How is cloud technology changing ERP?

A couple of years ago, a client was grappling with the high costs and complexities of their on-premise ERP. We took the plunge and migrated to the cloud. The financial and operational benefits were immediate. No more hefty upfront costs or constant maintenance—our cloud provider handled it all. This shift didn't just save us money; it freed us to focus on strategic growth. The cloud isn't just about cost-cutting; it's a game-changer that lets businesses be more agile and efficient.

To be honest, I think that cloud-based ERPs are not an additional option nowadays. They are the only option. But doing the right comparison their costs are not lower. If we take the right number of years in the ecuation (>5) the SaaS model is always more expensive. At least 5 years is the right number because an ERP implementation is such a big thing that no one company changes it before. Besides, no one speaks about a key factor: independence. With the cloud model you are married forever.

Cloud Computing, especially SaaS has made ERP systems much more accessible to SMBs/ Smaller businesses. They also benefit from access to advanced Analytics solutions which in the past required large investment in Infrastructure for Data & Compute. Niche functionality for specific industries or business models/ processes not available in standard ERPs is now easily accessible as well via Integrations to other specialised software available via the Marketplace model. Overall ERP availability in the cloud has made the case for “Buy” much stronger than “Build”.

Enterprises deploy ERPs to support mission critical processes. As such they are provisioned to support peak capacity which typically comes through around month ends, quarter ends, year ends or a few specific times around the year. This results in underutilisation of expensive infrastructure. Cloud hosted systems offer the option of re-architecting ERP systems to take advantage of the autoscaling and burst capabilities to bring down costs significantly, without adversely impacting response times or quality of service. Cloud platforms also offer easy pay as you go access to a number of complementary capabilities like AI and Analytics that further improve business benefits and improve the value of the ERP.

Cloud-based ERP reduces operating costs by leveraging the benefits of advanced analytics features with optimized performance as well as better flexibility and scalability. It also reduces the overall infrastructure costs by fostering innovation and sustainability.

I remember working with a fast-growing startup that was hitting a wall with their traditional ERP system. Every time they wanted to scale, it was a logistical nightmare—new hardware, more licenses, and endless configurations. Then we transitioned to a cloud-based ERP. The difference was night and day. Suddenly, scaling became a non-issue. Need more storage? Done. More users? No problem. The system adapted in real-time to our needs, allowing us to focus on meeting market demands rather than wrestling with technical limitations. The cloud-based ERP was not just a tool; it became a strategic asset that empowered us to be nimble and responsive in a fast-paced market.

Scalability with controlled mechanism and reliable and dynamic with much require flexibility is implemented it makes process easier and efficient

Cloud ERP systems offer higher scalability compared to on-premises alternatives. They allow businesses to easily adjust their resources and functionalities as needed, whether it's expanding to accommodate growth or scaling down during slower periods. This flexibility ensures that organizations can adapt their ERP solutions to meet evolving business requirements without significant upfront investments or complex hardware upgrades.

One of prominent benefit of cloud-based ERP is scalability. Given the ongoing and substantial growth in data volume in recent years, coupled with the increasing shift of people to online platforms, the ability to scale up is imperative for ERP solutions.

Scalability- Higher Scalability, is key reason to choose the Cloud ERP based on data volume. Customer can increase/decrease their hardware according to the business, with affecting the performance etc. Also they can add the additional modules/customizations easily

A few years back, I was consulting for a company that was hesitant to move their ERP to the cloud, primarily due to security concerns. They were worried about data breaches and compliance issues. We finally made the switch, and the level of security we experienced was eye-opening. Advanced encryption, multi-factor authentication, and real-time monitoring became our new normal. Not only did we meet industry regulations like GDPR, but we also had peace of mind knowing that our data was backed up and could be quickly recovered in case of any unforeseen events. The move to the cloud didn't just alleviate our security concerns; it enhanced our trust in the system, allowing us to operate with greater confidence and efficiency.

Cloud-based ERP solutions can leverage advanced encryption, access controls, and continuous monitoring to safeguard sensitive information from cyber threats. Cloud providers also invest heavily in compliance certifications and updates, ensuring ERP systems remain up-to-date with the latest security features and patches. This not only enhances data protection but also reduces the burden on organizations to maintain their own security infrastructure, resulting in a more robust and resilient ERP ecosystem.

Security is streamlined and updated regularly , complies with security requirements and ever changing demands ensures it complies with latest in demand.

The cloud services becoming the number one choice for companies and therefore the vendors like AWS, Google, Azure etc. are aligning with the highest security measures available in the market.

An attention point is data sovereignty. How easy can one get hold of the data? What is the level of friction you encounter when consuming the data in another external system? How easy is it to integrate the solution into the enterprise data governance processes and systems? Off the record, I'm also curious how this ai redacted article will grow and look like.

I once consulted for a company with multiple international offices, and their on-premise ERP was a bottleneck. Employees couldn't access real-time data when they were out of the office, which hindered decision-making and collaboration. We transitioned to a cloud-based ERP, and the change was transformative. Suddenly, team members from different continents could access the same data in real-time, whether they were in the office, at home, or even at the airport. This newfound accessibility didn't just make life easier; it fundamentally changed how the company operated. Decisions were made faster, teams collaborated more efficiently, and customer service improved because everyone had the information they needed, right at their fingertips.

This is one of the top benefit of Cloud ERP in this era of digitization where businesses need faster and accurate real time data at any time anywhere in the world with a 24/7 access. This become more popular after Covid 19 when Cloud ERPs helped businesses to sustain and grow by working from home model.

Especially for ERP products that require high amounts of memory and processor power, such as s4hana, cloud computing makes it easier for companies with limited resources to benefit from today's technologies and enable them to be competitive.

In my experience user access is easier given that the security solution is not to hard. What has been a challenge however is building interfaces with a cloud ERP. That is interfaces to other cloud or local systems or on-prem hardware like machines or printers.

Last but definitely not the least, the ease of access of the cloud based applications enables business to access it anytime, anywhere and usually on any device they want which gives the, a lot of flexibility which results in increased efficiency and productivity.

there are a few more angles you might consider exploring: - Business Continuity: Cloud ERPs often have built-in disaster recovery plans. - Vendor Ecosystem: The cloud allows for easier third-party integrations. - Speed of Implementation: Cloud ERPs are generally quicker to deploy. - User Experience: Cloud-based systems often offer a better user interface. - Regulatory Compliance: Easier to meet industry regulations with cloud features. - Real-time Analytics: Enhanced data-driven decision-making capabilities. - Environmental Impact: Cloud data centers are often more energy-efficient.

Make an informed decision. Sure, there are benefits in the cloud, but also downsides. Do a TCO analysis, which should consider 1) effort to refactor the ERP for the cloud, as lift & shift will most probably be detrimental (classic ERP is not cloud native, it's optimized for on-prem); 2) the repatriation cost, in case things go wrong; 3) If SAP, consider if you really need things and innovation only available in the cloud of it that's superfluous to you; 4) needed customizations 5) Integrations. Then make your decision - but don't rush it. Consult your technical teams. Business may have a "cloud first" strategy, but where you run a workload should be determined by the workload characteristics. ERP in the cloud is NOT a no brainer.

It is also important to consider, the cloud provider's managed services and infrastructure offerings significantly reduce the traditional burden of hardware and operating system maintenance.

Cloud agility in the form of avoiding vendor proprietary lock-in is more important than ever before. When deploying ERP in the cloud think about how to keep your own vendor procurement staff fully empowered to negotiate both now and into the future. If a contract creates artificial costs with proprietary (vs open) integration and data egress, consider those costs up front to avoid cloud vendor lock-in. Use open standards and consider the potential costs upfront for moving your ERP cloud from vendor to vendor in the future.

I think the biggest benefits of cloud based solutions is it allows a business to focus on their business. Most organisations do not have the skillsets to manage complex on-premise solutions and the costs can spiral, or alternatively there are risks of failure. A cloud solution is designed to be scalable, so that memory intensive processes use the processing power available, staff can access securely at any location (Important now with people working from home, or in many locations), and the cloud providers have much better security than any on premise solution can utilise.