04 May What is Cloud ERP?
There has been a lot of buzz about new enterprise cloud software and how they greatly improve the productivity of any enterprise; ERP is one of them. So, what is cloud ERP? Cloud ERP (Enterprise Resource Planning) is a Software as a Service (SaaS) system that is created to put together processes and their data sources into one unified system. In layman terms, a cloud ERP is an online subscription-based ERP solution for enterprises. The ERP system puts together external and internal information across the whole enterprise, manufacturing processes, customer management, assimilating accounting, and sales.
Many people always ask the question, “What is cloud ERP Solution’s main function?” The main function of a cloud ERP system is to ensure smooth collaboration of information between an enterprise’s internal and external business functions. Any cloud ERP system has two main components; a unified database and software with a modular design. A unified database ensures that the ERP system can access all the information required to make the whole enterprise run effectively. The database also allows the information to be easily accessed and shared by various units in the enterprise. The modular software design ensures that other software programs can be added or removed from the ERP platform in order to increase efficiency.
Benefits of Cloud ERP over On-site ERP
Whether an enterprise uses an on-site ERP or a cloud ERP, there are a lot of benefits it will get. However, using a cloud ERP has far more benefits as compare to using an on-site ERP. Some of these benefits are:
Minimized initial investment
An onsite ERP solution requires enormous initial capital investment to buy servers, house the servers in a secure environment, deploy, configure and maintain them. Apart from the initial capital outlay, onsite ERP solutions also need the effort, time and costs associated with hiring and keeping a well skilled and experienced IT staff. In comparison, with a cloud based ERP solution the cost of setting up, maintenance and updating the ERP system is shifted to the ERP provider. Due to this, the customer does not have to be concerned about the cost, human resource and time to implement, maintain and run the ERP system. It is due to this that even small enterprises are now embracing ERP systems.
Quick Return on Investment
Cloud ERP solutions use the SaaS application business model. Due to this, their implementation and integration is easy and faster compared to onsite solutions. It takes only a few weeks for most cloud ERP solutions to be fully implement and running as compared to onsite solutions which take months to a year to be fully operational. It is because of the fast implementation of cloud ERP that enterprises start enjoying the benefits earlier which leads to a quick payback. The end result is the reduction of TCO (total cost of ownership) and quick return on investment during the investment’s course.
Seamless and Quick Updates
Enterprises that use onsite ERP solution usually have to wait for quite a while before they can buy and enjoy the benefits of new upgrades, features and security patches. Upgrading onsite ERP systems also comes with some problems; these are potential disruption to enterprise activities, the cost and complexities involved. It is because of this that some enterprises will choose to shift to the new ERP release rather than upgrade the current one. These problems are eliminated when dealing with a Cloud ERP solution. This is mainly because the cloud ERP provider always performs upgrades in an unobtrusive and continuous way. This way, the enterprises will always be enjoying the latest tools and applications as opposed to waiting for a new release of the ERP system as is the case when using an onsite ERP system.
Scalability and Changes
Cloud ERP systems can easily be scaled to meet the new business demands of any enterprise. Removing or adding software and users can be done whenever there is demand for it. The only thing that will change regarding the ERP solution will be the subscription fee. The flexibility that is depicted by Cloud ERP is what makes it beneficial especially for cyclical, seasonal or growing businesses.