Enterprise resource planning (ERP), a term that describes software that automates end-to-end business processes within a company, from sales to financials, was first used in the 1990s. ERP systems were initially implemented on-premise, on clients’ servers, and in their own data centers. Cloud ERP was introduced in 2000 and changed everything.
What is cloud ERP software?
Cloud ERP software is an enterprise resource planning system that can be accessed via the Internet. ERP software is the IT backbone of an organization and provides advanced functionality for core processes.
Hosted on a provider’s cloud computing platform, cloud ERP is typically delivered “as a service” (software-as-a-service or SaaS ERP). Customers do not own the software but lease it to them on an annual or monthly basis. There are no upfront hardware expenses. The vendor handles all aspects of maintenance, updates, innovations, storage, security, and data storage.
A screenshot of Cloud ERP showing the dashboard of all available resources for a project
Cloud ERP vs. on-premise ERP
Cloud ERP or SaaS ERP is hosted on the cloud platform of your provider and is managed by their IT department. On-premise ERP is installed on your hardware and servers and is managed by either your IT team or a third party.
Cloud ERP deployment options are becoming more popular with businesses. A recent survey found that 63% of respondents preferred cloud ERP software to on-premise ERP.
Why use a cloud-based ERP?
Cloud ERP is a key ingredient to success in the digital age, thanks to its flexibility and advanced features. ERP systems have been a valuable tool for organizations in the past, helping to increase productivity and gain insight. Digitalization has brought about a shift in the world and competition. ERP systems on-premise simply cannot keep up. They are hard to adapt to constant change. Most legacy ERP systems were designed for simpler environments and lack the flexibility, speed, and insight companies require to be more agile.
Customers expect quicker delivery, continuous product and service improvement, higher reliability, lower costs, and faster delivery. To provide the best customer experience, businesses often have to look beyond their own walls. They collaborate virtually with many partners, including those involved in product distribution, sales management, and service support. They need software that can not only help them manage increasingly complex internal processes but also allows them to manage global business networks. Without cloud ERP, this is impossible.
Learn more about the advantages of a cloud ERP system.
Cloud ERP is crucial for midmarket businesses
ERP is essential to any midsize business. An ERP system that is intelligent and automated will provide insight using AI and machine learning, as well as help companies, innovate business models.
These are just a few of the reasons that many mid-sized companies are switching to cloud-based ERP.
- Increased agility: Agility can be a major asset for mid-sized companies with potential growth. These companies often specialize in specific industries and work in verticals like professional services. These companies have strong customer relationships. They must seize opportunities to grow quickly – add new locations, introduce new products and services or respond to competitor failures.
A system that isn’t flexible or expandable can limit growth as it doesn’t give the information required to make decisions quickly enough. It’s hard for departments to work together and share information if they rely on separate reporting systems, many of which use Excel spreadsheets and workarounds to overcome the lack of integration.
- Cash flow visibility: Midsize businesses tend to have a very cost-conscious top management. Cash flow is the lifeblood of small businesses. Increasing profit margins is often a top priority. To build balance sheet reserves and fuel growth, you need to be careful about working capital, operating costs, and investments. All of this cannot be done in isolation. Cloud ERP integrates accounting processes and business operations, so everything can be accounted for.Although most midsize businesses have an accounting system, not all systems can provide immediate cash flow or vital information about profitability. They are often not able to meet current business needs or integrate with other systems.
- Easy integration of applications: Midsize companies have been slow to implement ERP-based solutions, but quick to adopt specific solutions to meet their operational needs. These “bolt-on” solutions can be costly and complicated as they don’t connect to the ERP system. Modern cloud ERP is changing everything. This is causing growing companies to reconsider their ERP choices. Companies are increasingly opting for cloud ERP because of its ease of use, scalability, and agility.
Is SaaS ERP security?
It is pertinent to ask whether cloud ERP is secure, given all the recent news about data breaches. It is possible to hack into any system; however, it depends on how the system was implemented and who managed it.
These are the key points you should consider:
- Data theft: It is a hot topic in the news, where large companies have had data files stolen and customers’ information compromised. However, it is more common to discover that the data was not stored in the cloud but on the company’s premises.
- Data Loss: While losing entire files can be a horrible thing, it is possible to do so when there are natural disasters, inadvertent deletions of data, or when your system crashes. It is essential to have your data backed up regularly. Cloud ERP infrastructure providers provide off-site backups that are regularly performed and redundantly. It is easy to restore data if there has been a loss.
- Security: It is vital to have the correct level of ERP security. Midsize businesses have limited IT, staff. This stuff tends to take care of infrastructure, system updates, and user issues. Midsize businesses rarely have full-time IT security personnel. Midsize businesses can have professional security specialists on-call 24×7 if they use a reliable cloud ERP provider. This ensures that all security procedures and updates are up to date.