Enterprise Resource Planning (ERP) helps organizations streamline and automate their business operations across teams, departments, and companies. While ERP has a long list of benefits, namely, increasing overall efficiency and productivity, reducing human errors, streamlining data, and enhancing communication and collaboration, it can be both challenging and costly to implement. What’s more, many companies simply don’t have the necessary IT infrastructure, nor the manpower to implement an ERP system on site.
What is Cloud ERP Anyways?
Enter cloud-based ERP. It’s an ERP system delivered over the cloud as a Software-as-a-Service (SaaS) model. Cloud ERP enables organizations of all sizes to access a comprehensive ERP system without the many IT-related hurdles of an on-premise system. Because cloud ERP runs on a vendor-managed public or private cloud, it’s more cost-effective, and it’s accessible anywhere, at any time, making it an attractive solution for businesses looking to scale up and grow their operations.
What does cloud ERP do?
Cloud ERP solutions eliminate the need for on-premise installations. They are 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 full cloud ERP, it’s possible to choose the required modules only, and scale as and when needed. The most common modules are:
- Finance & Accounting
- Human Resource Management
- Marketing & Sales
- Inventory & Order Management
- Project Management
- Supply Chain Management
- Customer Service
Some niche ERP products may offer more specialized modules, such as Field Service Management (FSM), Food & Beverage Management, say, for a restaurant chain, including Point of Sale (POS) functionality, and more. It’s also possible to integrate cloud ERP with third-party software products, such as Customer Relationship Management (CRM), Manufacturing Execution System (MES), or Business Intelligence (BI) tools.
How is cloud ERP different from on-premise ERP?
On-premise ERP solutions are deployed at the customer’s location on their infrastructure. On-premise systems are also managed by the customer’s in-house IT team, where more often than not, the cost of maintaining a team tends to be high. Software upgrades, integrations, purchasing supplementary software, and customizations require additional expenses and expertise. What’s more, a company will frequently have to hire external consultants and service providers to keep their on-premise ERP system in check. Yet, it is and continues to be the solution of choice for organizations that prefer to keep their sensitive business data on-site, close at hand, and in turn, have greater control over their ERP system.
Cloud-based ERP is the ideal solution for companies that do not have an internal IT department or those who may be intimidated by the challenges of on-premise ERP. It’s more affordable, it’s more accessible, and it’s also faster in terms of implementation. 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.
What businesses must do before implementing cloud ERP
Although cloud ERP can be deployed quickly, it’s necessary (and recommended!) to have an ERP strategy in place – first. Before purchasing a cloud ERP system, here’s what businesses need to do:
- Assess the need and readiness for ERP
- Allocate a budget for the purchase and maintenance of ERP
- Lay the groundwork for data migration, including validating and cleaning existing data, and preparing it for migration
- Consider third-party integrations and customizations
- Ensure hardware compatibility
- Train employees and get them accustomed to using the new ERP system prior to the actual deployment
Benefits of cloud ERP
- Less expensive and there are no hidden costs
- Accessible for small and medium-sized companies
- Ability to scale when and as needed
- Niche modules can be easily deployed over the cloud
Disadvantages of cloud ERP
- It May not be compatible with legacy systems, and certain companies may be averse to change
- Companies may continue to use older infrastructure, necessitating the use of on-premise ERP
- Niche industries, e.g. medical devices or pharma that handles sensitive health-related data, must ensure that their cloud ERP complies with stringent government/industry regulations, such as HIPAA, FDA, and others
- Third-party integrations may incur additional fees, especially major customizations are required
Cloud ERP helps businesses to scale
Cloud ERP eliminates the need for major software installations and for purchasing extensive hardware. In addition, ERP vendors usually take responsibility for providing regular software updates, security, customer service, and tech support. As a result, organizations of all sizes can automate their operational business processes, financials, and much more, without having to invest heavily in on-premise ERP. In the long-term, cloud ERP is the ideal solution for businesses that are looking to scale, become more productive, and automate manual, and redundant tasks.