able to covert from a subscription license to a perpetual license by paying an “option price.” This will also give them the option of installing the software on-premise, or continuing with Amazon’s EC2 hosting service. Only Windows environments are supported when moving from the cloud to on-premise, Comport says.

In conjunction with the External Cloud Service, Lawson unveiled its new Test Drive offering, which gives Lawson customers–both cloud and on-premise–the capability quickly begin using two products, the Lawson smart office interface, and the search capability for S3, via the Amazon cloud.

ERP Dips a Toe in the Cloud

Ever since companies like NetSuite, SalesForce.com, and Workday began having success with their cloud-based ERP, CRM, and HR packages, the big enterprise software vendors like Lawson, Oracle, SAP, Microsoft , Infor, and others have been waiting and wondering how and when the cloud will impact their core businesses, which is still almost entirely dependent upon selling software that gets installed on servers that reside at the customer’s site.

SAP, with its Business ByDesign offering, is on the leading edge of moving to the cloud. Now Lawson is betting that the business model pans out. It will be very popular, according to Comport, who sees cloud computing providing a number of compelling benefits, including shielding customers from the complexity of computers, eliminating capital and human costs, and offering application resiliency at a lower cost.

“Through Amazon we have access to a broad pool of shared resources, and that’s where we get our elasticity in allowing customers to scale up and scale down according to their demands,” Comport says. It also gives customers “a capability to very rapidly re-start an application in an alternate or backup virtual space. In the limited amount of time it takes to do a restart, we’re up and ready to run, and don’t care what happened to the old environment, and what hardware or other problem caused it to go down.” rnHardware issues don’t exist in the Amazon cloud, at least from the customer’s perspective. Amazon, on the other hand, must balance hundreds of thousands of commodity servers across the world, and it’s good enough at it to offer a service level agreement (SLA) guaranteeing 99.95 percent uptime to EC2 customers.

Sizing is another thing Lawson cloud customers don’t have to worry about. “Traditionally with on-premise, the customer has to get capacity, get computers, size those computers to the T, and make guesses as to what’s the right size based on these factors,” he says. “There’s some risk that goes on there. You hate to get too much, but you also hate to get too little.” With the Amazon cloud, customers pay only for what they use. While they must make workload projections, if they guess wrong, more capacity can quickly be brought on line in a matter of minutes.

In terms of capital and human savings, Comport estimates the Lawson cloud service will eliminate the need for multiple full-time equivalent (FTE) employees and an average of three to five servers. But Lawson is really focused on gaining net-new customers with its cloud offering, including smaller organizations, who may be implementing a full ERP system for the first time.

Maintaining the Customization Option

Moving to the cloud can eliminate technical aspects of an ERP implementation. But it has no impact on other crucial components of a full-scale ERP implementation, such as planning the organization’s new business processes.

“We shrink by weeks to days, or even a day, for actually standing up one of these systems, technically, to make it available for business configuration,” Comport says. But the business configuration process “is a people-oriented thing, and that doesn’t really have anything to do with the technology. That’s very often a multi-week or multi-month kind of implementation.”

Depending on their industry, Lawson customers can choose the vendor’s “QuickStep” program to speed the business configuration process. Under QuickStep, a customer quickly configures the ERP software using the most popular pre-configured settings, while only the most important aspects are manually configured.

While QuickStep will speed cloud-based ERP implementations for Lawson’s customers, they will still have the option of customizing their cloud environment to a very high degree if they choose. That’s something that is not generally available with the popular cloud-based ERP systems already on the market, Comport says.

“The software-as-a-service vendors will say, ‘We don’t allow customizations, so you don’t have to worry about dealing with that in an upgrade cycle or an implementation. Everything’s simplified.’ That’s the good news. The bad news is that it’s a compromise for the customer,” he says.

“Instead of having the technology enforce that compromise on our side, the customer gets to make it based on business value,” Comport continues. “They can use QuikStep and stay vanilla, stay within the guidelines, and they’ll have an application that is easy to upgrade, easy to roll forward. Or if business demands that they take the application and make it more personal, they recognize that they’re breaking with the norm. They get the high value of doing that, but also recognize that they’ll upgrade less frequently.”

The inability to modify ERP systems in one of the downsides of multi-tenant cloud-based ERP applications, Comport says. Multi-tenant applications, in which data from multiple customers can be securely and separately housed within the same application instance, require business processes to be identical among customers. With Lawson External Cloud, which is not built on a multi-tenant architecture, each customer has its own private ERP application instance.

“We’re trying to move away from treating multi-tenancy as the acid test of, ‘Are you SaaS’ or ‘Are you cloud?’ and get back to this business value proposition: Where’s the flexibility and where are the constraints?” Comport says.

Lawson is expected to make more cloud-related announcements at CUE, its annual user conference, which is scheduled for April 25-28 in San Antonio, Texas.