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Cloud-based ERP Software: Exploring the Benefits

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Enterprise resource planning (ERP) is a type of data management software that businesses use to integrate key processes. As more companies migrate to the cloud, cloud-based ERP software is becoming increasingly popular. In this article, we will compare cloud ERP with traditional ERP software and highlight the advantages that make cloud ERP solutions superior.

How Does Cloud-based ERP Software Work?

To understand how cloud-based ERP software works, let’s first look at the traditional approach. Conventional or on-premise ERP refers to software installed on a business’s servers. It is managed and maintained by in-house IT staff or contractors responsible for installation, upgrades, repairs, and ongoing maintenance.

Installing and maintaining on-premise ERP software is expensive and requires significant expertise and time allocation. This has traditionally limited ERP software to larger enterprises. However, with advancements in cloud technology, cloud-based ERP software is now hosted and managed offsite on a vendor’s cloud platform. Users access the software through a web browser, similar to how Amazon or Shopify’s inventory software system works. Vendors lease their ERP software on a subscription basis and take care of installation, maintenance, and updates.

Cloud-based ERP solutions allow businesses to focus on improving their processes without the cost and time implications. According to a recent HubSpot study, around 85% of companies have improved their processes with cloud ERP solutions.

Benefits of Cloud ERP

In addition to process improvement, there are several benefits of using cloud ERP:

  1. Scalability: Scaling up on-premise ERP can be costly and labor-intensive. Cloud ERP is inherently scalable, allowing businesses to adjust to fluctuating needs without the need for additional hardware. This flexibility also makes it easier for small businesses to expand globally.

  2. Accessibility: Cloud ERP provides instant access to data from any location and device with an internet connection. This improves collaboration efficiency and allows teams to make important business decisions without geographical or device limitations.

  3. Agility: Cloud ERP can be seamlessly integrated with other cloud software, such as cloud-based VoIP. It can also be quickly upgraded and customized to meet emerging trends and demands. On the other hand, making customizations to on-premise software is difficult and expensive.

  4. Implementation Velocity: Cloud deployment is fast and hassle-free. Unlike on-premise ERP implementation, there is no need to source and set up hardware or hire specialized staff. This results in less downtime and quicker time-to-value.

  5. Continuous Upgrades: Cloud ERP eliminates the need for manual system upgrades as vendors handle it on an ongoing basis. They implement the latest data machine learning technologies, often outside of business hours. In contrast, on-premise ERP upgrades are more likely to disrupt daily operations.

  6. Reduced Cost: Cloud solutions are generally more cost-effective to implement and maintain. There are no hefty hardware purchases, initial installation fees, or ongoing operating costs associated with on-premise ERP solutions. This makes cloud ERP a practical choice for small or budget-conscious businesses.

  7. Security: Cloud vendors prioritize data security and compliance. They offer enterprise-grade security, communication systems, and end-to-end encryption. Additionally, they conduct regular vulnerability testing and have established disaster recovery plans. On the other hand, on-premise ERP solutions require robust disaster recovery and business continuity plans, which can be costly to implement and maintain.

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Types of Cloud ERP

While considering cloud ERP deployment, it is important to consider the type of software that best suits your needs. Here are some common types:

  1. Multi-tenant SaaS: This model serves multiple businesses with a single version of the software and shared infrastructure. Each business’s data remains private. Most cloud ERP solutions fall under this category.

  2. Single-tenant SaaS: In this model, a business has exclusive access to a single version of the software and its infrastructure.

  3. Public Cloud: All hardware, software, and infrastructure are owned and operated by an online service provider. Multiple businesses share these resources, but each business’s data is only accessible to them.

  4. Private Cloud: This is a fully isolated service where hardware, software, infrastructure, and services exist on a dedicated network for one business.

  5. Hybrid Cloud: Hybrid clouds combine on-premise infrastructure with private or public clouds. This allows businesses to optimize efficiency based on their specific needs.

Wrapping Up

In today’s dynamic business climate, it is crucial for companies to leverage scalable and agile solutions like cloud ERP software. By optimizing core processes, cloud ERP empowers businesses to quickly respond to demands and ecommerce trends, minimizing disruptions. With its flexibility and agility, cloud ERP software enables sustainable growth.

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