As more businesses move from on-premises ERP to the cloud, explore the key benefits of a cloud ERP solution and why you should make the switch.
The shift from on-premises enterprise resource planning (ERP) software to modern cloud ERP solutions has rapidly accelerated. According to Gartner Inc., 51% of IT spending will have shifted from traditional solutions to the cloud by 2025. The public cloud ERP market has experienced significant market growth, and according to Bloomberg, could reach $73 billion by 2026, with an annual increase of 15% from 2021.
Companies are making the shift to cloud ERP as it fosters digital transformation and agility, allowing them to keep up and adapt to any scenario. They also offer numerous benefits over their on-premises counterparts and resolve many of the issues that accompany legacy ERP solutions, including cost, maintenance, and adaptability.
In this article, we’ll explore the top 6 benefits of cloud ERP solutions and why more organizations are pivoting to the cloud each year.
What is Cloud ERP Software?
An ERP solution consolidates and streamlines your operations across core business functions, such as finance, sales, inventory and order management, and more. Historically, on-premises ERP solutions were implemented, hosted, and managed on the company’s data servers. Cloud ERP solutions are hosted on the vendor’s cloud servers, allowing end-users to access their software through the internet.
There are different versions of cloud ERP software including public cloud, private cloud, and hybrid cloud. Public cloud or Software-as-a-Service (SaaS) is one of the more popular models. It has a multi-tenant architecture, which essentially means that all its customers share the cloud infrastructure and operate on the same version of the software. It is separated at the database level so that customer’s data and workload are kept private using secure virtual machines.
Following the pay-as-you-go model where customers pay only for the services they use, SaaS-based cloud ERP is a top choice if scalability, affordability, and hassle-free maintenance are important to you.
Learn more about cloud ERP here:
The Main Benefits of Moving Your On-Premises ERP to the Cloud
Cloud ERP solutions offer many benefits, particularly to small and medium-sized businesses as they reduce the total cost of ownership, unblock barriers to better functionality, allow for corporate agility, better data security, and reduce IT dependency. While specific benefits may vary from industry to industry, these are the top 6 cloud ERP benefits that apply universally across most businesses. Let’s dive in.
1. Software Updates and Upgrades Are Quick and Painless
All ERP software requires periodic updates to improve performance, fix security vulnerabilities, and more. If you’re currently using an on-premises ERP solution, this can be a long and time-consuming process that requires skilled IT resources. Worst case scenario? Incorrect or incomplete upgrades, in which users may end up with different software
versions.
An outdated or legacy ERP can be risky as it may compromise critical business processes, impacting profitability by dragging down business growth and innovation. Companies that aren’t up to date on their software are less likely to meet internal schedules, maintain accurate inventory or complete on-time deliveries, receive timely data for business decisions, and finally, they are less likely to see improvements in profitability.
With a modern cloud-based ERP solution, the hassle of software updates and upgrades falls on the provider. Minor updates are deployed without disrupting your day-to-day while major updates are announced in advance and typically include a sandbox-training environment and end-user training. This way, your business will always be able to leverage the latest technology.
2. Operating and Scaling Costs Are Lower
A reduced total cost of ownership is one of the biggest reasons companies switch to cloud-based ERP software. On-premises ERP software requires significant investment in hardware and personnel. In comparison, cloud-based ERP solutions have lower implementation costs because there is no hardware setup.
This makes it a viable option for small and medium-sized businesses as most cloud-based ERP solutions are offered in a subscription-pricing model and companies can hit the ground running without system downtime. If you’re switching over from an on-premises system, you’ll find several hidden economic benefits of cloud-based ERP solutions including:
More instant scalability
Lower direct and indirect costs of infrastructure
Savings from not having to run and maintain the servers
Reduced implementation time
Cloud-based ERP systems are flexible and allow for more innovation. Unlike their on-premises counterparts, they are not constrained by the deployed build and have more scope for scalability. With cloud ERP software, businesses can easily scale operations up or down.
3. Cloud ERP Improves Data Security and Prevents Data Loss
Data security continues to be a top concern for organizations, but this should not hold you back from accessing the benefits of cloud-based software. Despite the myth that an on-premises ERP system means more security since it is “in-house”, avoidance of cloud services may lead to unnecessary security risks as companies continue to rely on outdated or mismanaged in-house systems that have more vulnerabilities than the public cloud equivalent. Additional monitoring costs and requiring dedicated IT admin also suggest a less secure in-house environment.
Why is this? For one, cloud-based ERP providers such as Microsoft can deliver enterprise-grade security and compliance which is far beyond what a company can provide internally. For instance, consider available features like:
Data encryption
Secure networks and key logs
Monitoring response times
Malware protection
Regular backups, failover capabilities, and intrusion prevention
Securing physical locations where cloud servers are based
Security measures such as these and more also help to prevent data loss. Cloud-based ERP solutions offer a robust backup and recovery plan. Backup functionality is usually already included and occurs at scheduled times whereas on-premises tape backups may not be tested regularly. Not to mention, on-premises ERP systems are often vulnerable to disruptions due to power outages or issues with hardware or the network. Cloud ERP providers focus a lot of their efforts on avoiding downtime and have robust power backups and fail-safes in place.
🔎 Read More: 9 Cloud Security Best Practices for Small Businesses
4. Improved Accessibility, Collaboration, and Agility
Compared to on-premises software, a modern cloud ERP solution offers improved accessibility, usability, and mobility. When you switch to cloud ERP, you can access your business data via the internet, from anywhere, on any device. This becomes particularly beneficial if your company has remote workers or multiple geographic locations. Cloud ERP is also cheaper to implement across multiple locations, and configuration can be handled remotely as well.
Using a cloud ERP model makes information accessible in real time, providing visibility into the status of all processes and data. This increased accessibility also means higher rates of cross-departmental collaboration and productivity, as the ability to share and integrate data across your business becomes easier. Critical business decisions can be easily made by remote or mobile employees to respond to any changes in your operations.
It is also easier for companies to scale up with cloud ERP, as well as integrate third-party solutions as needs evolve. This is more difficult with on-premises software as additional hardware needs to be purchased when on-site servers are at capacity and integration with other applications requires intensive customizations.
🔎 Read More: How Cloud ERP Can Help Build Resilient Supply Chains
5. Reduces Dependency and Frees up Internal IT Teams
Migrating to a cloud-based ERP can have a major impact on the company’s internal IT team. As on-premises ERP software can be cumbersome to maintain, it leaves little time for employees to focus on strategic IT infrastructure planning and governance. In contrast, running a cloud ERP solution usually takes less time and in-house effort. As more technical responsibilities fall to the software vendor, your internal IT team have fewer day-to-day maintenance tasks to worry about, such as:
Hardware upkeep
Product support
Updates and upgrades
What does this mean for your IT team? Well, they will be able to concentrate on higher-value activities, focus on business results and spend a fraction of their valuable time on troubleshooting and routine ERP maintenance. This especially helps small to midsize businesses make the most out of their internal IT team. Similarly, businesses that do not have a fully developed IT department, can operate smoothly without having to make that additional investment.
6. Access to Business Intelligence Capabilities & New Functionality
Cloud ERP solutions make it much easier to collect and store data in a single system, which is essential for effective data analysis. Most modern cloud-based ERP solutions offer built-in analytic features, that are powered by real-time data. While on-premises software has reporting features, they do not offer the integrated, real-time analytics available through the cloud, all of which lead to better decision-making.
These analytics allow your team to identify changing business conditions as they occur, evaluate potential strategies, improve business performance, and make data-driven decisions that reduce risk, cut costs, and drive revenue.
Modern cloud ERP solutions also offer new and intelligent functionality, powered by AI, machine learning, robotic process automation, and more. Cloud ERP vendors also deliver new functionality and application improvements through continuous upgrades and larger releases every year.
Is the Move to Cloud ERP Right for You? Kwixand Solutions Can Help
For most businesses, on-premises ERP software is simply unable to keep up with the pace of a digital, data-driven market. Migrating to the cloud brings improved agility, innovative technological capabilities, and a more secure, resilient solution.
Do you have questions about migrating to the cloud or how a modern cloud ERP solution can benefit your specific business? Get in touch with Kwixand Solutions, a cloud ERP solutions provider and Microsoft Dynamics 365 Partner. We guide businesses across the US and Canada through all stages of their cloud transformation and ensure that the solutions and strategies we design for your specific business set you up for long-term success.
Book a free consultation with us today to learn more.
