It’s time. As more businesses move their on-premise ERP to the cloud, find out the key benefits of a cloud-based ERP and why you should make the switch.
There’s no doubt that the cloud is growing at an exponential rate. According to a report by Gartner Inc, the worldwide public cloud services market is projected to grow 17% in 2020 as cloud adoption becomes mainstream. 2020 is poised as the year in which more Enterprise Resource Planning (ERP) applications go cloud-native and it’s predicted that by 2025, more than half of all ERP spending will be on cloud ERP deployments.
As more businesses accept Cloud ERPs as the new normal, upgrading to a cloud-based system can help make your business more agile and support business growth – especially during these current times where the virtual office and remote work has become more prevalent.
But First - What is Cloud ERP?
Simply put, a Cloud ERP allows users to access their enterprise resource planning software over the internet. The ERP software and tools are offered and managed in the cloud, instead of being hosted on your system on-premises.
The Main Benefits of Moving On-Premise ERP to the Cloud
Cloud ERP systems offer many business benefits, particularly to small and medium-sized businesses as it reduces the cost of ownership, unblocks barriers to better functionality, allows for corporate agility, better data security, and reduced IT dependency. Let’s dive into the main benefits in more detail.
1. 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-premise ERP system, this can be a long and time-consuming process that can require a lot of internal IT resources. Worst case scenario? Incorrect or incomplete upgrades, in which users may end up with different software versions.
An outdated ERP can be risky as it may compromise critical business processes, impacting profitability by dragging down business growth and innovation. According to data by Microsoft, companies that aren’t up-to-date on their ERP software are:
5% less likely to achieve complete and on-time deliveries
6% less likely to meet internal schedules
4% less likely to maintain accurate inventory
8% less likely to receive timely data for decisions
3% less likely to see improvements in profitability
With a cloud-based ERP, the hassle of 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 often 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
Compared to an on-premise ERP, cloud-based ERP systems have low implementation costs as there is no hardware setup. This makes it a viable option for small and medium-sized businesses as most cloud-based ERP systems are offered in a subscription-pricing model and they can hit the ground running without system downtime. If you’re switching over from an on-premise ERP, you’ll find several hidden economic benefits of cloud-based ERPs including:
More instant scalability
Lower direct and indirect costs of infrastructure
Savings from not having to run and maintain the servers
Reduced deployment times
Cloud-based ERP systems are flexible and allow for more innovation. Unlike their on-premise counterparts, they are not constrained by the deployed build and have more scope for scalability. With a Cloud ERP, businesses can easily scale operations up or down.
3. Cloud ERPs offer more security and prevent data loss
Data security is a major concern nowadays and cloud-based ERP vendors like Microsoft, have built-in security protections to safeguard your data. Despite the prevalent myth that an on-premise ERP 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.
Why is this? For one, cloud-based ERP providers can deliver enterprise-grade security and compliance which is far beyond what a company can provide internally. For instance, consider available features like:
Secure networks and key logs
Monitoring response times
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 systems also offer a robust backup and recovery plan. Backup functionality is usually already included and occurs at scheduled times whereas on-premise tape backups may not be tested regularly. Not to mention, on-premise ERP systems are often vulnerable to disruptions due to power outages or issues with hardware or the network. Cloud ERPs providers focus a lot of their efforts on avoiding downtime and have robust power backups and fail-safes in place.
4. Improved accessibility, collaboration, and agility
Compared to on-premise ERPs, a Cloud ERP offers improved accessibility, usability, and mobility. Especially in these times, as more employees work from home, businesses of all sizes are becoming more decentralized. If your ERP is managed in the cloud, it allows for more corporate agility. This means that your employees can easily access the tools they need from anywhere, anytime, and using any device if they have an internet connection. Companies with multiple geographic locations will also face no problems accessing a cloud system.
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.
5. Reduce dependency and free up internal IT teams
Migrating over to a cloud-based ERP can have a major impact on the company’s internal IT team. As on-premise ERPs can be cumbersome to maintain, it leaves little time for internal IT personnel for strategic IT infrastructure planning and governance. In contrast, running an ERP out of the cloud usually takes less time and effort. As more technical responsibilities fall to the software vendor, your internal IT team have less day-to-day maintenance tasks to worry about, such as:
Updates and upgrades
What does this mean for your internal IT team? Well, they will be able to concentrate on higher-value activities and 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 more business intelligence capabilities
Cloud ERPs make it much easier to collect and store data in a single system. This is essential for effective data analysis. In fact, most cloud-based ERPs offer built-in analytic features, that are powered by real-time data. This allows your team to identify changing business conditions in real-time, evaluate potential strategies, improve business performance, and make data-driven decisions that reduce risk, cut costs, and drive revenue.
In contrast, traditional on-premises ERP software often encounters compatibility issues and are more likely to have data silos. Plus, Cloud ERPs can also easily integrate with external third-party business intelligence programs if you are looking for specific capabilities.
Is the Switch to a Cloud ERP Right for You? Let us Help.
Migrating to the cloud brings improved best-practice data, innovative technological capabilities, and a more secure ERP system. For many businesses, on-premises ERP is simply unable to keep up with the pace of a digital, data-driven market.
Got questions about migrating to the cloud or business benefits of Cloud ERPs? Book a free consultation with us today to learn more.