Cloud computing is a trend that isn’t going away anytime soon. The cloud has fundamentally changed the way we can do business today. Whether it’s everyday office applications or operational management, there is no denying that moving to the cloud has decreased the barrier to entry for new and growing businesses to leverage and adopt powerful technology that helps them stay competitive and improve productivity. From reducing hardware and maintenance costs to the ease and security of working remotely, the opportunities are endless when you know how to make cloud technology work for you.
Across nearly all industries, cloud technology continues to be one of the fastest-growing segments of IT spend. One area where the cloud has made a significant difference is in ERP and business applications. According to Gartner, the most considerable shift of IT spending happening right now is in application software, where 36% of companies that have used other means to host their business productivity software have now moved to the cloud.
The world at large has spent decades running businesses from on-premise systems, investing in hardware and paying for maintenance and upgrades. Now that cloud ERP software is a viable option for any size company looking to upgrade or adopt a new business management system, it’s essential to know the facts and get educated on the technology. That’s our goal with this blog post. We have compiled the vital information on cloud ERP technology, including 8 of the primary reasons companies choose to adopt cloud-based ERP over on-premise systems and what tangible benefits they are experiencing as a result.
A Short Introduction to Cloud ERP
Let’s start with the basics. Cloud ERP is an integrated financial and business management system that runs on a shared cloud platform. That means the software that manages and stores your essential business functions and data, from sales and finance to inventory and supply chain, is hosted in remote data centers and accessed securely through the internet.
When you use cloud ERP software, your cloud vendor is entirely responsible for the application, data storage, underlying operating system, servers, physical data center infrastructure, and installing security updates and feature upgrades. Cloud software vendors typically own data centers around the world and will keep each customer’s data in multiple locations. These data centers are designed to maximize reliability and minimize downtime.
Cloud ERP is delivered as Software as a Service (SaaS), which means it uses the internet to distribute software to the end-user. Usage is subscription-based, with a monthly or annual fee, and software upgrades are managed by the solution provider and occur at regular intervals. Compared to on-premise ERP systems, cloud ERP does not require the company’s purchase and maintenance of hardware or physical servers and offers lower upfront costs.
While it may seem that the one difference between cloud ERP and on-premise ERP is where your software is physically located and who manages it, we will explain more distinctions between the two in the next section.
Cloud ERP vs. On-Premise ERP
When you purchase on-premise ERP software, you license the core software platform upfront and then either buy or lease the servers, networking, and storage required to physically run and maintain it in-house. That means your IT department is responsible for installing and managing the application, including additional costs for upgrades, troubleshooting, supplementary software, customizations, and data security software. Also, on-premise software requires paying a percent of its purchasing cost, often referred to as a “maintenance” or “annual enhancement” plan, for access to updates that often include imperative compatibility coverage across your integrations. In addition, updates are often complex enough to require intricate projects that employ external experts, tie up internal IT resources, and entail large expenditures and business disruptions.
With cloud ERP software, you don’t get to avoid all of these costs, but they are certainly more predictable in the long-term. Instead of paying for a stacked IT department and enterprise-grade servers, you pay a monthly fee that includes storage, hosting, and uninterrupted access to your data and applications. As long as you have a stable internet connection, you have access to your software from anywhere at any time. Also, depending on the cloud ERP you select, updates and upgrades can become seamless with little-to-no costs or technical resources necessary, happening in the background.
As is the case with most enterprise software, you still have to pay for customizations, training, and support with cloud ERP. The big difference is that you will likely be investing that money into functional and process-oriented support instead of additional hardware and IT personnel costs.
8 Ways Cloud ERP Can Prepare Your Business for Future Growth
As you can see, cloud ERP software is an economical, flexible option for growing organizations looking to optimize their resources and save costs. While there will always be companies with years of experience and equipment who opt for the on-premise or hybrid route, the cloud’s benefits can’t be ignored. Faced with the choice between cloud and on-premise deployment, more and more companies are motivated by costs, usability, accessibility, and scalability for the future. Here are 8 reasons why many of these companies are opting for cloud ERP software:
- Cost Savings
No ERP software is ‘cheap’ by any means, but the cloud saves you money and resources in the long-term. Since a cloud ERP vendor hosts and manages the software on its servers, you avoid expensive upfront infrastructure costs as well as additional costs for IT staff, system maintenance, security software, and updates. - Shorter Implementation Time
Without the hardware or technical setup, cloud ERP software can be configured much faster than on-premise ERP software. Keep in mind that this type of business process management software requires extensive time devoted to planning, training, and customization. It’s best to work with a software solutions partner to ensure optimal system setup and successful adoption.
- Consistent Upgrades
On-premise ERP upgrades have traditionally been a time-consuming, complicated process. As a result, many companies get so far behind the latest version that it becomes too expensive to consider upgrading. Since cloud ERP software vendors handle all cloud ERP system upgrades and updates on an ongoing basis, you will always be running on the most up-to-date technology. Cloud ERP software updates can take as little as 30 minutes and usually occur during off-hours to prevent business disruptions.
- System Scalability
With cloud ERP software, you can start with the core system and add more functionality and locations as needed. The ability to quickly grow is particularly beneficial to companies growing by merger or acquisition, but it also helps the SMBs. The cloud enables you to quickly scale up or down in both functionality and the number of users, so you aren’t paying for features or licenses you don’t need, and you can add them as you do.
- Data Accessibility
The ability to access your cloud ERP software from anywhere not only improves employee communication and productivity – it helps connect your entire operations. A cloud ERP solution is designed to bring together all of your business applications on one platform to share data across sales, accounting, inventory, etc.
- Enhanced Analytics
Due to the nature of cloud technology, cloud ERP software is more scalable for accessing and storing large amounts of data. As a result, many cloud ERP solutions have integrated business intelligence and analytics built-in and ready to use.
- Simplified Customizations
Cloud ERP software is designed to be agile, allowing you to adjust more quickly to industry changes and unforeseen events. When it comes to tailoring your system to fit your business processes and industry, cloud ERP systems integrate well with other cloud-based products, and new functionality or modules can be added and tested without downtime or additional hardware.
- Strong Data Security
Cloud ERP solutions are known for having very secure hosting environments with dedicated security resources, access control, and data protection. In case of a disaster, cloud ERP data is distributed across multiple servers in several geographical locations and continuously backed up to enable prompt and complete restoration. The reality is, many cloud providers offer better data security and compliance than most companies can afford on their own.
What Cloud ERP Solution is Right for Your Business?
Moving to a cloud ERP system is a big move, and we are here to help. At Clients First, we offer a selection of pure cloud ERP solutions, including Microsoft Dynamics 365 Business Central, SAP Business One, and Acumatica. Not every cloud ERP solution is the same, so the software you choose will depend on your business, your people, and your future goals.
Our cloud and ERP experts take the time to assess your current business software requirements and identify what features and functionality make the most sense for your journey forward. With our background and expertise, we’re here to show you software solutions that will best fit your business and answer any questions you may have on moving to the cloud.
Book a cloud ERP assessment to get the conversation started.