Cloud ERP and on-premise ERP each have their benefits. The best choice for you will depend on your organization’s structure and business strategy.
While this post focuses on the benefits of cloud ERP, it is by no means superior to on-premise software or hybrid cloud environments. The benefits you realize from any technology will depend on your project execution before, during and after implementation.
Here is a technology-agnostic perspective on the reasons some organizations choose to implement cloud ERP:
1. Better Business Intelligence
Cloud technology allows organizations to access data remotely without complex technical configuration or robust IT staffing. Over the past two years, the number of organizations deploying business intelligence (BI) in the cloud has doubled. Cloud BI adoption is especially prevalent among sales and marketing departments as they rely on real-time data to understand and improve the customer journey.
When it comes to data access and data storage, cloud ERP has several advantages over on-premise ERP. Cloud technology is more scalable for storing large amounts of data and can provide access to data gathered by IoT technology.
While researching cloud ERP systems, you’ll likely run across many lists of “top ERP systems.” These lists are often based on the amount of research and development vendors are investing in their products. The most innovative ERP vendors are heavily investing in cloud BI.
SAP vs. Oracle Case Study
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
2. Faster Implementation
Cloud ERP systems are faster to implement than on-premise ERP systems. The technical environment for cloud technology can be configured in as little as 24 hours.
This gives organizations more time to focus on the business side of transformation. Change management and business process management require the same time and resources whether you’re implementing cloud or on-premise ERP.
3. Ability to Focus on Your Core Competencies
Many organizations lack sufficient IT staffing or cannot afford the same resources and infrastructure as cloud providers. While an organization may be decently skilled at IT, it’s not necessarily its core competency.
Cloud technology allows organizations to outsource their IT function and focus on their core business. Retailers, for example, typically like to dedicate more focus to the customer experience than IT maintenance.
4. Cost Savings
The initial cost of cloud technology is lower than on-premise technology. While subscription costs add up over time, many CFOs are more concerned about minimizing capital expenditures than reducing operating costs. These CFOs may opt for a multi-tenant cloud to minimize long-term costs.
For smaller organizations, the long-term cost of cloud ERP may actually be less expensive than on-premise ERP – the fixed infrastructure costs of on-premise ERP can’t be spread over enough volume to justify the cost.
5. End User Buy In
Cloud technology tends to be more modern and easier to use than on-premise software, so employees may be quicker to embrace it. This does not mean organizations won’t need end-user training and a communications plan. It just means they might experience less resistance. Some organizational cultures are more accepting of cloud ERP than others.
In any technology initiative you should communicate with employees about the benefits of new technology, emphasizing how their jobs will become easier. Are you implementing robotic process automation in conjunction with cloud technology? Focus on how these bots will streamline menial tasks and enable employees to work more efficiently.
6. Strong Data Security
To avoid security breaches, many organizations turn to cloud ERP as cloud vendors tend to have very secure hosting environments. Some CIOs still worry about the security of the cloud, but they don’t realize how vigilant cloud ERP vendors can be when it comes to security because the stakes are so high. Cloud vendors have a lot to lose – with multiple customers, they are popular targets for security breaches. This may sound like a disadvantage, but in many cases, it forces vendors to develop sophisticated security.
Cloud ERP Best Practices
While there are very compelling reasons to implement cloud ERP, all technology initiatives entail significant risk. Before jumping into a cloud implementation, you should first understand your business strategy and digital strategy. The deployment model you choose should align with these strategies.