The term cloud ERP is gaining momentum in recent years. A cloud ERP can be defined as an enterprise resource planning system operated over the Internet. Today, many ERP system manufacturers have chosen to release versions of their ERP software in the cloud to make them more accessible.
Advantages of a cloud ERP
Cloud ERP systems contain the main features of traditional ERP. However, at the same time they bring new advantages and disadvantages that have to be taken into account when considering both options.
Cost
Cloud ERP refers to software located on the web servers of the contracted provider. This means that the company will pay only for the right to access a server and use a program. These payments will normally be monthly and will increase depending on the number of users using the system. This single monthly payment will include the service, updates and maintenance.
The total cost of implementing a cloud ERP is significantly lower than that of an on-premise ERP. The figures for the operation are difficult to define, although it is generally possible to obtain specific examples of budgets for small, medium and large companies. Similarly, the price of the system will differ depending on the sector in which the companies operate. For cloud ERP costs by industry and size of organization, see the Budget Planner in the ERP 2023 Guide.
Enhancements and upgrades
In a study conducted by Aberdeen Group, 34% of 832 European companies surveyed had on-premise ERP that was between 7 and 15 years old. According to the same study, the cost of upgrading was the main reason for obsolescence in these companies.
Therefore, the advantage of cloud ERP systems is that they are updated automatically and at no additional cost from vendors. This is a major breakthrough, as users will always have the latest version of the service available to them at no additional cost.
Flexibility
ERP in the cloud can be accessed no matter where, when, or how the connection is established. The only requirement is to have an Internet connection. The user will have real-time information from any type of device. On the other hand, it is worth noting the speed at which the system allows you to add or remove users, as well as contracted functionalities.
Disadvantages of an ERP in the cloud
Uncertainty due to the loss of control of your data.
Legal aspects: if the main occupation of the company is to work with personal data, you must take into account the LOPD (Organic Law on Data Protection) and make sure that our provider complies with all the requirements.
Internet connection failures cannot be controlled, but they are a serious problem when you need to work with the ERP. A good internet connection will ensure that you get the most out of your software.
Downtime due to vendor maintenance will mean limitation of data usage. Vendors will have to report such maintenance but you will not be able to decide when the downtime takes place.
In case the service provider does not continue to provide the service, the cloud ERP will also stop working. The explosion of the cloud computing market has attracted a multitude of companies, however, some of them have not been able to withstand the competition and have ended up closing down.
Conclusion
Although it may seem that the implementation of a cloud ERP can be easy and fast, the improper installation of this type of services can generate costly and frustrating delays in companies. There are a few pitfalls that can make switching from on-premise to cloud ERP a real problem. To avoid these pitfalls, consult the ERP 2023 Guide for crucial information on how to successfully implement your ERP in the cloud.
Advantages of a cloud ERP
Cloud ERP systems contain the main features of traditional ERP. However, at the same time they bring new advantages and disadvantages that have to be taken into account when considering both options.
Cost
Cloud ERP refers to software located on the web servers of the contracted provider. This means that the company will pay only for the right to access a server and use a program. These payments will normally be monthly and will increase depending on the number of users using the system. This single monthly payment will include the service, updates and maintenance.
The total cost of implementing a cloud ERP is significantly lower than that of an on-premise ERP. The figures for the operation are difficult to define, although it is generally possible to obtain specific examples of budgets for small, medium and large companies. Similarly, the price of the system will differ depending on the sector in which the companies operate. For cloud ERP costs by industry and size of organization, see the Budget Planner in the ERP 2023 Guide.
Enhancements and upgrades
In a study conducted by Aberdeen Group, 34% of 832 European companies surveyed had on-premise ERP that was between 7 and 15 years old. According to the same study, the cost of upgrading was the main reason for obsolescence in these companies.
Therefore, the advantage of cloud ERP systems is that they are updated automatically and at no additional cost from vendors. This is a major breakthrough, as users will always have the latest version of the service available to them at no additional cost.
Flexibility
ERP in the cloud can be accessed no matter where, when, or how the connection is established. The only requirement is to have an Internet connection. The user will have real-time information from any type of device. On the other hand, it is worth noting the speed at which the system allows you to add or remove users, as well as contracted functionalities.
Disadvantages of an ERP in the cloud
Uncertainty due to the loss of control of your data.
Legal aspects: if the main occupation of the company is to work with personal data, you must take into account the LOPD (Organic Law on Data Protection) and make sure that our provider complies with all the requirements.
Internet connection failures cannot be controlled, but they are a serious problem when you need to work with the ERP. A good internet connection will ensure that you get the most out of your software.
Downtime due to vendor maintenance will mean limitation of data usage. Vendors will have to report such maintenance but you will not be able to decide when the downtime takes place.
In case the service provider does not continue to provide the service, the cloud ERP will also stop working. The explosion of the cloud computing market has attracted a multitude of companies, however, some of them have not been able to withstand the competition and have ended up closing down.
Conclusion
Although it may seem that the implementation of a cloud ERP can be easy and fast, the improper installation of this type of services can generate costly and frustrating delays in companies. There are a few pitfalls that can make switching from on-premise to cloud ERP a real problem. To avoid these pitfalls, consult the ERP 2023 Guide for crucial information on how to successfully implement your ERP in the cloud.