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Cloud ERP

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What is Cloud ERP, and how does it work?

Are you curious as to what cloud ERP is and how it works? You've come to the right place!

In todays modern business world, cloud based ERP systems have become more and more popular, because of their flexibility and cost efficiency. But how does it work? and what advantages and disadvantages exist in this type of system? 

These are some of the questions we will handle in this blog post, where you can learn the differences between cloud ERP and traditional on-premise ERP systems, and also the upsides and downsides with cloud ERP.

Read along, and learn how cloud ERP can help your business grow!

What is cloud ERP?

Cloud ERP is the modern form of ERP system, which makes it possible for businesses to integrate their business processes on a centralized platform. With cloud ERP, businesses can control anything from finance and inventory control to order management, supply chain management, sales and customer service, from a single software solution in the cloud.

What makes cloud ERP unique, is the webbased system which can be accessed from any device with internet access - including computers, tablets and smartphones. This gives businesses freedom and flexibility since employees can access the system no matter where they are, and what they're doing.

How does cloud ERP work?

When a business chooses to implement cloud ERP, they'll typically need a third party supplier who can host and maintain the system. The supplier will then set up and configure the system, according to the business' needs and goals.

When the system has been configured and implemented, the business will have access to a centralised software platform, that gives them opportunity to integrate their business processes across departments and functions.

Cloud ERP software works by saving all business data in a central database, which is hosted on an external server. The data can then be accessed and treated by the employees from any device with internet access.

Since the system is webbased, the business can collaborate with other businesses and partners across geographical areas and time zones.

The cloud ERP software is usually built on a scaleable architecture, which means businesses can adapt the solution to their specific needs and expand as needed. This also makes it possible for businesses to scale their ERP system, according to how their business goals and needs change.

Advantages and disadvantages with cloud ERP

Even though theres many advantages with using cloud ERP, theres also many potential challenges that businesses need to consider, before they decide to implement a solution like that. 

In this segment we're gonna look closer at both the advantages and disadvantages with cloud ERP and give you a better understanding of what to expect when choosing this solution. 

Advantages with cloud ERP

  • Scaleability
    With cloud ERP businesses can quickly scale up or down depending on their needs, without having to invest in new servers or software licenses. This means that businesses can adapt their systems as their goals change.
  • Always updated
    Cloud ERP suppliers make sure the software is updated and security patches are automatically installed, which minimizes risk of security breaches. You no longer need to worry about manual updates or getting behind on the newest technology.
  • Accessible anywhere, everywhere
    With cloud ERP users can get access to the software from any device with internet access, which makes it easy to work external or on the road. This increases mobility and flexibility for the employees, who can work from home or any other location.
  • Economically advantageous
    Cloud ERP doesn't demand a lot of one-time purchases for hardware, and can thus be more economically advantageous than an on-premise solution. Businesses can save money on both hardware- and infrastructure purchases and can instead pay a monthly or yearly subscription fee, to use the system.
  • Automated backup
    The cloud ERP suppliers regularly take backups of the data, so businesses don't have to worry about loss of data. This will make sure that businesses always have a backup of their data and can restore the data quickly and efficiently just in case.

Disadvantages with cloud ERP

Even though the current trend is that more and more businesses are using cloud ERP due to the many advantages you gain by using it, there's still some challenges you need to be aware of before migrating to a new system.

  • Migrating big batches of data can be a hassle
    If you as a bigger company has had an on-premise solution for some time, a shift to cloud ERP can be a complicated process. It takes patience and you should always in this process consult experts so the process can be completed as smoothly as possible.
  • Resistance to changes
    Bigger companies with bigger IT- and admin departments can meet resistance from important actors internally in the company, when the ERP software moves off site. This can happen since admins lose a certain amount of control over the automated processes and the new ERP suppliers will be responsible for maintanence and infrastructure - and IT teams can lose control of certain operational processes.
  • Compliance challenges
    You can also meet challenges with cloud ERP if you in your company has strict cybersecurity policies or limits for hosting customer information in the cloud. This could mean that not all businesses can harvest the full potential of cloud ERP. The bigger players on the market has however taken the first steps in complying policies such as HIPAA and GDPR. But, for most businesses there shouldn't be any problems regarding this, and you shouldn't feel trapped in an on-premise solution because of this.

Cloud ERP vs. On-Premise ERP

Cloud ERP and on-premise ERP are two of the usual ways to implement a new ERP system. Cloud ERP systems are accessed via internet and are hosted on an external server, while on-premise ERP systems are hosted on a server placed on the business property and are administrated by the business itself. Both methods have their advantages and disadvantages, and it's very important to consider the business' specific needs and goals before deciding on one or the other.

Some of the advantages with cloud ERP includes the opportunity to scale up or down as needed, updates being handled by the supplier, availability from any internet accessed device and lower start- and operational costs. Disadvantages can be worries about datasecurity and dependence on internet access.

On-premise ERP systems can give you better control, but will typically demand bigger one-time purchases and can be more challenging to maintain. Besides, businesses can have difficulty scaling up or down as needed, and problems could arise with accessing data outside of the business' physical property.

Vil du vide mere? Læs med her og bliv klogere på forskellene mellem cloud-ERP og on-premise ERP.