Cloud computing is particularly useful for small businesses because it delivers access to fully functioning applications for a sensible subscription price. It can be a cost-effective way of installing and maintaining hardware and software, hiring and training staff, not to mention saving on the physical use of space that hardware takes up. Put simply, cloud-based ERP solutions for small businesses can grow substantially through increased efficiency, saving time and money.
Using Enterprise Resource Planning (ERP) software in the cloud helps with web-based management of a business’s accounting, operations management and reporting. Areas such as Customer Relationship Management (CRM), Human Resources (HR) and Accounting have adapted quickly to the cloud model, but ERP has taken longer to join the party because of the complexity and more advanced computing requirements of its systems.
Nevertheless, progress is being made, and more and more ERP suppliers are making their services available through the cloud. There may only be a few cloud ERP systems available compared to other fields, but every major ERP vendor, such as SAP, Oracle, Infor and Microsoft, provides their software with online access.
Challenges of Cloud-Based ERP Solutions for Small Business
Cloud-based ERP solutions for small businesses are not without their obstacles. There are different challenges depending on whether your software is being implemented from scratch or if it is being moved from an existing on-premises solution to a cloud version. However, there are some fundamental hurdles no matter how the software is being implemented.
The challenges mentioned here apply particularly to small businesses.
When making the decision to implement Cloud ERP, it is important to consider, if you currently have ERP software, whether it can be transferred to the cloud. If it can, you need to think if the cloud version of your ERP software is as good as your current on-premise system. There are a host of different Cloud ERP architecture and licencing models out there. There are three main choices in cloud software licencing: proprietary software licencing, commercial open source and community open source.
Proprietary software licencing
This kind of licencing, as found in software such as Acumatica Cloud ERP, is usually bound to specific locations and hardware, which has not evolved to keep up with the dynamic world of cloud environments.
Commercial open source
Vendors of this kind of software usually deliver products with closed-source features unavailable in the open-source project code. These features remain inaccessible to their community until they no longer offer the company a competitive advantage. Eucalyptus Systems is an example of a commercial open source cloud vendor.
Community open source
This kind of software, unlike the other choices, is virtually unlimited. It can be licenced to an unlimited number of users and can be run on an unlimited number of servers. The code can easily be accessed and changed so that features required by your company can be implemented into the code. This doesn’t involve licencing costs, but requires a lot of work to code and implement features, and you will need to arrange your own support. The chief example of this kind of software is OpenStack.
The challenge is to find which variety would match your business needs best.
Another issue is how well current systems will integrate into the new ERP. This is of particular concern to small manufacturing businesses with shop floor data gathering and production systems, as such businesses need to know if these systems can integrate with the ERP and if it can be done at a price they can afford. There are not as many cloud ERP solutions available for small manufacturing businesses that contain industry-specific functions compared to other kinds of business. There are quite a few ERP systems with good general industry performance, many of which offer delivery through the cloud, but these are more tailored towards mid-sized to large businesses.
Once you have designed your system of customised processes, you will need to figure out how, or if, your current customisations can be relocated to the new placement. Your current processes may have to be changed or else dropped entirely.
Putting Cloud ERP into action will be a major change in your company, and therefore requires considerable investment into change management. The change can have a real effect on your employees, especially if your workforce is downsized as a result, and so the human side must be handled as well as the technical side.
Another result of this big adjustment is the necessity of training. Many companies often stick their head in the sand instead of dealing with training. They may worry it’s a waste of money, especially as the training is squandered when employees leave the company.
The biggest problem, once an ERP solution is set up, is its connectivity requirements. A strong and reliable internet connection is essential for a web-based system such as Cloud ERP software.
Before adopting a cloud system, you will need to resolve any connectivity issues your current infrastructure may have, as Cloud ERP won’t work if your office connectivity is unreliable.
To determine how well a Cloud ERP would suit your business, and to find which solution works for you, your business needs to complete a feasibility study and determine the choices of suitable solutions with optimum architectural and licencing models. The capacity for integration needs to be kept in mind during this process. A list of customisations should be made, with potential suppliers being matched to each of your functional specifications.
As for your change management obligations, a lot of the fallout can be mitigated easily just by making sure your employees are ready for anything way ahead of time and being clear and honest to your employees and users. Change management should be well organised, so give the responsibility to a senior manager.
Training doesn’t have to be a problem either, provided the budget is appropriate and secure. Employees leaving is nothing to worry about if sufficient investment is made in training toolsets, which will guarantee that the training stays in your system.