Depending on your business model and industry, you can select a cloud ERP system, an on-premises ERP system, or even a hybrid of the two. So how do you know which is the best fit for your business?
In this article, we’ll explain what is cloud ERP, how cloud ERP systems work, the difference between cloud ERP vs on-premises ERP, the benefits of cloud ERP solutions, and the features and modules you can expect with your system.
What Is Cloud ERP?
Cloud ERP is ERP software that is hosted on remote servers instead of local servers. Often, cloud-based ERP systems are hosted on the servers of your ERP vendor, and on-premises ERP systems are hosted on your business’s local network. Because cloud ERP systems store data “in the cloud,” your data is accessible anywhere the internet is available, including mobile devices.
How Does Cloud ERP Work?
Cloud ERP software uses high-speed internet technologies to connect a variety of internet-enabled devices. Cloud ERP systems are always on and accessible. Your ERP provider handles security updates automatically, leading to a lower cost of ownership. In other words, with cloud-based ERP software, all you have to do is use it. The rest is handled by the vendor.
For your business, here is how cloud ERP works:
- Select a cloud ERP service
- Implement your ERP solution, often delivered as a software as a service (SaaS)
- Use your web browser to log in; users will be assigned secure login credentials
- Access data, assign employees roles to limit their data access, and explore features
- Collect and store data in your ERP system
- Collaborate with other employees or departments via the ERP system
- Scale your resources up or down depending on your business needs
- Integrate your software with other systems for a holistic view of your organization
- Report, track, analyze, and optimize your business processes
Features & Modules of Cloud ERP Systems
Cloud ERP systems offer similar, often more robust, features, ERP modules and other products as on-premises systems. In fact, they are often more easily customizable as you can download and install the software you need easily. On top of that, you can work with your ERP consultant to select and implement what you need and remove what you don’t.
Here is a short list of common cloud ERP modules specifically for manufacturers:
- MES and Production Control
- Production Control
- Advanced Planning and Scheduling (APS)
- Project Management
- Sales Management
- Sales and Operations Planning (S&OP)
- Customer Service and Order Management
- CPQ and Guided Selling
- Service Management
- Field Service Management
- Logistics and Supply Chain Management
- Materials and Inventory Management
- Product Life Cycle Management
- Advanced Forecasting
- Business Intelligence and Analytics
- Document Management
- Training and User Adoption
- Financial / HR
- Financial Management, Analytics, Costing
- Employee Self-Service
- Customer and Vendor Portals
- Salesforce & Hubspot Integration
Keep in mind that you can use most of these features with on-premises ERP solutions, but they won’t be updated automatically, and you’ll have to secure them yourself.
Some businesses opt for hybrid cloud and on-premises ERP solutions, too.
Cloud ERP vs On-Premises ERP
The difference between cloud ERP vs on-premises ERP is where the data is stored. Cloud ERP systems store data on the vendor’s servers in a remote location. On-premises ERP systems store data locally on servers owned by your business.
There are advantages to each, but upgrading your ERP system to a cloud-based solution is the most popular solution today. With cloud-based ERP software, the technical management of your ERP system is generally managed by the vendor. With on-premises ERP software, your IT team is responsible for cybersecurity and system updates.
7 Benefits of Cloud ERP vs On-Premises ERP
Growing quickly in popularity, cloud ERP solutions have myriad benefits. There are still reasons you may want to opt for on-premises ERP software, but let’s take a look at the benefits of cloud ERP systems first.
1. Save Money
Cloud ERP removes the need for on-premises hardware, like servers. This means you don’t have to drop a big investment on physical infrastructure to get started, and you don’t need to monitor and maintain equipment to keep going.
2. Scale Your Business
The beauty of cloud ERP systems is the ability to scale your business infinitely. With on-premises ERP, you need to keep investing in hardware as you grow. That’s not the case with impressively flexible cloud solutions.
3. Access Your Business from Anywhere
Cloud ERP systems allow you to get a bird’s-eye-view of your business from anywhere you have an internet connection. Many ERP systems also have apps or other mobile-friendly means of logging on. This is great for remote workers or on-the-go employees, like truck drivers.
4. Quick Implementation and Modification
Cloud-based ERP software can be installed and upgraded more quickly than on-premises systems. This reduces any downtime necessary to complete the implementation.
5. Automatic Updating
Your cloud ERP provider handles software updates so you don’t have to. This will give you access to the latest features and security patches without having to think twice about them.
6. Disaster Recover Options
Cloud ERP software usually includes disaster recovery options, like automatic back-ups. This will allow you to restore recent data if there’s an unexpected interruption.
7. Put Your Heads Together
Collaboration is a huge benefit of cloud ERP software. Users can communicate in real time using shared data, meaning they are working off of the same information and can collaborate without discrepancies. This makes teamwork more efficient and innovative.
Is Cloud ERP Right for You?
Now that you know what is cloud ERP software, is it right for your business? For most businesses, cloud ERP systems are the right way to go. However, we’d love to hear about your business so we can help you pick the best ERP solution. Contact us at Godlan for a consultation today.