Why Adopt a Cloud ERP?

Estimated reading time: 6 minutes.

Are outdated systems holding your business back?

We recently visited a manufacturing client to discuss their online marketing strategy. Our meeting was delayed as the owner was in the factory checking the level of raw materials – they had run out.

Not long after the meeting started, his mobile phone rang. His head salesman was frantically trying to determine if a certain product was in stock for their best customer. No one in the office had a ready answer.

We turned the conversation to how the business was going. The owner said he was constantly stressed because they couldn’t react fast enough to changes in customer demand. Additionally, they were regularly running out of the raw materials required to meet production requirements and his sales team couldn’t access customer records or place orders while out on the road.

The owner had become akin to a juggler, madly trying to keep all the balls in the air. It was clear to us that this business didn’t need a change in marketing strategy, rather a reengineering of its core business processes was in order. This business required a cloud ERP system.

What is ERP?

ERP stands for Enterprise Resource Planning. It is a type of software that organisations use to manage day-to-day business operations such as sales orders, purchasing, supply chain management, inventory management, manufacturing, accounting and more. An ERP system integrates all of these functions into a single system.

What are the benefits of Cloud ERP systems?

Adopting a cloud ERP could be the key to increasing your speed, efficiency and the growth of your business. If you’re not using cloud ERP, here are six benefits you could be missing out on:

1. Cost Savings

Traditionally, ERP software was hosted on-premise – with all the associated costs of hardware, networking, back-ups and support. On-premise software also requires significant time to install, customise and maintain the system.

Cloud-based ERP are different. The applications are hosted in the cloud and are therefore not dependent on your internal IT infrastructure. They require no extensive installation. Your team simply logs in from any device connected to the internet.

With cloud ERP, the business pays a monthly or yearly fee for the cloud vendor to manage the system for them. By moving from ‘capital expenditure to ‘operating expenditure’, the ERP system then becomes a recurring, fully tax-deductible expense i.e. OPEX rather than CAPEX.

2. Improved data availability
Work remotely

With COVID-19 and the need to move to remote working quickly, cloud applications offer a distinct advantage over on-premise software.

A cloud ERP is not dependent on your on-premise infrastructure, so your team can access the system from any location and device. (Of course, it’s also possible to restrict access to certain IP addresses to prevent remote access, if desired.)

Recover from disasters quickly

With on-premise software, if there is a fire or natural disaster, your business will likely be interrupted for days, if not weeks. Whereas when data is in the cloud, you can simply buy new computers and your team can immediately get back to work.

3. Make decisions faster
Operate with more agility

Your business can react to changes in the marketplace quickly. Data is shared more easily across the organisation (regardless of location), and because everyone is interacting with centralised data through a common interface, the opportunity for collaboration is therefore increased.

Better business intelligence

Cloud ERP integrate with BI (Business Intelligence) tools to manipulate and present information in a format you and your stakeholders need. Dashboards can be configured so you can see the health of your company at a glance. You’ll also need to be able to spot trends quickly, so that you can take action immediately.

4. Integration flexibility

On-premise systems do not allow for the speed of change which is required nowadays. The costs of integrating a traditional on-premise ERP to another system are often prohibitive – or simply not possible.

Cloud ERP systems on the other hand are by their nature designed to integrate with other cloud systems – typically via third-party or vendor-coded integrations. All reputable cloud applications will also support an API (application programming interface) which enables customers to integrate with other systems such as their CRM (e.g. Salesforce) or accounting system (e.g. Xero).

The ability to integrate with other applications enables you to run a core cloud ERP (e.g. for inventory or manufacturing management) and then connect with other best-of-breed applications for other required functionality such as accounting, CRM and marketing.

This gives a far superior and feature-rich ERP system, compared to the ‘jack of all trades, master of none’ software of old.

5. Improved data security

A locked cupboard in your locked office sounds secure, but it doesn’t compare to the security of cloud-hosted ERP systems.

Secure hosting & data encryption

With a cloud ERP, it will typically be hosted across multiple secure data centres around the world (e.g. on the Amazon (AWS), Google or Microsoft Azure clouds). Secondly, the data stored on cloud servers are encrypted. This means that they are scrambled, which makes it very difficult for cybercriminals to access.

Real-time security updates

How often do you ignore those notifications to update your operating system, browser or other on-premise software? Doing so presents a real security risk. Those updates often contain code designed to protect your system from the latest viruses and malware.

With a cloud application, security updates are immediately rolled out to all users as soon as they’re available. You never need to worry about installing an update!

Redundancy (think, ultra-back-ups!)

But what about hardware failures, a power outage or natural disaster? Will you still be able to access your cloud systems?

Yes, because any reputable provider will practice redundancy. This means that they copy your data several times (in real-time!) and store them on many different data centers around the world. This way, if one server goes down, you can access your files from a back-up server.

Third-party security testing

Reputable cloud service providers hire outside security companies to test their infrastructure and software regularly to make sure they are safe from hackers and the latest malware and viruses. When was the last time you engaged a security consultant to test your on-premise system?

In short, a cloud ERP will be significantly more secure than a system running in your office.

6. Easier to scale your growth

Scaling is hard. By scaling your business too slowly, you will fail to keep up with customer demand or the competition. But if you scale too quickly, you might overspend.

A cloud ERP system solves this problem by being on a scalable platform. As your business grows, you won’t need to purchase new hardware or install more software. Rather, you can simply add more user licences to your plan.

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