What is Cloud ERP?

What is Cloud ERP? post image

Cloud enterprise resource planning (ERP) allows you to control, maintain, and streamline key business processes. It integrates all areas of your enterprise, from procurement to the delivery of goods. This fosters collaboration between departments, allows you to automate repetitive tasks, and ensures faster turnaround times.

Due to the unifying nature of ERP, it makes most sense to have a cloud-based system as opposed to an on-premise solution. ERP on the cloud benefits from maximum scalability, mobile accessibility, as well as lower costs.

 

What is a cloud-based ERP system?

Cloud ERPs are delivered over the internet – typically as software-as-a-service (SaaS). Vendors of this service include the likes of NetSuite, Epicor, and Sage. While you don’t technically own the ERP, you can modify it to meet your business needs. It consists of several modules that you can add or deduct depending on your business needs and processes.

Modules are innumerable, but the main types include:

  • Financials and accounting
  • Supply chain management
  • Procurement
  • Warehouse management
  • Manufacturing execution systems (MES)
  • Inventory management
  • Customer relationship management (CRM)
  • Human capital management (HCM)
  • Order management
  • Project management
  • Material requirements planning (MRP)

The main purpose of ERP and cloud computing is to unify all of these departments to provide you with cohesive control over your business from end to end.

Given the wide range of departments and processes that modern businesses oversee, maximum flexibility, speed, and control are crucial – all of which can be supplied by cloud-based solutions.

By providing you with easier remote access, cloud options can connect these departments far more easily. For example, it allows for rapid communication between your warehouse and order management departments.

Real-time updates not only promote greater project management but also means you can update customers with real data, which boosts customer experience.

The difference between cloud and on-premise ERPs

A cloud ERP system is hosted by a vendor and not by your own business servers. This means that the data you input is stored in a cloud-based database, rather than an on-premise equivalent. This defines the main benefits of cloud ERP solutions:

  • It frees up local resources and space
  • You don’t need to pay for an on-site setup
  • It’s supplied over the internet and is managed by the server

These are also the points that separate cloud from on-premise solutions.

When ERP was first introduced, only on-premise options were available. The big drawbacks of this were infrastructure and maintenance costs, and the fact it occupied a lot of the IT department’s time and resources. Not only do you save money on upfront costs with a cloud-based solution, but it allows your IT professionals to focus their attention on other, more crucial aspects of your business.

Opkey found that, out of the businesses surveyed, 76% had switched from on-premise ERP solutions to the cloud.

 

Cloud ERP types

As aforementioned, cloud-based ERP solutions tend to be delivered as SaaS. However, there are more specific types of ERPs that you need to be aware of, including the following:

Single-tenant SaaS

A single-tenant SaaS ERP is like a private version of the software. While the system still runs on the vendor’s platform, the single tenant has its own unique version of the ERP infrastructure. The private nature of this option allows for maximum customisation and configuration options for the tenant.

Given that you don’t share this version of the platform with any other company, it generally provides greater security to users. However, it’s the more expensive option when it comes to ERP types. Plus, there are longer set-up times due to the singular configuration, customisation, and maintenance required.

Large enterprises are generally more likely to opt for single-tenant SaaS ERPs.

Multi-tenant SaaS

Multi-tenant options, on the other hand, consist of single architectures that are used by several customers. However, while multiple organisations use the same platform, data and interfaces remain private to each company. Each dataset is isolated.

While customisation options are available, you can only alter modules – you can’t alter the code to configure the architecture to better fit your business needs.

However, the fact that you share the architecture with other businesses reduces the cost of this type of ERP significantly. Multi-tenant options are easier to manage for the provider than single ones. Updates and changes to the system can be performed instantly for multiple customers, rather than one by one.

Small and medium-sized businesses tend to opt for multi-tenant access not only because of the price but because they don’t require as much customisation as bigger businesses.

Is cloud ERP secure?

Both multi and single-tenant SaaS enterprise solutions provide a high degree of security. When you opt for an ERP solution from a major company like Sage, you’re guaranteed to gain a high level of security. In fact, cloud vendors can provide more privacy, security, and compliance than a single company could with an on-premise solution.

Specifically, they implement end-to-end data encryption, which ensures your data remains secure, inaccessible to hackers, and in line with security regulations.

Quality ERP providers have reliable backup and recovery measures in place. A key component of their service is regularly backing up your data, as well as verifying its confidentiality, integrity, and availability – in line with the CIA security triad. In the event of the vendor experiencing a data breach, they’ll be able to unlock the backed-up data and keep your downtime to a minimum.

This is another reason why small and medium-sized businesses tend to opt for cloud ERPs. Small enterprises may not have the time, resources, or staff to maintain a data backup routine. By opting for a cloud solution, this responsibility is taken over by the vendor.

Other benefits of cloud ERP solutions

Throughout this article, we’ve highlighted several benefits of ERP solutions. There are many other plus points that we’ve failed to mention, including the following:

  • Cash flow visibility – The real-time data provided by cloud ERP solutions creates greater financial management. Accounting processes are streamlined with supply chain management and other modules, which gives you a greater understanding of your real-time cashflow. This allows you to identify areas that require cashflow improvements far easier.
  • Always up to date – We touched on how vendors handle system upgrades but didn’t explain how this benefits businesses. You’ll never experience any downtime or software errors because of using an out-of-date server. Providers make sure updates are performed as soon as they become available. This also means that your in-house IT team doesn’t need to waste time carrying out the update.
  • Universal access – Cloud ERP can be accessed by a verified device from anywhere in the world – all they need is an internet connection. They come with mobile-friendly interfaces, which makes them great for on-the-go updates from employees in transit. This is not only great for your employees, but it also means that your customers can easily log onto your ERP platform from wherever they are.

The drawbacks of cloud ERP solutions

Although introducing a cloud-powered ERP solution to your business holds countless benefits, there are some drawbacks and challenges that you need to be aware of.

These include:

  • Training – Modern cloud ERPs can drastically differ from older, on-premise systems. This means that you need to dedicate a lot of time and resources to training your staff.
  • Resistance – Implementing an off-site ERP system effectively redefines the role of your own IT and security team. They lose some degree of control over processes, which could leave them feeling demoted.
  • Lack of customisation – Even if you invest in a single-tenant solution, you won’t gain access to the inner workings of the infrastructure. This limits the amount of customisation that can take place.

Find a cloud ERP vendor with YourShortlist

Implementing a new ERP system through the cloud can transform how you conduct all enterprise operations. To ensure you pick a solution that’s right for your business, you need to research and evaluate providers.

This isn’t a case of picking between Sage and Netsuite – there is a wide range of ERP solutions out there, each offering unique modules and features.

To quicken your vendor evaluation process, you should use YourShortlist’s knowledge and expertise in software procurement.

We help businesses of all sizes find the perfect software solutions for their needs.

Contact us and tell us your industry-specific needs and we’ll create you a shortlist of suitable vendors.