What is a Cloud ERP and What are its Advantages?

There has been so much talk about cloud platforms in recent years. While some suggest that cloud-based platforms are better than their on-premise counterparts, there is no denying that the cloud offers considerable advantages. Right from cloud-based email marketing systems to marketing automation, companies of all sizes are leaning toward cloud platforms.

Similarly, companies are turning to cloud-based enterprise resource planning (ERP) software to facilitate seamless enterprise planning. However, to understand what cloud ERP is, we should first understand how an on-premise ERP model has evolved. 

SEE ALSO: 8 Exciting ERP Trends to Look Out for in 2021

Enterprise resource planning: Cloud vs on-premise

Enterprise resource planning (ERP) is a term that was first used in the 1990s. It primarily refers to software that automates different processes across an organization. At that moment, ERP systems were deployed on a client’s servers within their organization’s data center. 

Today, the scenario has changed in many ways. It is now possible to deploy software via the internet as a software-as-a-solution (SaaS). This is essentially known as a cloud-based ERP. 

Check out the SaaS trends that are expected to take over in 2022. 

A cloud-based platform is managed across the vendor’s cloud platform. This approach is very different from an on-premise solution that is hosted on the company’s servers. 

Instead of purchasing it in one go, the cloud model can be leased on a monthly basis. Besides, there is a myriad of differences between cloud ERP software and an on-premise variant including security and variability in flexibility. 

Let’s try to understand what a cloud ERP is in detail. 

What is a cloud ERP software?

A cloud ERP software is an ERP system that is hosted and managed offsite on the cloud by the software vendor. The ERP provider primarily handles data storage, takes care of the application, the physical data center infrastructure, features upgrades, and security updates. This takes away a significant amount of load off a business and enables one to focus on important activities. 

Besides, a cloud model allows small to medium-sized companies to customize an ERP solution based on their needs. As a cloud ERP does not require the same degree of time, effort, and financial investment, it is a very beneficial alternative for small businesses. It allows smaller organizations to improve their efficiency, streamline process automation, and enhance data accuracy. 

The shift from on-premise to the cloud has been very pivotal for enterprises. The first cloud ERP system was introduced in 1998. With the arrival of cloud ERP solutions, businesses did not have to maintain them financially. In addition, they no longer had to devote IT resources for software maintenance or complex upgrades. 

The first set of cloud ERP systems was limited in functionality and had a host of drawbacks. Besides, they were not entirely developed for the cloud, making it very difficult for companies to embrace these tools completely. 

These ERP solutions were also very difficult to integrate into the existing systems businesses were using, hindering its demand. At present, cloud ERP solutions address all these challenges and offer a plethora of benefits. 

Benefits of cloud ERP software

Why are businesses opting for a cloud ERP solution? The answer is simple. These solutions offer many benefits which are discussed below. 

  • Upgrade

On-premise ERP software requires considerable time and hired contractors to carry out the necessary software upgrades and updates. Upgrades and updates on a cloud system take less than 30 minutes and can be initiated during off-hours. 

This means that vendors can proceed with updates without interrupting business systems and workflow. 

  • Cost

Costs budget cash flow finance money

One of the most important benefits associated with cloud ERP is the low upfront and recurring operating costs in comparison with an on-premise ERP. When an on-premise ERP is deployed, the company is responsible for costs linked with software licenses, servers, and energy consumption. Besides, the company also pays for backup, consultants, IT staffing, and ongoing maintenance and upgrades. 

When the ERP is deployed on the cloud, the vendor takes the burden of upgrades, support, security, and maintenance. This means that companies are liable to pay only for resources they require instead of paying for resources they do not need. 

Users can either follow a pay-per-use model or pay a monthly subscription, making it easier to manage costs and make cost-related predictions. 

  • Implementation time

One of the biggest challenges companies faces when they choose a new software is implemented. It can either be a long and tedious process or a seamless one depending on the vendor. In most cases, a cloud ERP minimizes the implementation time considerably. 

You will save considerable time that goes into deciding hardware, training IT personnel, creating security and data protocols, and more. The implementation of a cloud system is easier and less complicated in comparison to on-premise systems. 

You can also check out the best practices for the successful implementation of an ERP to get a better understanding

  • Scalability

Another major advantage of a cloud ERP is that it can easily adapt to the growing size of a company. Businesses can begin with the most basic functions and keep adding more features if and when required without having to buy new hardware. 

In addition, local servers are not needed with cloud-based systems, and since cloud vendors have data centers spread across the globe, new units can be acquired rapidly. 

This allows businesses to adapt to new technologies more quickly than ever before. 

  • Customizations and security

Although on-premise ERP solutions offer tons of customizations, they are limited to the current version of the software. Besides, they cannot be re-implemented with newer versions of the software. A cloud ERP solves this problem and allows businesses to add new modules and features as per their evolving needs. 

It is understandable that companies are skeptical of allowing external vendors to handle their data. However, the best cloud ERP vendors will ensure that your data is not compromised and is safe from external and internal security threats. 

Cloud providers offer end-to-end encryption and enterprise-level security. Hence, you can sit back and relax and not worry about any security issues. 

Making the most of cloud ERP

Hologram projector screen with cloud system technology

The success of an ERP and how it can help your company starts with the process of choosing the right software. The best cloud ERP providers know exactly what is needed from them and how their products can help companies streamline their core processes. 

A successful implementation is a journey wherein businesses need to be extremely transparent and open, while effectively communicating how the ERP can help the company. 

An array of cloud-based ERP tools are available in the market. However, choosing the right tool for your business can be challenging. This is why we have listed some of the best ERP solutions on our website. You can compare the features of these solutions and find out the best ERP solutions for your business.

SEE ALSO: 5 Unmissable Cloud Computing Trends in 2021

Feature Image Source: Image by Photo Mix from Pixabay

Image 1 Source: rawpixel.com

Image 2 Source: rawpixel.com

Karandeep V

Karandeep V

Karandeep was born in Pune, Maharashtra, an upcoming metropolitan city in the Western region of India. While most members of his family are engineers, he had different ideas. He was more inclined toward exploring the non-technical aspects of a business, which is why he studied Bachelors of Business Administration at Symbiosis International University, Pune.  Having said that, his love for new and upcoming technologies remained intact, which is why he has written extensively about technology throughout his career. After a brief stint with a gaming company at the beginning of his career, he discovered that his love for writing was not temporary.  Being a tech geek, he always liked installing and playing around with new applications on his mobile devices and the home desktop. He was fascinated by how technology can simplify even the most mundane and complex tasks with just a few commands. He keeps a close eye on how businesses use different tools to streamline their operations to boost productivity and efficiency. At ToolsMetric, he writes product reviews that cover the main features and specifications of different enterprise applications. The sheer amount of innovation and hard work that goes into building these tech solutions is one of the reasons why Karandeep loves reviewing these tools. Besides product reviews, he also writes interesting news articles and blogs that track the latest developments in the tech industry.  When he is not writing, you can find him rooted to his seat playing video games, watching movies, or supporting his favorite football team. Since his childhood, he has always loved to travel and explore new places. Traveling is a major part of his life due to a myriad of reasons such as experiencing new cultures, food, and traditions. His other hobbies include playing football, cooking, and running.  You can find him on LinkedIn here.

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