Cloud-based enterprise resource planning (ERP) is centralized business management software that runs on a provider’s cloud platform. Instead of sitting on an on-premises network or internal server, the system is securely accessible online, from anywhere. It’s considered one of the most powerful types of ERP due to its flexibility, accessibility, ease of use, and scalability. From accounting to inventory to human resources, many companies use it to manage and integrate all their processes into one system in the cloud.
Among many benefits, cloud-based ERP offers businesses room to grow rapidly and efficiently. However, you need a good understanding of the difference between cloud-based ERP and an onsite ERP solution to fully grasp its value.
Introduction to Cloud ERP
Cloud-based computing gives you the possibility to access software applications running on shared computing resources through the internet. In the simplest terms, this allows you to store and access data over the internet instead of your local hard drive.
Generally, the upfront costs for cloud-based software solutions are much lower because you can subscribe to the computing resources monthly instead of purchasing outright and maintaining them on premises. This licensing and access method is often referred to as software as a service (SaaS).
It also allows companies to access applications that are critical for the business anytime, anywhere. According to Selecthub, nearly 88 percent of organizations from multiple industries reported that an ERP system implementation contributed to their business success.
Cloud ERP vs. On-Premise ERP
There are many differences between cloud ERP and on-premises ERP, including flexibility and security. Generally, the fundamental difference is where the software resides.
When using on-premise software, it is installed locally, either on the computer or a server. In contrast, cloud ERP is accessed through a web browser. Let’s dive a little deeper:
On-premise ERP software is managed by an IT staff of the business or a managed service provider. Typically, the company purchases the system upfront, then to run it physically, the business needs to purchase or lease in-house servers and storage to house the software and the data.
One perk of using on-premise ERP is that it offers more hands-on control with security and configuration because the company owns the ‘storage unit’ where the data is collected. It also doesn’t rely on an internet connection.
On the downside, it incurs additional costs for supplementary software, troubleshooting, maintenance, updates, internal or external management resources, and other needed customizations. There is also a need to buy and install antivirus, security software, storage, and server backup systems.
Additionally, IT staff is not only needed during the initial implementation but also ongoing training, support, and upgrades to keep the system running and up-to-date. This is very time-consuming, costly, and resource-intensive.
Moreover, the general movement to cloud-based ERP by product publishers like Microsoft is leaving on-premise ERP systems behind in many ways. The lion’s share of development resources to evolve the solutions and meet modern business requirements is put into cloud-based solutions.
In contrast, cloud-based ERP is hosted on the vendor’s server. In this case, the vendor (for example, Microsoft with Dynamics 365 on the Microsoft Azure cloud platform) is responsible for the accessibility, data storage, servers, operating system, the infrastructure of the physical data center, and installation of security updates and upgrades.
Additionally, cloud ERP is generally more accessible to small and midsized companies (SMBs) due to its low barrier to entry and the independence from scarce internal—or costly external— resources for ongoing management.
In other words, small businesses can truly benefit from cloud ERP solutions because it doesn’t have the same level of financial requirements as onsite ERP. It can be used for process automation, improving data accuracy, and enhancing the efficiency of a business.
Current statistics show that 62.7% of organizations would go with cloud ERP over an on-premise system.
9 Top Benefits of Cloud-Based ERP For Your Business
Businesses increasingly need to ensure that employees across the organization are on the same page when it comes to data accuracy and accessibility so they don’t skip a beat in productivity and can make better, more profitable decisions. Cloud-based ERP makes this more possible than ever.
Aside from this, here are some of the main benefits of cloud-based ERP for your business.
Choosing to deploy cloud-based ERP means avoiding upfront costs for hardware and data servers. You can also reduce costs because cloud systems don’t have the same level of IT support services needed as with on-premises ERP. It also eliminates the need to pay upfront for the software licenses. Instead, it’s subscription-based, usually monthly.
Lastly, it eliminates the costs of supporting and maintaining the software because the vendor already handles the maintenance, upgrades, and updates automatically and without disruption to the business or operations.
One tremendous benefit of cloud ERP software is that it scales very easily. From user count to data storage to functionality, cloud ERP systems can quickly adjust the entire infrastructure to the required size for each stage of your company’s development.
With on-premise ERP, scaling is expensive and complicated, involving increases in storage capability, and more IT and training procedures, or superfluous servers and wasted funding.
Having a cloud ERP solution can be a major advantage in terms of investment, continuity, and competitive position. Imagine being able to simply accommodate all phases of your growth without roadblocks or disruption.
Workload Reduction for the IT Team
Once a cloud ERP system is up and running, there’s generally very little needed from the company’s IT staff. Most of the support comes directly from the partner who implements and supports the system. For example, if you experience any technical issues, there’s rarely, if ever, a need to wait for the company IT to fix the problem.
A cloud ERP solution is ideal for companies where the IT team is overloaded or perhaps scarce because it reduces the internal resource requirements and stress while keeping the business running and the workers still productive.
Another benefit of a cloud ERP solution is rapid implementation, as compared to on-premise ERP systems. There’s no need to worry about selecting and buying hardware, hiring and training more IT staff, implementing security measures, and ensuring that employees have reliable access to these data and applications.
Your business can get your cloud-based ERP solution up and running in no time. By offering greater accessibility and reliability anytime, anywhere—the entire team is able to collaborate with each other and be more productive overall.
The traditional on-premise ERP system upgrades are complicated and time-consuming. This results in businesses often falling behind the latest software version because upgrading is very expensive. Cloud ERP addresses this problem automatically.
Since the vendor handles all the system upgrades for cloud ERP, the company is assured that they have the most up-to-date technology. Typically, an update of a cloud ERP software only takes 30 minutes at most, and updates occur during off-hours to avoid any business interruptions.
For instance, Microsoft Dynamics 365 Business Central generally releases two major updates and enhancements a year, and they are seamlessly executed to the platform without impacting any third-party functionality add-ons or customizations.
In terms of accessibility, since the system is hosted and managed in the cloud, the employees can easily access the data and other applications they need anywhere using their laptop, tablet, or mobile phones as long as there’s internet connectivity.
The information is available in real-time. As a result, making sound business decisions doesn’t need to wait until everyone can get access to the same data because everyone already has it. Cloud-based ERP is helping businesses create a more agile team because it features improved collaboration, easy accessibility, and a boost of productivity among team members.
Real-time analytics is one of the most significant benefits of cloud ERP. This means you can access the most important information at the click of a button. Additionally, real-time analytics give you an insight into the business, which can help make critical decisions ensuring business process optimization.
Customization and Agility
Since cloud-based ERP is easily scaled with a company, it’s also easy to customize it to meet your business requirements.
Although an on-premise ERP can be modified, these customizations are usually fairly costly and time-consuming because they are developed within the current software. Traditional on-premise customizations also inflate the time and costs of subsequent upgrades. This means it may be challenging to implement the same customizations with future versions of the software, especially if the integrations are made in-house. It’s one of the primary reasons why some companies don’t want to upgrade their on-premise ERP system. Instead, they choose to continue using an already outdated product, which prevents improvements to processes and productivity.
Additionally, using a cloud ERP system allows you to integrate with other cloud-based solutions and add new modules without the need for additional hardware. For example, Microsoft Dynamics 365 Business Central uses ‘extensions’ in the form of apps to extend the functionality of the ERP. These extensions don’t impact upgrades, updates, or compromise the core system.
Increased agility allows companies to be proactive, adjusting to industry trends, dynamic changes, and other circumstances.
Security Standards and Compliance
Cloud-based ERP solutions benefit from world-class security support. They offer encrypted connections between the vendor and the customers, eliminating the need for remote employees to use a company VPN.
The end-to-end security is built into every layer of the cloud ERP environment. As a result, logging into the networks is secured with 24/7 system monitoring. Their security standards minimize business disruptions giving companies better peace of mind. For example, Microsoft Azure, the host of Microsoft’s Dynamics ERP solutions like Business Central, ensures the highest standards in data security.
Is Cloud ERP Solution Right For Your Business?
If you’re looking into a cloud ERP solution for your business, it’s best to partner with a solutions consultant and provider to get a complete understanding of which approach will best suit your company’s requirements.
While ERP software can help you make sound and data-driven decisions by giving real-time insight into what’s going on in your business, at Wye Core, we believe the real benefit starts and ends with the users you empower with the technology. Learn more about our proven methodology here.
By focusing on your needs and making your people more efficient and capable with the talents they already have, your software and business infrastructure can successfully work for you to an infinite degree.
For more information regarding this innovative, user-based approach to the deployment and implementation of a cloud-based ERP solution like Microsoft Dynamics for your growing organization, you can contact the experts at Wye Core.
Contact us now to discuss your business goals and how we can help you meet them.