Cloud ERPs, they’ve been around for more than a decade now and in that time have redefined the industry. However, much confusion still exists over when and why businesses may want to choose a cloud ERP over a traditional option. Today, I want to focus on the question of why cloud ERPs have become so popular. To answer it, we will look at five of the major benefits a cloud ERP can offer any business, no matter their size or industry. Let’s dive right in!
Free up capital for other projects
While I did not write the five reasons, we’ll dicuss in today’s blog post in any particular order, this is one of the biggest reasons why cloud computing has become so popular in the last several years. When you use a traditional, on premise ERP system you must manage the server and other hardware your system runs on. Maintaining this equipment can be difficult, especially for small businesses who have little or no internal IT staff. Not only that, they are also expensive. Just like computers, servers have a relatively short, finite lifespan. You can’t buy one today expecting it to run the latest and greatest software 20 years from now. So, every few years, you’ll need a new one. Bearing this expense is often a challenge for smaller businesses who prefer to focus their limited resources on investing in other areas
But the expenses don’t just stop hardware. You must also buy your user licenses upfront. So, to control expenses, many businesses limit the number of user licenses they own, only giving access to the employees who must have access to it. If someone needs occasional access, perhaps to get data out to do their quarterly reporting, they must rely on someone else to collect the information for them. While this system works, it can impede the productivity of both employees.
When you choose a cloud ERP solution, you are no longer responsible for buying or maintaining the servers the system runs on. That now becomes the responsibility of your vendor. And rather than paying for your software licenses upfront, you often can pay in installments, making it easier to budget and possibly allowing you to grant access to more employees than you would be able to if you had to pay for all licenses at once. Your ERP becomes an operating expense rather than a capital one. For businesses with limited capital resources, the switch can be attractive.
Give you access to tools that once required large budgets and deep IT expertise
The competition between ERP vendors today is fiercer than ever. This may not be good news for ERP vendors, but it’s great for buyers and users. It’s led many ERP vendors to invest heavily in the latest technology. In the past, things like AI, machine learning and IOT were out of reach for many businesses, especially small ones. But that is no longer the case.
In general, if you are using a cloud ERP, these features will appear in your system with little work on your part. The vendor will take care of the software development and hardware enhancements needed to support the changes.
With an on-premise ERP, your vendor will take care of adding new features through source code adjustments. But it will be up to you to install the latest software version and make sure you have all the hardware necessary to take advantage of the latest and greatest updates.
Improve mobility and collaboration
Since you can only access traditional ERP systems on hardware that exists within your office walls, they can make it difficult to keep up with the times and sometimes stifle collaboration. Today’s workforce wants flexibility. They expect to work from anywhere on a schedule convenient for them. But when your ERP is only available on certain computers within your office, it is very difficult to allow your employees to work anywhere but at the office. If inspiration strikes in the middle of the night, they can’t just log into your ERP system on their smart phone to look at the latest sales numbers, they have to wait until they get into the office the next morning.
With a cloud ERP, collaboration among teams, even geographically disperate ones becomes much easier. All anyone needs to access key business information is an Internet enabled device running any common browser. Your staff does not lose time commuting into the office. And you don’t have to wonder whether the information you’re looking at is up-to-date.
Make your business more agile
Let’s say you have a seasonal business and you do 50% of your yearly sales in one quarter. Well, with a traditional ERP where you have a set amount of computing resources available to you, you have two choices. You can either overbuy to meet the needs of your busy season. Or, you can buy only what you need for the other 75% of the year, leaving you to struggle through your busy season with a sluggish system.
With a cloud ERP, you don’t have to choose. You can scale the system up and down as your needs change without having to invest in additional hardware. While your vendor may charge you a fee for using additional computing resources, it is faster and much more economical than having to purchase new hardware just to meet seasonal demand.
Lessen IT headaches and boost productivity
With a traditional ERP system, you rely on you IT team or a consultant to support you when issues arise. This set up may work well if you have knowledgeable employees or great support from a local expert. Even so, network issues, power outages or hardware problems happen from time to time. And, with an on-premise system they are your responsibility to resolve. So, it’s imperative you have the skills and resources to address these issues quickly as they can bring productivity to a standstill. If you’re relying on a consultant to assist you, there may be times where you must wait to get on their busy schedule. When this happens, you may have to improvise and find temporary solutions to keep the business running.
A cloud ERP takes much of this responsibility off your shoulders. As I mentioned earlier, with cloud solutions, your vendor is responsible for hardware and software maintenance. They understand their success relies heavily on providing their customers with uninterrupted access to the system. They invest heavily in state-of-the-art hardware and usually offer uptime guarantees. This can’t mitigate all unexpected disturbance. We can’t always predict what mother nature will do, and even if your cloud provider handles software updates for you, they still may cause a little downtime from time to time. But when things like that happen, their support team will be there to help you get the system up and running again.
Want to learn more about the differences between cloud and on-premise ERP systems? Watch this three-minute video for a simple, no-nonsense explanation.
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By: Laura Schomaker, Intelligent Technologies, Inc., a North Carolina Acumatica and Microsoft partner,