What is cloud based ERP?
Cloud-based ERP is an enterprise resource planning software hosted on a vendor's shared computing platform, allowing businesses to access data over the internet. This model eliminates on-site server maintenance by utilizing remote data centers to manage core business processes like accounting, inventory, and human resources via a subscription-based service.
While traditional ERP is an on-premise system that runs on in-house servers at a company's location, Cloud ERP systems run on a vendor-managed public or private cloud, eliminating the need for on-premise installations and offer a wide range of time, resource, and cost-saving benefits.
How does cloud ERP work?
Cloud ERP works by hosting enterprise software on a service provider's remote servers accessible via the internet. Unlike local software, cloud ERP centralizes data in a shared database where real-time updates occur across all departments, allowing users to access business applications through a web browser or mobile app without maintaining physical on-site hardware.
The cloud-based platform allows for automatic updates and maintenance, reducing the need for manual IT support. Data security is also enhanced through advanced encryption and regular backups, reducing the risk of data loss or cyber attacks.
ERP deployment
Multi-tenant SaaS
Many cloud systems are multi-tenant SaaS. A multi-tenant model means multiple organizations use a single software version and its infrastructure. Although different organizations use the same software hosted on the same server, each organization's data is inaccessible to others.
Single-tenant SaaS
This model means that only one organization uses a single system and its infrastructure. That organization's data is hosted on a private server, with each organizations data and configurations isolated from others, and any customizations or modifications made to the software are unique to each organization.
Public cloud
In a public cloud, multiple organizations share cloud services that are owned by a third party vendor, such as Amazon Web Services (AWS) or Google Cloud.
Private cloud
Completely private cloud usage that is not shared with any other organization. A private cloud generally has a much higher upfront cost, but comes with:
- A Dedicated Infrastructure
- More Customization
- Better Security and Control
The scalability of a private cloud setup is limited by the physical infrastructure's capacity, therefore, expanding the capacity might require additional hardware investments.
Hybrid cloud
Hybrid is a “mix” of both, combining on-premise ERP software with a private or public cloud. With a hybrid cloud setup, organizations can have greater flexibility and more deployment options. For example, critical workloads can be run within the private cloud, while less-sensitive workloads can be run on the public cloud.
Why choose cloud ERP over on-premise ERP?
Choosing cloud ERP over on-premise ERP provides significant advantages in cost reduction and scalability. Cloud systems eliminate expensive hardware maintenance and upfront capital costs, while offering automatic security updates and universal remote accessibility that allow teams to collaborate in real-time from any location without managing complex local servers.
Cloud ERP is the ideal solution for companies that don't have an in-house IT department or those who may be intimidated by the challenges of on-premise ERP.
Vendors usually offer cloud ERP based on an annual or monthly subscription fee. The fee often covers software updates, security, installation, customer service, and tech support. As a result, organizations worry less about their operational processes and have more time to focus on their actual business strategy.
Cloud ERP is a particularly attractive option for businesses looking to scale up and grow their operations because Cloud ERP is often offered as a solutions suite or package consisting of several basic modules, with each module targeting a specific area of the business. If, for example, a customer doesn't require a complete cloud ERP suite, it's possible to choose only the required modules and scale as and when needed.
Ideally, because cloud ERP runs on a vendor-managed public or private cloud, it's exceedingly more cost-effective. Cloud-based solutions provide the flexibility and mobility to access an ERP system and its connected solutions through the vendor's cloud platform and are more convenient, as the system can be accessed from any location and at any time.
