The question for most companies is not if -- but how much -- of a hybrid environment they're going to have in the coming years. They then must plan for how they'll manage those cloud and on-premises integrations, according to one Gartner analyst.
"The days of the end-to-end, integrated, one suite doing everything, which you manage on-premises, is dead. That's gone," said Nigel Rayner, an analyst with Stamford, Conn.-based Gartner Inc. He is author of the report Best Practices for Managing Integration in a Hybrid Cloud and On-Premises ERP World. "It's the reality of where things are going, and [companies] need to be ready for it. You've got to plan on how hybrid you're going to be."
Although cloud applications continue to mature and evolve, it will still take 10 to 15 years before they really mature, according to Rayner. In the meantime, the vast majority of midsize or larger organizations will continue to gravitate to a hybrid environment, deploying cloud and on-premises applications if they haven't already.
People who oversee their organization's SAP landscape need to anticipate the "hybridization" of their IT environment so they don't end up overwhelmed with a confusing mess of cloud integration "spaghetti," according to Rayner.
In his report, he recommends that companies come up with a plan for what kind of hybrid environment suits them best. Current scenarios include incorporating an on-premises core ERP with selected cloud extensions; either cloud or on-premises core ERP with a mix of extensions that are both on-premises and cloud-based; or an evolving portfolio of cloud and on-premises applications.
The latter approach can work for companies that have a "cloud first" mentality but are still trying to work out what stays on-premises and what's to be Software as a Service (SaaS)-based.
At the same time, companies should understand the cloud services integration (CSI) capabilities offered by business application vendors, any additional cost that might be involved and what the roadmaps are.
Three kinds of hybrid environment integration scenarios
In the first scenario, the company depends on a "hub and spoke" model where the core ERP applications act as the hub and selected cloud applications are the spokes. The integration challenges are typically simpler in this model, according to Rayner.
If the organization is using a relatively small number of cloud applications, typically fewer than five, companies should consider using point-to-point integrations using either data import/export, on-premises connectors or cloudstreams, according to the report. Gartner defines a cloudstream as "a packaged integration template that provides a description of everything necessary to govern, secure, and manage interaction between two services at the API level."
If the cloud applications are from different vendors and the ERP vendor does not offer specific connectors, using cloudstreams from the cloud vendors is preferable, according to Gartner.
Companies with on-premises ERP with more than five or so applications should consider using on-premises integration middleware or possibly Integration Platform as a Service (iPaaS) to integrate the applications.
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"Although point-to-point integration may work in the short term, the cost and complexity of supporting different interfaces will grow as the number of applications increases," Rayner writes in the report. "Generally, when the center of gravity remains on-premises, it makes sense to use on-premises integration middleware, especially if you use the middleware from your ERP vendor."
Companies may also consider a hybrid approach, using point-to-point integration with cloud applications whose integration requirements are not complex, and middleware or iPaaS for more complex Integrations, according to Rayner.
The second hybrid planning scenario involves companies that have deployed a cloud or on-premises ERP with a mix of on-premises and cloud extensions, which is more challenging because it requires cloud-to-cloud-to-ground CSI.
In this case, Rayner recommends considering iPaaS, given its potential to work with multiple cloud and on-premises applications, noting that SAP is also incorporating iPaaS capabilities in its HANA Enterprise Cloud platform.
There may be challenges, however.
"Once a core component of ERP like financials or core HR moves to the cloud, the cloud application starts to become the hub for integration rather than a spoke feeding the ERP core," Rayner writes. "This creates the cloud-to-cloud-to-ground complexity, because in addition to some cloud-based spoke applications linking to the cloud hub core ERP system, there will be ground-based systems also feeding data into it."