ERP stands for enterprise resource planning, which is a type of software used by companies to manage information across the organization. Cloud ERP refers to ERP software and tools that are offered and managed in the cloud, as opposed to the business hosting their system on premises. While every organization operating today is different, they all face a common challenge—in order to effectively compete in today’s business environment, they need access to technology that helps them innovate, scale, and grow quickly. They need advanced, globally-connected, and continuously updated software tools and systems that allow them to focus more of their time and energy on implementing growth initiatives and less on day-to-day IT management. That’s where cloud ERP comes into play.
As technology continues to advance and evolve, more businesses of all sizes are considering cloud ERP than ever before. This popularity is largely a result of factors such as cost, reliability, speed, and access.
This resource will provide you with an in-depth overview on the topic of cloud-based enterprise resource planning software.
To stay on the cutting edge of innovation, you need to understand what cloud ERP is and how it could help your business. This resource will put you on the right track toward evaluating, implementing, and managing the right cloud-based ERP system for your company and team.
Defining Cloud ERP Concepts and Glossary of Terms
There are hundreds of concepts and terms that relate to cloud-based enterprise resource planning, but here are 14 worth understanding now—before you decide to invest in cloud ERP for your business:
- Cloud-based ERP: ERP software that exists and is managed offsite in the cloud by your vendor.
- On-premises ERP: ERP software that is installed locally on your hardware and servers, and managed by your IT staff.
- SaaS ERP: SaaS stands for software as a service. SaaS ERP is enterprise resource planning software that is delivered and managed in the cloud. When you invest in SaaS ERP, your tools are hosted in the cloud as opposed to on your local machines. With SaaS ERP, your vendor becomes responsible for the ongoing updates, management, and upkeep of your technology and tools.
- Deployment strategy: Deployment strategy refers to the choices you have when it comes to how you implement and manage ERP software at your business. Examples of deployment strategies include on premises, managed hosting, SaaS single tenant, or SaaS multitenant.
- End-to-end security: End-to-end security refers to the secure and encrypted connection that exists between you and your vendor when you manage and access business and customer information in the cloud.
- Cloud deployment: Cloud deployment of ERP software provides users with continuous updates and innovation of the tools they need to manage and grow their business. Because cloud ERP is hosted and managed online through end-to-end security, it allows users to access tools and information from anywhere.
- IoT: IoT stands for Internet of Things. IoT refers to systems and tools that are interconnected through an online network. IoT systems allow machines and tools to “talk” to each other and work together to optimize performance with minimal human interaction or effort.
- Global-ready ERP: Many cloud-based ERP solutions are global-ready, so you can connect your employees, vendors, partners, and customers with accurate, real-time data. When everyone can access secure, up-to-the-minute information across your entire value chain, your team can collaborate more efficiently and make decisions more confidently.
- Mobility solutions: Mobility solutions refer to tools, systems, and information that can be securely accessed by your team or customers via mobile devices such as smartphones from anywhere.
- Shared infrastructure: Shared infrastructure refers to any system that provides users with access to vendor tools in a shared network environment. With cloud ERP, the scale of shared infrastructure allows businesses to access continuously updated enterprise-grade tools at a fraction of the cost.
- Agile systems: Agile systems empower teams to make efficient decisions that relate to the sustainability and future growth of their business. Applying lean and agile principles through cloud-based ERP software allows you to optimize processes and tasks to increase productivity, save costs, and boost profits.
- Infrastructure costs: Infrastructure costs refer to the amount of money you spend on on-premises technology to keep systems, information, and tools up-to-date and operating smoothly.
- Disaster recovery: Disaster recovery is one example of the many security benefits of world-class cloud-based ERP. In the event of a major disruption (e.g., a fire), disaster recovery involves a set of policies, tools, and procedures that are provided and managed by your vendor to recover your data and systems for you.
- High availability: High availability is another benefit of a well-designed cloud ERP solution. This term refers to systems that are built to be resilient and likely to operate continuously without failure for a long time, keeping your business running as usual.
Now that you have a better understanding of some of the most common terminology you’ll encounter with cloud ERP, you’re ready to find out if implementing a cloud-based ERP solution is the right next move for your business.
Cloud ERP vs. On-Premises ERP
To fully understand the value and benefits of cloud ERP, you need to have a good understanding of what makes it different than an onsite ERP solution. This section will provide you with a brief overview of the two different types of deployment options.
What is on-premises ERP software?
As mentioned earlier in the glossary, on-premises ERP is a system of enterprise resource planning software and tools that are installed locally on your hardware and servers, and managed by your IT staff. In other words, on-premises ERP systems put the maintenance burden squarely on your shoulders. With on-premises ERP systems, you only buy the core software platform once, but you incur additional costs to maintain and update your software and hardware, hire an installation expert, troubleshoot issues, and keep your supporting infrastructure up-to-date. Typically, the additional costs, competing priorities, and time constraints of upgrading on-premises ERP software will limit your ability to evolve with the software. Without regular updates, businesses are left behind with functionality, security, and usability enhancements.
With on-premises ERP, you have to buy or outsource enterprise-grade servers, operating systems, and databases—plus antivirus software and backup to support those servers—which many organizations find impractical. On-premises deployments require ongoing support from IT staff who must ensure your system is up-to-date rather than focusing on higher-value strategic initiatives that can help you drive business growth. Offsite access to an on-premises ERP system can also vary depending on the technical decisions made during implementation.
Deploying an ERP solution on premises can also be a slow process—it often requires approval on hardware selection, buy-in from more stakeholders, and valuable time allocation of your IT team.
What is cloud-based ERP software?
Cloud-based ERP is a system of enterprise resource planning software and tools that are hosted and managed offsite in the cloud by your vendor. With cloud deployment, you can focus on running your business rather than IT administration. Cloud-based SaaS systems put the management and maintenance burden on the vendor rather than on your business. Cloud ERP offers ongoing and seamless software updates—already included in your single, recurring fee. Deploying cloud ERP also requires little to no IT involvement, which can enable your team to elevate their value to the business by spending more time on tasks that support strategic growth initiatives.
In the cloud, your ERP system can help you shift your focus to business outcomes rather than technology. The automatic updates help you keep pace with the rapid nature of technological change. Oftentimes business leaders classify this ability to get current and stay current as one of the greatest unexpected results of migrating from an on-premises ERP solution to cloud ERP. With ready access to more innovative business software, you can build a competitive advantage that grows and evolves with the market.
Security will always be a top priority. When you invest in cloud ERP deployment with Epicor, you’re also benefitting from world-class security infrastructure, best-practice backups and disaster recovery, and guaranteed 99.5% uptime.
Now that you know the main differences between on-premises and cloud-based ERP, it’s worth digging deeper into some of the biggest benefits of cloud ERP.
Cloud ERP Benefits
Today, more businesses are choosing to deploy ERP in the cloud than ever before. Why? Here are 10 main cloud ERP benefits that can help answer the question:
Rapid updates and upgrades: Cloud ERP from Epicor offers instant and ongoing updates and upgrades to your ERP software and tools, so you never have to worry whether you’re using the most up-to-date technology to suit your business needs. You also don’t have to spend time updating—or hiring someone to update—your systems like you would if you used an on-premises ERP system.
Lower up-front and operating costs: One of the biggest benefits offered by cloud ERP is that it’s much less expensive than traditional onsite ERP systems. When you deploy on premises, you might pay for the software once by way of a license, but you have other costly expenses such as server purchase and ongoing maintenance, database creation and management, initial implementation, IT staffing, energy costs, and security and backup. With cloud ERP, you pay less up front and your overall ongoing operating costs are much lower because the vendor takes care of updates, maintenance, and security for you.
Rapid implementation: Cloud ERP can also get up and running in much less time than on-premises ERP systems. With on-premises ERP, you have to worry about things like selecting and purchasing hardware, training IT staff, potentially hiring more people, implementing new data security protocols, and ensuring that everyone on your team has reliable access to the tools they need to help you grow your business. With cloud ERP, deployment and implementation are fast and painless. Deploying your software in the cloud is also reliable and offers easy data access in real time from anywhere—which can help make your entire team more collaborative and successful in their roles.
Scalability: Cloud ERP is built to help you scale operations at your company. Cloud ERP allows your team and partners to access information on a global level. With cloud ERP from Epicor, you also benefit from world-class security and system monitoring that allow you to grow quickly without having to wonder whether or not your information is safe.
Focus on core competencies: Because cloud ERP vendors take on most of the burden associated with managing a complex ERP system, you can spend time on what matters most—growing a sustainable, profitable operation. In other words, you get to focus on what you’re best at. When you don’t have to spend time worrying about software upgrades, downtime, and security issues, you get to spend time on areas that directly impact future business growth.
Improved accessibility, mobility, and usability: Cloud ERP is better in these areas than other types of ERP deployments. Because your ERP system is managed in the cloud and global-ready, your team can access the tools they need from anywhere using their mobile phones and an Internet connection. Information is accessible in real time, so key business decisions can be made without having to wait until everyone is in the same room or accessing your ERP system from the same place. In other words, it helps you build a more agile team. This focus on instant accessibility and improved collaboration helps boost productivity both inside and outside your enterprise.
Improved system availability and disaster recovery: Data security is a very real concern for any team today that leverages the Internet to run their business. When you invest in cloud ERP, you put the responsibility on the shoulders of your vendor—and they ensure that your system is protected from potential attacks or vulnerabilities. Epicor invests in world-class infrastructure and security to keep your system protected and allow you to focus on other areas of your business that require your attention.
Cost transparency: When you deploy cloud ERP systems, cost is predictable and transparent. Either you pay a monthly subscription on the SaaS model, or you adhere to a pay-per-use model. In addition, there are no unexpected expenses relating to software updates and technology upgrades with cloud ERP, as they fall under the responsibility of your vendor.
Sales automation: Sales automation is also optimized thanks to the global-readiness, real-time, and mobile access that comes with cloud ERP deployments. With cloud ERP, your partners, customers, and vendors can connect to your system seamlessly from anywhere in the world. Epicor cloud ERP is highly reliable, and customers who deploy ERP through the cloud experience a 99.5% or greater uptime.
Security standards and compliance: As mentioned, cloud-based ERP vendors like Epicor have world-class security support and protection for customers. Epicor has a comprehensive, end-to-end security model. We build security into every layer of the ERP environment—and physical network interface cards, user passwords, and 24×7 system monitoring. A holistic approach to security lets us anticipate and minimize disruptions, giving you more uptime and better peace of mind.
Now that you’re more familiar with some of the main benefits that cloud ERP can offer to businesses, it’s helpful to understand how the benefits and challenges would apply to you given your industry and size of business.
Cloud ERP Benefits and Challenges by Business Size
Depending on the size of your business, you may experience different benefits and challenges than other businesses deploying cloud ERP. Here are some examples that might relate to your specific situation:
If you operate a business that, because of compliance, cannot store or host customer information in the cloud, you may not be able to benefit fully from cloud ERP in ways that other businesses can.
If you operate a big enterprise with a large IT team, you may have to spend more time getting buy-in from key stakeholders before being able to deploy cloud ERP. You may also need to train one or more individuals who can act as an internal champion when you need to work closely with your cloud ERP vendor.
If you operate a larger business that has used traditional ERP software for some time, you may need extra support from your ERP provider in order to migrate your system over to the cloud.
If you operate a business that collaborates with partners and vendors across the world, you will benefit from the usability and accessibility that cloud-based ERP provides.
If you operate a business that is ready to move into the next stage of growth and profitability, a cloud-based ERP system can help you support such growth. Cloud-based ERP will allow you to easily scale operations in order to meet customer demands and take advantage of new opportunities.
If you operate a smaller business but can’t afford the on-premises hardware and technology that a bigger company might be using, cloud ERP can provide you with enterprise-grade tools at a fraction of the cost. Cloud-based SaaS ERP system offerings can be scaled up or down to fit your needs.
As you consider whether cloud-based ERP deployment is right for your business, think about your unique situation and the challenges and benefits you might experience as an organization. If the benefits outweigh the challenges, consider investing in cloud ERP in the near future.
CRM and ERP Systems Integration
An additional benefit to cloud ERP systems is that they can be easily integrated with other cloud-based software and tools that you need to use to manage and run your operation.
For example, with Epicor, you can leverage cloud-based ERP software and cloud-based customer relationship management (CRM) software to gain more insight about your entire supply chain. Epicor CRM provides the information and control to deliver a world-class customer experience at every touchpoint. Advanced collaboration capabilities in Kinetic (new name for Epicor ERP) connect employees, departments, and supply chain partners so your whole company can be more responsive.
Cloud ERP Implementation Strategic Planning
If you decide that you’d like to deploy cloud-based ERP at your business in the near future, keep the following implementation strategy best practices in mind:
- Build a business case: The first step you need to take when thinking about deploying cloud ERP at your business is to build a business case that key decision makers and stakeholders at your organization can buy into and support. Build a report that highlights benefits, cost savings, potential challenges, plans to overcome those challenges, and what you’ll need from other people at your company.
- Keep your team and partners informed: To avoid pushback from your IT staff or other employees and partners, keep everyone informed about what’s changing, when, and why. Whenever you can, be transparent about the process.
- Find internal champions: To ensure that you experience a successful implementation across your organization, identify champions early. Your champions are the people who trust you, support the idea of investing in cloud ERP, and are excited about it. Your champions can help build the right culture and attitude around the change you’re about to make.
- Set your team up for success: Invest in early planning, documentation, and training to ensure that everyone on your team is set up for success when it comes to using your new cloud ERP tools. Check in with people often, and make sure to follow up with anyone who has a question that you aren’t able to immediately answer.
- Get help when you need it: If you think you’ll need additional assistance at any point along the way, hire a consultant.
There are many benefits that cloud ERP software can provide to a growing business. As you continue to scale your operations, you need innovative and reliable tools that can help you boost efficiencies, improve accessibility, save costs, and drive business growth. Ready to learn more? See how Kinetic can help your business.