Cloud ERP Systems : Benefits, Challenges, Types, and Implementation

Cloud enterprise resource planning is a system that operates over the Internet instead of on a local network. It enables different departments within an organization to access the data anywhere and anytime.  

Many organizations are shifting to cloud ERP because of its advanced analytics capabilities. In fact, the cloud ERP market is growing at a CAGR of 11.2% and will reach $138.34 billion by 2030.  

If your organization is also planning to integrate cloud ERP or migrate its existing ERP to the cloud, there is no better time than now. Why?    

Because of the long list of benefits it offers to small and medium businesses. 

In this blog, you will learn about all the benefits cloud ERP solutions can offer your business. You will also learn about the types of cloud ERP, how it works, and how to overcome the challenges you face while implementing it.  

Cloud ERP: Introduction  

Enterprise Resource Planning (ERP) is a software system that integrates all your organization's data in one place. It enables better decisions through enhanced data visibility. You can use ERP software in two ways: First is through a cloud-based ERP (software-as-a-service, or SaaS). And second is buying a license to run it on your own servers (on-premises).  

What is Cloud ERP Software?  

Cloud ERP software runs on a vendor's cloud instead of your on-premises system. It is usually accessed through a standard web browser.   

It offers all the functionalities of on-premises ERP and covers the downsides of a premise ERP. For example, you don't have to pay the licensing fees upfront; instead, you can select the pay-as-you-go model.  

Plus, it boosts efficiency across all departments. Your sales team gets real-time inventory updates. Whereas your finance team can easily monitor cash flow and quickly handle audits or performance data requests.  

Types of Cloud ERP Software 

SaaS (Software as a Service) 

• This is the most prevalent form of cloud ERP. It operates on a multi-tenant basis, meaning that a single instance of the software serves multiple clients.   
• The service provider manages all system maintenance and upgrades, and users cannot modify the code or database. This option is more cost-effective due to its shared nature.  

Single-tenant SaaS  

• Typically chosen by larger companies, this model provides each client with their dedicated software instance and database. The service provider is still responsible for maintenance and upgrades.  
• This setup offers businesses greater control over their data and processes, ensuring their environment is not shared.  

Private/Proprietary Cloud  

• In this model, the data is stored on servers exclusively owned and managed by the company, not the cloud provider. This option offers robust security and control, like on-premises systems, but requires significant initial investment and ongoing maintenance.  
• It's ideal for businesses that need the functionality of on-premises systems combined with some benefits of cloud computing, like scalability.  

Public Cloud  

• This involves using infrastructure owned by the cloud provider, which customers access over the internet. While generally less costly than private clouds, public clouds can pose more significant security risks.   
• Well-known examples include Amazon Web Services (AWS), Microsoft Azure, and Oracle Cloud. To ensure security, data in public clouds needs to be encrypted both during transit and at rest.  

Hybrid Cloud  

• This approach combines elements of both public and private clouds. It allows companies to keep sensitive data secure in a private cloud while leveraging the cost-effectiveness of storing less sensitive data in a public cloud.  

White Label Cloud  

• Like proprietary clouds, it involves part of the ERP being hosted on a public Infrastructure as a Service (IaaS) like AWS, under the ERP vendor's branding.  

Benefits of Cloud ERP for Your Business  

Lower Costs  

One of the biggest perks of cloud ERP is the cost savings. With a subscription model, there's no need for hefty upfront investments in hardware or software. Your provider takes care of upgrades and maintenance, slashing IT costs. For businesses moving away from on-premises ERP, this means no more spending on servers, database setup, or extra IT staff. It’s a win-win: lower costs and less hassle.  

Simplicity and Automation  

Cloud ERP systems streamline your business operations. They consolidate old, standalone applications into one unified system. This integration simplifies workflows and automates processes, leading to new efficiencies across the board. You’ll spend less time managing disconnected systems and focusing more on what matters.  

New Functionality and Seamless Updates  

With cloud ERP, staying up to date is a breeze. Vendors handle all system upgrades and updates, ensuring your software runs the latest and greatest version. These updates are quick and typically happen during off-hours, so there’s minimal disruption to your business. No more lengthy, costly upgrades – just smooth, ongoing improvements.  

Real-Time Insights  

Cloud ERP systems are designed to handle big data, providing real-time analytics that legacy systems can’t match. You can access up-to-the-minute information and insights, making better, data-driven decisions. Spot trends, predict changes, and optimize resources – all from a single, integrated platform.  

Mobility and Accessibility  

In today’s world, you need to be able to access your business data anytime, anywhere. Cloud ERP makes this possible. Whether working from home, on the road, or at a client’s site, you can connect to your ERP system from any device with an internet connection. This mobility ensures your team has the information they need, boosting productivity and collaboration.  

World-Class Security  

Security is a top priority for cloud ERP vendors. They employ professional security experts for data protection, backups, and disaster recovery. This means your data is stored in highly secure, redundant data centers. With robust security measures like encryption and access controls, your business is well-protected against breaches and data loss.  

Fast Implementation  

Implementing a cloud ERP system is much quicker than setting up an on-premises solution. The technical environment can be configured in just 24 hours, and modern user interfaces make the software easy to adopt. This rapid deployment means less downtime and a faster return on investment.   

Scalability  

Growth can be unpredictable, and that’s where cloud ERP shines. It allows you to scale your resources up or down as needed quickly. Whether expanding rapidly or adjusting to seasonal demands, cloud ERP can handle the changes without requiring significant hardware investments. This flexibility helps your business stay agile and efficient.  

Disaster Recovery  

Cloud ERP systems offer robust disaster recovery capabilities. Your data is backed up regularly and stored in geographically dispersed locations, ensuring it is safe from local disruptions. If an unexpected event occurs, like a natural disaster or hardware failure, you can rest easy knowing your data is secure and accessible.   

Leveraging Modern Technologies  

Cloud ERP systems integrate advanced technologies like AI and machine learning to automate tasks and provide intelligent insights. These technologies help with everything from predictive maintenance to fraud detection, enhancing operational efficiency and security. AI-powered analytics can also improve decision-making, making your business more innovative and responsive.  

Shift of Responsibilities  

One of the standout benefits of cloud ERP systems is the significant reduction in the IT burden. Traditionally, businesses have had to manage and maintain their hardware and software, which includes installing and updating applications, managing data centers, and handling security and compliance issues. With cloud ERP, these responsibilities shift to the cloud provider. This transfer not only alleviates the workload on your IT department but also ensures that these critical tasks are handled by specialists who focus solely on maintaining optimal performance and security of the system.  

Focus on Core Business  

By outsourcing IT maintenance and management to the cloud provider, your internal IT team can shift their focus to more strategic initiatives that drive business growth and innovation. Instead of spending time on routine maintenance tasks, IT professionals can now engage in projects that enhance operational efficiency, improve customer experiences, and support the organization's overall strategic goals. This shift in focus can lead to a more dynamic and forward-thinking IT department capable of contributing significantly to the business’s competitive edge.  

How Does Cloud ERP Work?  

An ERP (Enterprise Resource Planning) system, often called an ERP suite, is a set of connected modules or business applications that work together. A Module in ERP refers to a specific business area. Common areas include finance, accounting, human resources, sales, procurement, logistics, and supply chain management.   

These modules share a common database, which means they can easily exchange information and use the same data to function. Companies can choose the modules they need and add more as they grow or their needs change.   

Thus, the cloud ERP system allows the manager to analyze complex data in minutes and make better decisions based on it.  

How a cloud ERP system is implemented

Selection and Subscription   

You start by evaluating various cloud ERP providers to find the one that best fits your needs. Once you find the right provider, subscribe to a plan that suits your organization.  

Configuration and Setup  

After subscribing, you set up the ERP system according to your business requirements. This involves organizing the system structure, defining user roles and accounts, and customizing modules and workflows.  

Data Migration   

You need to transfer your data if you’re moving from an old ERP system to a new cloud-based one.   

Check out for More Information: Cloud Migration Guide 2024  

Integration  

Your cloud ERP system will likely need to integrate with other software you use, like CRM systems or e-commerce platforms, to ensure smooth data flow.  

Ongoing Usage and Management   

With the ERP system fully operational, you can access it from anywhere for various tasks like data entry, report generation, process management, and collaboration.  

What are the Challenges of Cloud-based ERP?  

1. Data Security  

Challenge 

• Not Knowing Who Can Access & Edit Your Data: When too many people have access to sensitive data, information can be stolen or mishandled.  
• Weak Passwords and Authentications: Weak passwords and a lack of multifactor authentication (MFA) can expose a business to risks.  
• Lack of Activity Logging and Review: It's challenging to track operations and identify unusual activity without activity logs.  
• Not Having a Growth Strategy: Ill-defined strategies can hinder security measures and growth.  

Solution  

• Set Role-Based Access: Ensure authorized personnel can access and edit critical information.  
• Implement Strong Passwords and MFA: Verify user identity through multiple attributes to enhance security.  
• Utilize Activity Logs: Regularly review user and activity logs to detect deviations from normal behavior.  
• Develop a Growth Strategy: Create a strategy that includes security measures and adapts to continuous growth.  

2. Customization Limitation  

Challenge  

• Limited Customization: Cloud-based ERP systems often prioritize standardized processes over customization, which can be a drawback for businesses with unique workflows.  

Solution  

• Assess Customization Needs: Evaluate the specific needs of your business and seek cloud ERP providers that offer flexible customization options.  
• Work with the Vendor: Collaborate with Prioxis to develop tailored solutions that accommodate your unique processes.  

3. Price/Cost Savings  

Challenge  

• Subscription Fees: While initial costs are lower, subscription fees can accumulate over time, potentially leading to higher overall costs.  

Solution  

• Monitor and Manage Costs: Ensure the subscription model aligns with your business needs and budget. Review expenses regularly to avoid unexpected costs. 

Learn More: ERP Digital Transformation

Cloud ERP Takeaways   

To sum it up, cloud ERP is a game-changer for businesses today. Imagine having all your vital data accessible from anywhere, anytime. You can make quick, informed decisions with real-time insights. With cloud ERP, this is not just possible; it’s the new standard.  

If you’re considering integrating or migrating to cloud ERP, now is the perfect time to do so. To better understand cloud ERP's benefits for your business, contact our experts today. We have 5+ years of experience delivering enterprise-grade solutions with a 99% success rate.