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Cloud-Based ERPs: How and Why They’re Worthwhile for Your Business

Cloud-Based ERPs: How and Why They’re Worthwhile for Your Business

Cloud-Based ERPs: How and Why They’re Worthwhile for Your Business
Halyna Korolevska

Author:

Halyna Korolevska

Content Manager

Category: Business
7 min read

Someone once said well: "Life is a series of choices." You would probably agree, the same can be said about business success. After all, everything has a causal relationship, all decisions are of great importance and have their own consequences. The same goes for the choice of software for companies and enterprises.

Departments of enterprises and corporations, depending on their goals and needs, use different software in their work: CRM, HRM, various task managers, etc. But there is one big downfall - this separation complicates the work management and the collection of necessary analytics in order to get an overall picture of the enterprise. So obviously there appears a need for a unified system that would have all these tools integrated with each other. This task is fulfilled by ERP.

What is the ERP system, why does your business need it and what are the features of its development? So, let's not beat around the bush. The most juicy information is in our article.

 

What is ERP?

In short, Enterprise Resource Planning (ERP) is an integrated system for managing the main (or almost all) business processes, which is carried out in real time with the help of software and technologies. The main purpose of using ERP system is to manage and optimize the enterprise resources use. It combines individual narrow systems within a corporation into one mechanism on a single platform and ensures high-quality timely data exchange between them.

typical erp includes

After arriving at the conclusion that ERP is a cool thing, customers have the following question - where to place it? And here they have two options: in the cloud or on the company’s server. Let's figure it out.

 

In-house vs cloud-based ERP hosting: which one is better?

The results of the Panorama Consulting Group research for 2019 showed that most organizations are satisfied with their choice of ERP system. The same source claims that 95% of companies improve their processes after implementing ERP.

erp system satisfaction

More and more companies opt for hosting in the ERP cloud. According to the Panorama Consulting Group for 2019, more than half of organizations prefer cloud-based ERP software to on-premises. Why are clouds so attractive to business owners? More on this later.

cloud vs on premise erp software

 

Hosting ERP on a local server

Disadvantages of on-premise ERP

  • The need to install expensive equipment (hardware).
  • Need for further maintenance.

Benefits of on-premise ERP

  • System configuration management - due to the fact that the server belongs to your company, you control your backups and everything else that is related to data.
  • Good downloading data speed to the server.
  • Security - only your team has physical and digital access to the server.

 

Why is cloud typically more popular?

Disadvantages of cloud ERP

  • Difficulty accessing data without the Internet

With a weak Internet connection, data access problems may occur. With some software though, it’s still possible to access data offline. Either you cannot edit the data offline, or you can edit it, but it will be synchronized later.

  • Cloud Data Transfer

If your company stops using the cloud, it may be difficult to transfer data to another location. But this problem can be solved thanks to MaaS (Migration-as-a-Service). There are entire companies specializing in MaaS that help transfer data from on-premise to the cloud, as well as migrate between platforms - transfer data from one cloud hosting to another.

Benefits of cloud ERP

  • Lower overall costs

Cloud ERP is much cheaper than on-premises ERP systems. Using it, you pay less in advance, and the total running costs are much lower, since security, updates, and maintenance are the concern of the supplier. With cloud-based ERP, you do not spend money on buying a server and its maintenance, on creating and managing a database, etc.

  • Fast implementation

Cloud ERP can be launched much faster than on-premise ERP systems. Implementing local ERP, you need to take care of buying the right equipment, training system developers, hiring more people, introducing new data protection protocols, as well as providing all team members with reliable access to the necessary tools. Cloud ERP, by contrast, is deploying quicker and the deployment process is also faster. In addition, the software deployment in the cloud is reliable and provides real-time access to data from anywhere in the world. This allows the company team to work more efficiently and complete the tasks successfully.

  • Scalability

Cloud-based ERP allows you to perfectly scale the operations in your company.

  • Quick updates and upgrades

With Cloud-based ERP, there is no need to worry about ERP updates, as the software vendor will do this for you. In addition, updates will be carried out instantly and continuously.

  • Improved accessibility, mobility and usability

With cloud-based ERP, your team has access to the necessary tools from any part of the world. To do this, only mobile devices and an Internet connection are needed. So, the data is available in real time. All this increases the productivity of your company both inside and outside, allowing you to optimize sales automation as well.

  • Enhanced system availability and damage control

Data security is an urgent problem for those who use the Internet in business management. In the cloud-based ERP, vendors are responsible for safeguarding your system against potential attacks and vulnerabilities. Cloud providers also provide data security.

  • Transparent and predictable costs

Costs are always a sensitive topic. But here you can breathe out calmly :) When deploying cloud-based ERP, you pay a monthly subscription according to the SaaS model or follow the payment model for usage. You should not be afraid that there will be some unforeseen expenses related to technological and software updates. After all, all this is your supplier's area of responsibility.

As you can see, the benefits of cloud ERP for enterprises are really many. Choosing a cloud-based ERP, companies significantly increase business efficiency, prospects for further company growth, reduce working capital, as well as staff, and improve the level of customer service. Let's see how its development process takes place.

 

Deployment models of cloud-based ERP

Cloud software can be deployed either in a hosted model or in a SaaS model (Software as a Service). According to Panorama Consulting Group, about 90% of companies that have chosen a cloud-based ERP system have preferred for a SaaS model to a host one. You may ask, what is so attractive to organizations? First of all, the ease of ERP use on the SaaS platform. Also in this case, the payment method is more like a leasing one, which is convenient for companies. Again, SaaS software is fully vendor-driven, meaning updates are automatic. This results in lower IT maintenance costs.

Disadvantages of deployment in SaaS:

  • vendor updates can create changes in process flows, and this necessitates ongoing training and updates to process documentation;
  • organization’s ability to improve software is limited.

Having decided on the location and deployment, now we can go directly to the development process, which can be divided into several stages.

 

Key Steps of Cloud ERP Development

1. Define ERP development goals

Make sure your goals match your business strategy. And do not forget that the goals must be SMART - specific, measurable, achievable, realistic, time-bound. When setting goals, think of ERP as a tool to achieve them, and also write down the objectives — the steps by which you are going to achieve your main goal. Once you have defined the goals and objectives for your ERP project, be sure to inform everyone who is involved in them, including a team of web developers.

2. Analyze the current situation

If some processes in your company need to be modernized or standardized, it is recommended to do this before the development and implementation of ERP.

3. Choose a development team

It's gonna be super if you manage to find a company that not only develops software, but also provides IT consulting services. So, you kill two birds with one stone: you get not just the execution of ERP construction, but high-quality consulting throughout the entire development process and before it, which will help you get the most effective software solution.

4. Identify ERP development priorities

Decide which business functions of the enterprise need to be integrated. An ERP system is rather cumbersome and may contain a large number of modules, so it is likely that its development will take a lot of time. Gathering customer requirements for ERP system, you must first describe main modules (that is, what should be in the system in general), as well as identify promising modules. The next step is to write down in detail what the customer wants from the modules that need to be implemented in the first place.

5. Create a project layout

Define the necessary modules, for each of which ERP-modules (applications) will be developed. In this process all the heads of business functions, the IT department of the company and the developers of the ERP system are involved. Since the ERP-system is developed in order to integrate the work of several departments among themselves, focus not only on the modules themselves, but also on how they should exchange information.

Also, at this stage it is decided where the system will be located: inside the company or on a cloud basis, as well as technologies and development tools are determined. Now it’s important to combine all the visions into one, through the visualization of ERP. The easiest way to do this is to create wireframes. This will help to get an idea of how the interfaces should look and what the overall picture will be.

6. Determine the cloud provider

The task of the system architect is to conduct research and negotiations with cloud providers and obtain an agreement that will meet the needs of the company.

7. Start the technical development of the ERP system

It can be divided into three stages:

  • Consolidate databases: combine all the enterprise data related to departments into a new tight database.
  • Integrate existing legacy applications: reconfigure legacy software so that it can integrate with off-the-shelf applications and new applications that will be developed.
  • Provide access to basic departments’ data for all users.

 

And a couple of tips:

  • Include all stakeholders, especially end users, in the decision-making process.
  • Properly prioritize the functions, this will avoid delaying the shipping of the system.
  • Do not try to start the whole system at once. Divide your ERP system into small parts and deliver them one at a time. Start with the most important set of functions or even with one function, develop it and start testing as soon as possible.
  • Remember to include everyone on board. Make sure everyone understands the importance of the project and knows what is expected of them. Spend time and money training employees to use the new technology. After all, poor change management is also one of the main causes of ERP project failures.

Despite the complexity and duration of the preparation, development and implementation of cloud-based ERP, we are convinced that with it your business can succeed! We believe that all that is required is planning, focus, flexibility and the courage to make decisions. And, of course, an experienced software development company that will help you to put your plan into action :)

You can learn more about software development for enterprises in our articles:

Enterprise Software: Key Things You Need to Know About It in 5 W’s

Top 6 challenges of Enterprise Applications Development

How it works: IT consulting

How IT Consulting Can Help Your Tech Startup