A Complete and Accurate Guide to Understanding Cloud ERP


Cloud-based software is increasingly popular as companies integrate their systems and grow. Cloud Based ERP is a great solution and can make a business more efficient.

Cloud ERP (enterprise resource planning) is a system for enterprise resource planning hosted in the Cloud. Instead of an on-premises network, it runs on a vendor's cloud platform. This enables organizations to connect to the Cloud via the internet. 

ERP software streamlines critical financial and operational business processes. It offers a centralized data source for Inventory Management, orders, supply chain management, procurement, distribution, and fulfillment assistance. Organizations can access the software via the internet. All that is required is an internet connection and a web browser.

These systems can be hosted in the Cloud solutions to improve operational efficiency, report and analytics automation, and business functionality.

What is Cloud ERP Software?

Cloud ERP software is hosted by an ERP vendor and offered as a service for business owners. It supports the same functionality, or better, as on-premises systems, without the downsides of upfront licensing fees.

Cloud-based ERP systems are in high demand because they can access and analyze large amounts of data in real-time insights.

Midsize Businesses have many options for cloud-based solutions. They all offer different features and solutions. This is the essential distinction between them. The best software does not guarantee a company's success.

Each system is different, and each has its strengths and weaknesses. However, it's crucial to understand what these are and how they impact a company's efficiency. This software is designed to improve organization and productivity. Different software will be required depending on the type of business and the operational structure. Good research will give you valuable insight into the importance and integration of cloud-based ERP.

This gives sales teams real-time inventory information and allows finance teams to monitor cash runway and respond quickly to audits and other requests for performance data.

What is a Cloud Based ERP System?

It is essential to plan your cloud-based ERP system implementation carefully. This is because it will take a lot of work to integrate it into your business environment. A cloud-based system can provide a great return on investment, but it is essential to have a plan and goals.

While having systems that can be accessed remotely and via the internet is one thing, learning how to use all these applications is essential. Bringing colleagues on board for cloud-based integration is also a good idea. To prepare employees for the change, it is necessary to have an organizational change management program.

Who Should Switch To a Cloud-Based ERP?

It is essential to improve your business. However, only some processes work for some teams. Cloud Based ERP offers many benefits to almost all successful businesses.

Online ERP systems are an excellent option for companies that spend money on technology. The ERP system can be accessed online, which allows for increased growth and more cost-effective solutions. Most companies can benefit from a Cloud Based ERP if it is cost-efficient, efficient, and planned correctly.

What is Cloud ERP?

Cloud ERP systems use a combination of technology and high-speed internet connections. Cloud ERP systems are always available online. The ERP provider can handle security updates. Your team only needs to log in and use the ERP. This could result in a lower cost per user than older ERP systems hosted on company servers.

Cloud ERPs can be accessed on both mobile and desktop computers in many cases. These include many business applications that will help you keep your business running smoothly with a focus on a positive customer experience and profitable business outcomes.

Cloud-based ERPs allow for near-unlimited scaling and empower your team to have access to any information they require, wherever they are working. This includes customer sales meetings, remote worksites, or your home office. In the post-COVID world, where workers are increasingly working remotely and from home, it is crucial that they can securely log in from anywhere.

Cloud-based ERP is a service that allows businesses to give their employees access to software applications that run on shared resources online. It enables teams to communicate more effectively and streamline business operations. Although every business has its software, it is essential to have an ERP that is accessible to all employees.

The key features include accessing customer information, financial data, sales history, supply chain status, live operating metrics, and other operational metrics. Cloud ERP can connect to any system that your company needs.

You can choose from a variety of deployment models that are tailored to your company's needs. This can help you keep your team focused on the right metrics, workflow and goals for your company.

Get a Free Estimation or Talk to Our Business Manager!

Cloud ERP Software Components

All cloud-based ERP software offers core accounting and financial functionality. The type of modules and applications an organization chooses will depend on their industry and business needs. The following cloud ERP modules are available:

  • Accounting and financials
  • Management of human capital (HCM) or Human resource management software (HRMS).
  • Customer Relationship Management (CRM).
  • Inventory management
  • Management of orders
  • Procurement
  • Control of the supply chain
  • Management of projects
  • Material requirements planning (MRP).

Cloud ERP Concepts

As we get deeper into Cloud ERP, it is essential to grasp the basics of the subject.

  1. Strategy For Deployment: ERP software is available on-premises, on privately hosted servers, or as an "as-a-service" model. Cloud ERP functionality is usually more accessible but can be delivered faster. However, companies must still plan and prepare for data migrations, configuration, and training.
  2. Cloud-based ERP: Enterprise resource management software hosted offsite on the ERP vendor's servers. It can be accessed via a web browser and provided as a free service.
  3. On-premises ERP: Enterprise resource management software installed on a company's computers and servers and then managed by contracted or internal IT personnel. Software and supporting infrastructure are maintained, collected, and stored in-house.
  4. Hosted ERP: An organization or hosting provider contains the installation of ERP software and associated infrastructure. When businesses want to outsource IT operations, they often turn to hosted deployment models. Although this arrangement offers some cloud benefits, it is not an "as-a-service" model.
  5. End-to-End Security: Secure and encrypted connection between cloud-based ERP vendors and their customer service.
  6. A Company Pays Subscription Licensing and a Fixed Subscription Fee: at a specific time (either monthly or annually) to use the software. This fee may be per user or company, including software maintenance and updates.

Cloud ERP vs. On-Premises ERP

An IT department or managed service provider installs on-premises ERP software. After licensing the core software platform, the business purchases or leases enterprise-grade servers and networking equipment to run the software and the associated data. On-premise ERP systems can incur additional upfront costs for support, troubleshooting, upgrades, customizations, and maintenance. Additional charges may also be incurred for security, antivirus software, and storage or server backup systems.

The vendor hosts and manages cloud-based ERP through the Cloud. The software is offered via the Cloud in an "as-a-service" model. The vendor manages the application, data storage and the underlying operating system. They also manage the servers and the infrastructure for installing security updates and feature enhancements.

The most apparent distinction between cloud ERP and on-premises is the location where the software runs and the person who manages it. However, there are significant differences.

Different Types of Cloud ERP Software

First, not all cloud providers are created equal. Many legacy ERP vendors have modified their software to run on their own data centers connected to the internet. These ERP systems can be costly for businesses that use something other than cloud-based ERP.

Cloud Based ERPs allow companies to implement an entirely online service. A third party will offer applications to a company that they can use. This will enable a business to access the best applications for its operations.

A hybrid cloud-based ERP allows you to combine the best of both on-premise and cloud ERP. This is useful for businesses that have an existing on-premise plan and want to shift some resources to the Cloud-based on their operations and teams. This can benefit companies with the help and budget to do both while still being cost savings.

Cloud ERP Software can be purchased in many different forms:

  • Multi-tenant SAAS: A single version of the ERP software with its associated infrastructure is used by multiple organizations. Although each company uses the same software and is hosted on the same servers, data from one company remains inaccessible to the rest. A cloud ERP system that works well with multiple tenants is often a SaaS.
  • Single-tenant SAAS: A single version of the ERP software with its associated infrastructure is used by one company. This means an organization's data is stored on its servers, running a specific software instance. Many cloud ERP vendors offer customers the option of running a private or shared model.
  • Public Cloud: Managed by the service provider, multiple organizations share cloud computing services. Each organization's data is inaccessible to the others. Public cloud services include Amazon Web Services (Google Cloud), Microsoft Azure (Microsoft Azure).
  • Private Cloud: A service which is not shared with another organization.
  • Hybrid ERP: A hybrid ERP, is a combination of on-premises software and a private or public cloud to provide computing, storage, and services.

Read More: Increase efficiency and productivity with ERP solutions

8 Benefits of Cloud ERP Software

1. Initial infrastructure and operating costs: The most significant benefit of cloud-based ERP solutions is the overall cost reduction and cost of ownership. These benefits start at implementation. On-premise ERP will cost a business upfront by purchasing servers, initial performance, consultants, staffing, security, backup, and database creation.

On-premises ERP systems will incur additional maintenance costs, unique in-house or on-call resources, upgrades, and new servers. On-premises ERP is generally 30% more expensive than cloud ERP. Cloud ERP vendors host and manage the software on their servers. This allows businesses to avoid additional infrastructure costs, IT staff costs, and security, maintenance and updates costs. The vendor offers ongoing IT support.

2. Implementation Speed: This is a significant hurdle in any new ERP system. It can directly impact business downtime and time-to-value. Almost half of all businesses reported that their implementations were completed within the timeframe. Cloud-based ERP systems are typically faster than traditional on-premises solutions because they don't require the hiring or training of IT staff, nor do they need to set up hardware.

3. Accessibility: Cloud ERP users can access business information from any location, on any device and in real-time visibility. This allows employees to work with the same data across the company, regardless of their business units or areas, making it easier for them to make faster decisions and feel more confident.

4. Scalability: Cloud-based ERP solutions simplify scaling. Cloud ERP will grow with a company's growth. A company can start with core functionality and then add on as required without needing additional hardware. A cloud ERP solution makes it possible for users worldwide to connect to the internet to access their business information.

Cloud ERP solutions do not require local servers, so new units can be quickly brought online as companies grow through mergers and acquisitions. Cloud vendors usually have data centers all over the globe and can store each customer's data in different locations. This provides better and more reliable service than many businesses can manage. Cloud software vendors aim for 99.999% availability, meaning customers will experience less than eight minutes of unplanned downtime per year.

Flexibility and Customization: Cloud-based ERP is scalable with organizations. It can also be customized to meet business needs from the beginning or as they evolve over time. Although customizations can be made to existing ERP software, they are incompatible with future versions. They may prove challenging to implement, especially if the integrations were created in-house. This is why many businesses use out-of-date technology and avoid updating their ERP software.

Cloud ERP systems are easy to integrate with other cloud-based products. This means that new modules can be added without additional hardware or downtime. This agility allows businesses to be proactive rather than reactive and adapt more quickly to changes in the industry, consumer trends, and other unforeseen circumstances.

Upgrading: Cloud ERP vendors usually manage all system updates and upgrades continuously. This allows them to keep up with changing business needs and ensure customers use the latest technology for better customer interactions. Upgrades and upgrades to ERP software on-premises can take longer and require contractors to manage. Cloud ERP updates are quick and can be completed in minutes. They also occur outside business hours to avoid disruptions.

Security, Compliance and Disaster Recovery: Many organizations are concerned about the safety of their business data stored with an outside vendor. Cloud-based ERP providers can offer greater security and compliance than most companies can afford. A business can be confident that its data will always be backed up and that the vendor has prepared and practiced disaster recovery plans.

On-premise ERP solutions can lead to catastrophic data loss if no disaster recovery plan is in place. Cloud providers often offer enterprise-grade security and encryption between the vendor's organization and the cloud provider. Companies are responsible for managing access and identity for cloud ERP users.

Data Access and Resilience: Companies could spend considerable time and money to transfer data to new storage systems if their on-premises hardware is damaged. Cloud-based ERP stores data in the provider's data centers, often redundant and geographically dispersed.

This also makes it possible to access business information and data online. This is a significant advantage as more jobs and operations are moving online, and businesses seek to automate and streamline their business processes.

Cloud ERP Challenges

Although Cloud is on the rise, organizations could face some challenges.

  • Legacy systems- A migration to cloud-based ERP may prove difficult for larger businesses using on-premises techniques for years.
  • Resistant to change- Larger enterprises with large IT or administrative departments may need more support from key stakeholders. The vendor manages all infrastructure maintenance, so IT teams cannot control certain operations. Administrators lose some control over the ERP software.
  • Compliance with regulatory requirements- Businesses with strict cyber security policies, limited cloud hosting of customer data, and other compliance issues may be unable to reap the benefits of cloud-based ERP solutions. Nonetheless, major software-as-a-service providers have made significant progress in complying with regulations such as HIPAA and GDPR, and can usually accommodate mandates around data sovereignty and locality, so don't assume you're limited to on-premises ERP.

Cloud-based ERP comes with its Own set of Challenges

  • Constant cost

Subscription-based methods are cheaper in the short term but could be more expensive in the long term. Cost increases and maintaining a specific price for longer as services are updated is always possible.

  • Less control

Third-party vendors manage the software, so if they have issues, it will also affect companies that use them. This can cause a decrease in efficiency and poor updates and support systems.

  • Training sessions

While training employees in new skills is a positive aspect of any business, it can be challenging to teach them a system not created locally by a team who understands their needs. To make it easier for employees to learn, it's essential to identify your method and bring in experts to help.

  • Customization options

Cloud ERPs are usually customizable, but the options available on local servers tend to be limited. Third parties will provide these services, so they can have greater control over which options can be customized or not.

  • Compliance Questions

Due to compliance reasons, some businesses cannot store or host sensitive data in the Cloud. This makes it impossible for all companies to have this option.

  • Employee agreement

A large IT team can be a boon for company success and securing more jobs. It is crucial to ensure that the whole company/all couples agree on a cloud-based ERP to maintain employee morale.

How To Choose The Best Cloud-Based Erp Software

Cloud-based ERP software is available for businesses in many forms. Companies have the freedom to choose the company that best suits their needs. Some offer greater security, while others provide additional applications to streamline operations.

Making a priority list when researching different ERP solutions to help narrow your search is a good idea.

Cloud ERP Implementation: Strategic Planning

Cloud ERP implementation should be planned before it is implemented. This will ensure that you save both time and money. This system has many benefits, but it is important to weigh them all.

It is essential to compare the costs of hosting an on-premise and online software system. A combination of both can be beneficial for some businesses. In contrast, others may benefit from one another depending on their size and operations.

All partners and teams must be informed about the update to implement an online ERP system. Whether the system is new or has been implemented throughout the company is pleasing. Transparency is key.

Cloud Based ERP systems can be implemented by identifying critical leaders in teams. If there is no existing training system, key leaders can train others in groups.

Small Business ERP Solutions - Cloud Based

A cloud-based ERP system can be a massive benefit to many small businesses. This can provide insight and perspective to all employees, not only to other departments but to the entire company.

This will allow all teams to come together and improve the organization. Operations will also be easily accessible to everyone. This will enable teams to collaborate more effectively and increase efficiency by getting to know each other's systems and workflows.

While an ERP system is less expensive than a local server on-premise, it can still be prohibitively expensive for small businesses. Smaller businesses should use free ERP software to expand their operations.

Businesses should not only look for cheaper or free services but also research these services. Every ERP system is flawed for some companies. It is essential to do your research and consider subscription costs. Many ERPs offer a free trial. If you are interested, taking advantage of these offers is necessary.

Want More Information About Our Services? Talk to Our Consultants!

Last Thoughts

A Cloud-based ERP can offer many advantages and drawbacks. Finding the right software for your company is the most important thing. It doesn't matter if you use software services from an outside company or local data servers. The goal is to improve business performance and generate more revenue.

SaaS businesses can also be businesses, so it is essential to choose the right partner to build a mutually beneficial relationship. Both companies are seeking to improve their services and software. This can be achieved together. The right partnership will lead to exponential increases in efficiency and productivity.