The ubiquitous presence of cloud-based software solutions has really benefited small and mid-sized businesses over the past few years. Cloud-based ERP solutions help these businesses run all the critical functions needed to operate, such as distribution, manufacturing, finance and accounting, sales and customer service, HR, and managing the supply chain.

This solution doesn’t need to be installed locally, giving your employees access to real-time data anywhere. Vendors offer per-month, per-user flat rate pricing.

Many companies now use integrated cloud-based ERP systems, and the benefits of these systems include:

  • Increased visibility for more effective financial management in:
    • Accounting (GL, AP, AR, billing, sales orders)
    • Financial reporting and analysis management

  • Businesses are also experiencing improvements in business process management, with easier to implement best practices for more effective day-to-day operations. Areas of the organization that see increased effectiveness include:
    • Inventory Management
    • Shipping and Warehouse Management
    • CRM
    • Order Management
    • HR / Payroll Tools and Services
    • Customer and Vendor Portals

With the advent of cloud-based ERPs, companies can realize all of the same benefits of a more expensive, on premise ERP because the cloud itself provides the following advantages:

    Low Barrier to Entry
    Like most SaaS (software as a service) products, cloud ERP systems have a significantly lower barrier to entry compared to on-premise systems. The software is hosted by the provider which means businesses don't require the staff for handling the software, the servers, and other equipment. The hosting company handles everything.

    As a result, smaller companies can reduce initial costs and integrate ERP solutions quickly.

    In a cloud system, the hosting company manages everything, which allows businesses to scale seamlessly. Unlike with an on-premise system, which often requires new hardware to increase usage, adding more users with cloud-based ERP is easy – all you need to do is increase your license usage. Same goes for a reverse situation: if you need to downsize, you can quickly reduce your license size.

    Increased Performance
    With in-house ERP solutions, a fair amount of computer power is often required for optimal efficiency, which usually means investing in additional, separate servers that need to be set up and maintained properly. If these operations get executed poorly, a performance drop is unfortunately inevitable.

    However, cloud-based solutions only require an internet connection. The provider handles all of the resources required to host the solution with optimal results, and this enables the system to perform better than most in-house solutions, regardless of the type of servers and systems you already have.

    Lower Operating Costs
    The biggest problem with in-house ERP solutions is that the organization is responsible for all hardware, software, security, updates and maintenance. When it comes to small to medium businesses, this usually means new hires.

    If you choose an on-premise system, you will need to purchase the software along with all related licenses, which can get expensive quickly.

    With a cloud-based ERP, the total cost of implementation is drastically lower since everything is included in your monthly cost. With a cloud based ERP provider, there is no additional cost for installation, maintenance or upgrades. Operating costs remain constant and your need for an IT resource is drastically reduced.

    Ease of Access
    Any ERP is better than no ERP when it comes to quickly finding the information you need. However, with a cloud solution, you can have access to any information from anywhere at anytime – all you need is an Internet connection. This stimulates the increase of business operations and makes accessing information far easier, even from outside the office.

    Increased Security
    The information handled by an ERP is very delicate and needs to be secured at all times, both from outside sources and from prying eyes in the company who don’t need access to company-wide data.

    Cloud ERP solutions offer increased security measures to ensure your data is safe and secure at all times.

    Each user of an ERP system is assigned their own account, including custom permissions. This allows complete control over who can access what data. Groups of users can be easily managed with group policies.

    Geographic Mobility
    Since cloud software is available anywhere with an Internet connection, geographic mobility is easily manageable. A company can benefit in many ways from this. For example, if your business requires employees to travel, they will be still able to access the ERP system from anywhere. It also enables your employees to work from home. Your employees no longer need to be in the office to be productive.

    Continued Support Just like other cloud solutions, cloud-based ERP usually comes with 24/7 support. If an issue occurs, often it can be solved very quickly. The provider continually works on keeping the software updated at all times, so all critical updates, including new features and security fixes, get implemented immediately.

    On-call support allows your employees to contact the provider and solve any problem quickly. Unlike on-premise hosting, which often requires an additional purchase of support packages, cloud-ERP providers offer this as a standard part of their service.

    Cloud vs. On-Premise
    When it comes to comparing cloud-based ERP solutions with on-premise systems, the advantages of the cloud are clear:

    • Cost: Unlike with on-premise systems, cloud ERP offers a lower upfront investment. It comes with predictable expenses over time, and there are no additional hardware investments.
    • Security: Cloud solutions provide the latest in data security and protection, with round the clock monitoring. With on-premise systems, data security is in the hands of the organization – and many organizations aren't adept at practicing proper data security protocols.
    • Implementation: Cloud ERP takes far less time to implement compared to on-site ERP.

Nowadays, there are more options than ever for companies who are thinking about implementing an ERP system. Luckily, cloud-based solutions have made ERP more accessible for small to medium-sized companies. On-premise systems are more customizable and offer strict control over data, but the cloud provides some significant benefits that can't be found in on-site solutions.