Will All ERP Move To The Cloud?
Enterprise Resource Planning software assists businesses in the organisation of their operational workload. ERP provides a flow of data which helps to inform management about performance indicators and gives leadership teams the necessary insight to make key business decisions.
Many companies can benefit from the implementation of ERP but serious thought will need to be given to its management. Currently the two main options for a company are cloud-based ERP or in-house ERP. Both have their advantages, but as with many types of technology in the last few years, there has been a significant increase in companies moving their resources to the cloud.
Improved Performance And Maintenance
A cloud ERP model uses a cloud vendor to house the ERP data and software in its cloud environment, which an end user then connects to from a typical Internet web browser on their desktop. Cloud ERP solutions are managed by the vendor and will be regularly improved with upgrades and patches as soon as they are released. This ensures that users will access the most current version of ERP which will provide better functionality and security.
Performance of cloud-based ERP is also usually superior to that of an in-house ERP system. Cloud services run on architecture that is designed to provide the maximum level of network performance to its customers. As most cloud-based packages are taken out on a pay-per-use basis, this means that if there is a spike in ERP usage, then the cloud will automatically assign extra resources, such as additional memory or disk space, in order to cope with the sudden surge. This approach to performance almost guarantees that cloud-based ERP will beat in-house versions in terms of uptime. This is especially important given the increase in mobile staff who may need to access the system from their home office, or whilst on the move.
Another tick in the cloud-based ERP column goes to the relatively low cost of setting up the architecture. If a business was to purchase an in-house ERP system, then they would need to afford a large initial payment to cover the cost of dedicated servers and the software itself. The salaries of IT staff also need to be factored into the equation, as they would need to be paid for the management of the installation of the ERP project, plus being able to maintain it as part of their regular workload. If technical staff are not already experienced in ERP, it may be necessary to provide them with specialist training at a further cost.
In comparison, the cost of moving ERP to the cloud is much more affordable. In cloud-based ERP you simply pay for what you use. The cloud vendor’s staff will carry out all the maintenance and hosting tasks which will leave your current IT staff and resources free for other work. An independent analyst report by Hurwitz and Associates found that cloud-based ERP can cost 50% less than onsite ERP for a company made up of 100 employees over the duration of four years.
Once again, cloud-based ERP offers the advantage when it comes to rollouts of the system. As all the end user requires is an Internet connection, this means that ERP can be deployed across multiple offices and regions with ease. If your company grows or even downsizes, then cloud-based ERP will simply adapt with it.
On the other side, in-house ERP takes longer to deploy. Initially there will be the need to procure and install the servers and software. There may also need to be communication with end users to get ERP running on their desktops and provide training on how to access it.
By this point, you might be wondering if there are any advantages to in-house ERP at all. The answer comes in the form of customisation. Companies who wish to personalise various features of the ERP system can tailor-make their own version of ERP more easily in-house. This is usually because there is direct contact between the internal software development team and the end users. The internal relationship and understanding of cross-departmental requirements within an individual organisation is something that is difficult to replicate into cloud-based ERP. In-house ERP allows a business to enjoy complete control over their system and adapt it to suit any changes in business requirements.
While there are some advantages to keeping ERP in-house, it is impossible to ignore the key benefits that cloud-based ERP has to offer. It is likely that over time there will be a further increase in the adoption of the cloud so that managing your own in-house ERP systems will eventually become a real rarity.
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