Embracing the Future: How Cloud ERP Solutions Transform Organizations

Hive team posted on July 13, 2023

Cloud ERP refers to an enterprise resource planning (ERP) system that operates on a vendor's cloud platform rather than a local network, enabling organizations to access it via the Internet. According to Statista, the cloud based ERP solutions market is expected to reach $40.5 billion by 2025 at a CAGR of 13.6%. But why is cloud based ERP software development growing popular? First of all, this software integrates and automates crucial financial and operational functions of a business, consolidating various data points such as inventory, order management, and supply chain operations. Additionally, it assists with procurement, production, distribution, and fulfillment processes. By accessing the software through a browser with an Internet connection, organizations can conveniently utilize its features.

But that is not all. Cloud-based ERP solutions offer enterprises a broad scope of capabilities and benefits. It also has certain drawbacks we cannot ignore. That is why we give you a comprehensive analysis of the cloud based ERP solutions. Let us dive deep and see what makes these solutions valuable for large enterprises, how it compares to the on-prem ERP, and how you can benefit from these solutions.

Table of Content

• What Is Cloud ERP Software and Why Should You Consider It?
• How Does Cloud ERP Work?
• What are the Three Types of Cloud ERP Software
• Cloud ERP vs. On-Premises ERP: Which One Should You Choose?
• The Challenges of Cloud Based ERP Business Solutions
• How Can Cloud Based Erp Solution Help Your Business?
• FAQ
• Find The Best Cloud Based ERP Solutions with Hive

What Is Cloud ERP Software and Why Should You Consider It?

Unlike traditional on-premise ERP systems that require hardware infrastructure and maintenance, cloud ERP software is accessed and utilized over the Internet. It offers a centralized and integrated solution for managing and automating various business processes and operations, including finance, human resources, supply chain management, customer relationship management, and more.

Cloud ERP software eliminates the need for organizations to invest in dedicated servers or IT infrastructure, as all the enterprise software and data are securely hosted and managed by the cloud vendor. This allows for greater scalability, flexibility, and cost-efficiency, as businesses can easily scale their usage based on their needs and only pay for the resources they use. With cloud ERP software, users can access the system from anywhere and at any time using a web browser or dedicated application, as long as they have an Internet connection. This enables remote collaboration, real-time data access, and seamless connectivity across multiple locations or departments within an organization.

How Does Cloud ERP Work?

Cloud ERP systems utilize a combination of interconnected technologies through high-speed networks. These systems operate continuously in the cloud, and the responsibility of handling security updates lies with the ERP provider. As a result, users only need to log in and utilize the ERP and its underlying data, alleviating concerns for the team. Compared to older ERP systems hosted on company-owned servers, cloud ERPs often offer a lower cost of ownership. Cloud-based ERP solutions are typically accessible to users on both mobile and desktop devices. They encompass a broad range of business applications, promoting efficient business operations, managing resources, planning the re-purchases, delivering positive customer experiences, and more. The scalability of cloud based ERP software is virtually limitless, empowering teams to access information from anywhere they work, whether it be customer sales meetings, remote worksites, or home offices.

Key features of cloud ERPs include access to customer information, sales histories, financial data, human resources management tools, real-time operating metrics, supply chain status, and more. Moreover, a cloud ERP can integrate with virtually any computer system required by a company. Depending on the specific needs of a business, different deployment models with optimized modules and settings are available. This customization helps keep teams focused on the appropriate metrics and workflows that align with the company's goals.

What are the Three Types of Cloud ERP Software

Considering the cloud-based nature of the ERP solutions we discuss, their main types correlate perfectly with the main types of cloud services. It's worth noting that within each type, there can be variations and offerings from different ERP vendors, each with their own features and functionalities. Organizations should evaluate their specific requirements and consider factors such as scalability, security, customization, and cost when choosing the appropriate type of cloud ERP software for their business. There are primarily three types of cloud ERP software:

• Public Cloud ERP: Public cloud ERP software is hosted and managed by a third-party service provider. It operates on shared infrastructure, where multiple organizations use the same resources and infrastructure provided by the service provider. This type of cloud ERP offers cost-effectiveness, scalability, and minimal maintenance requirements since the service provider handles software updates and infrastructure management. However, customization options may be limited, and data security concerns may arise due to the shared environment.
• Private Cloud ERP: Private cloud ERP software is dedicated to a single organization and hosted either on-premises or in a separate cloud environment. It provides more control, customization options, and enhanced security compared to public cloud ERP. Private cloud ERP is suitable for organizations with specific security or compliance requirements and those needing greater control over their software environment. Naturally, it requires a higher initial investment, ongoing maintenance, and updates.
• Hybrid Cloud ERP: Hybrid cloud ERP combines elements of both public and private cloud models. It allows organizations to utilize a mix of public and private cloud deployments based on their needs. For example, sensitive or critical data can be kept in a private cloud, while non-sensitive data or less critical operations can be managed in a public cloud. Hybrid cloud ERP provides flexibility, scalability, and customization options while addressing security and compliance concerns. On the flip side, it requires careful integration and management of multiple environments, which calls for rather specific expertise on the side of your technology partner.

Cloud ERP vs. On-Premises ERP: Which One Should You Choose?

On-premises ERP does come with certain challenges, such as higher initial investments, increased maintenance responsibilities, and potential limitations in scalability and remote accessibility. Organizations should carefully evaluate their specific requirements, long-term strategies, and IT capabilities before deciding whether on-premises ERP is the right fit for their needs. On-premises ERP, despite being less favored in recent years, still offers several benefits for certain organizations with specific requirements. The advantages of on-premises ERP include:

1. Control and customization: On-premises ERP provides organizations with full control over their system since it is installed and managed internally.
2. Data security: With on-premises ERP, sensitive data remains within the organization's infrastructure, providing a higher level of control and security. Companies with strict data security requirements or in industries with stringent compliance regulations may opt for on-premises ERP to ensure data protection and maintain compliance.
3. Integration with legacy systems: Organizations with complex IT environments and a significant investment in legacy systems may find on-premises ERP more suitable.

Why Cloud Based ERP Business Solutions are a Better Option?

Now that we have discussed the benefits of on-premise ERPs, why should you consider cloud based ERP solutions? There are several essential perks to cloud solutions that outclass on-prem in almost every aspect. While both options have their advantages, the benefits of cloud ERP tend to outweigh those of on-premises ERP.

Cloud ERP offers several advantages:

1. Cost-effectiveness: Cloud ERP eliminates the need for upfront hardware investments and reduces infrastructure costs. With cloud ERP, organizations can avoid purchasing and maintaining expensive servers, data centers, and IT infrastructure. Instead, they pay a subscription fee based on usage, resulting in lower initial costs and predictable ongoing expenses.
2. Scalability and flexibility: Cloud ERP allows organizations to scale their operations easily. As business needs grow, additional resources can be provisioned quickly in the cloud, ensuring seamless expansion without disruptions. Scaling down is also an option.
3. Accessibility and mobility: Cloud ERP provides remote accessibility, enabling users to access the system and data from anywhere with an Internet connection. This flexibility allows employees to work remotely, collaborate seamlessly, and access critical information on the go using various devices like laptops, tablets, or smartphones.
4. Automatic updates and maintenance: Cloud ERP providers handle software updates, maintenance, and security patches. This eliminates the burden of maintaining and upgrading the system internally, freeing up IT resources and reducing downtime.
5. Data security and reliability: Cloud ERP systems typically employ robust security measures, including encryption, firewalls, and data backup procedures. Cloud service providers often have dedicated security teams and compliance certifications, ensuring data protection and regulatory compliance.
6. Disaster recovery: In case anything goes sideways, there’s also a backup version of your software in the cloud. Even in the case of disaster, you can return to the functioning version of your software, giving your development team time to address the problem.

While on-premises ERP may still be suitable for some organizations with specific requirements, such as stringent data security regulations or the need for complete control over infrastructure, cloud ERP offers numerous advantages that make it increasingly appealing for businesses. To put it simply, cloud ERP provides a more cost-effective, scalable, accessible, and secure solution for organizations, enabling them to focus on their core business operations while leveraging the benefits of a modern and robust ERP system.

The Challenges of Cloud Based ERP Business Solutions

While cloud ERP offers numerous benefits, it also presents certain challenges that organizations should consider. It is important for organizations to evaluate these challenges in relation to their specific business requirements, resources, and risk tolerance. You must not choose cloud based solutions because they look fresh and fancy. You must choose them because they suit your unique business case. Working with the right technology vendor and implementing proper risk mitigation strategies can help address these challenges effectively.

• Dependence on Internet connectivity: If the Internet connection goes down or experiences disruptions, users may face difficulties accessing the system.
• Customization limitations: Cloud ERP systems often prioritize standardization to provide scalable and efficient services to a wide range of customers. This can result in limitations on customization options compared to on-premise ERP solutions.
• Vendor reliance: When utilizing cloud ERP, organizations become reliant on the cloud ERP vendor for system availability, updates, maintenance, and support.
• Data governance and compliance: Cloud ERP involves entrusting critical business data to a third-party provider. Organizations need to ensure that the vendor's data governance practices align with their own compliance requirements and industry regulations.
• Unpredictable long-term costs: Ongoing subscription fees and potential charges for additional storage, user licenses, or advanced features can accumulate over time.

How Can Cloud Based ERP Solution Help Your Business?

All of the benefits we have discussed earlier translate perfectly into tangible value for your business. Firstly, they provide cost savings by eliminating the need for upfront investments in hardware and infrastructure. Instead, businesses pay a subscription fee based on usage, reducing initial costs and ongoing expenses. Scalability and flexibility are also key advantages, allowing organizations to easily adjust resources in response to growth or fluctuations in demand. Remote accessibility and collaboration enable users to access the system and data from anywhere, enhancing productivity and facilitating collaboration among distributed teams.

Automatic updates and maintenance handled by the ERP provider ensure the system remains up-to-date and secure without internal efforts. Data security measures and reliable backup procedures offer protection and compliance. Enhanced analytics and reporting capabilities enable informed decision-making by leveraging real-time data. Integration and connectivity with other applications streamline processes and provide a unified view of operations. These benefits collectively contribute to improved efficiency, informed decision-making, and business growth in today's dynamic environment.

FAQ

What is the real cost of ERP software?

The real cost of ERP software varies depending on factors such as the organization's size, complexity of operations, chosen deployment model, number of users, required features, and the ERP vendor. The total cost can range from tens of thousands to millions of dollars. That is why it is important to work with people who can assess your needs and suggest the right cloud offer for your case.

How to choose the right ERP?

First, assess your organization's specific needs, considering factors such as industry requirements, business processes, scalability, and integration capabilities. Next, create a comprehensive list of desired features and functionalities. Research and evaluate ERP vendors, considering their industry experience, reputation, customer reviews, and product demonstrations. Request proposals and pricing information from shortlisted vendors and compare them based on factors like cost, implementation time, ongoing support, and flexibility.

How to select an ERP software vendor?

Research and evaluate vendors based on factors such as industry experience, reputation, customer reviews, and product demonstrations. Shortlist vendors and compare them based on factors like expertise, functionality, scalability, integration capabilities, support options, and long-term viability.

How many companies use cloud ERP?

According to the research, 53% of the enterprises that use ERP already use cloud-based solutions rather than on-prem ERP. This ratio continues to shift in favor of cloud-based ERP solutions.

Create The Best Cloud Based ERP Solutions with Hive

Cloud-based ERP systems have revolutionized the way businesses manage their operations, providing a host of benefits that can drive efficiency, scalability, and growth. By leveraging the power of the cloud, organizations can enjoy cost savings, remote accessibility, automatic updates, enhanced data security, and seamless integration capabilities. However, it is crucial to work with the right technology partner when implementing a cloud-based ERP solution.

Choosing the right technology partner ensures a successful implementation and maximizes the benefits of cloud-based ERP. And Hive is the partner that can help you achieve your goals with confidence, agility, and speed. The Hive team will assess your organization's specific needs, provide expertise in ERP implementation, and offer ongoing support and maintenance. We will help tailor the system to align with your unique business processes, ensure data security and compliance, and guide you through the complexities of integration and customization.