A strong enterprise resource planning (ERP) solution can be the lynchpin to successful business growth. While several corporations are now making the transition towards cloud-based ERP solutions, others may not be ready to move off on-premises deployments.
No matter where you fall on this scale of consideration, here’s what you need to know to guide your ERP deployment decisions—both now and in the future.
Why is cloud ERP usage increasing?
In the past, businesses considering cloud ERP were attracted by the cost benefits. The ability to consume ERP on a monthly subscription basis offered businesses the ability to leverage operating expenditure (OPEX) as opposed to capital expenditure (CAPEX). It eliminated the responsibility for businesses to run and manage software applications, and invest in servers and infrastructure.
Cloud ERP has quickly levelled the playing field, enabling even smaller businesses to rapidly leapfrog older, more established companies—a compelling argument for its adoption. Companies want, and need, to see value from their technology investments and they don’t want to wait for implementations that take a year or more to see that value manifested. Nucleus Research, in a December 2017 report, stated that cloud deployments deliver 3.2 times the return on investment of on-premises deployments. This is notable and significant—especially to C-level executives who are increasingly part of the ERP selection process.
However, aside from bringing about improvements in responsiveness, agility, and costs, the cloud is helping businesses digitally transform and get fit for growth. As businesses shift away from traditional on-premises systems to cloud-based ERP they are taking advantage of new capabilities to improve their business and optimise processes. What’s more, cloud ERP is enabling teams to access real-time information from across the business, and then use that data to make better business decisions.
Are concerns still growing regarding cloud ERP usage from a customer viewpoint?
Understandably, security will likely always be a concern, no matter how far technology progresses, but companies need an insight-driven strategy to outpace ever-evolving threats. The reality is that all software is prone to viruses and vulnerabilities, whether it is stored on premises or in the cloud. Having your ERP in the cloud offers several security benefits that could outweigh on-premises options for your business.
One is that your ERP is automatically upgraded by your ERP vendor more often, so that you are constantly and consistently safeguarded with the latest security patches. Another is that world-class global cloud infrastructure now uses the latest in artificial intelligence and machine learning to detect and remediate vulnerabilities at scale, even before they are exploited. Physical datacentre security for world-leading cloud platform providers is so strict and technology-driven that it would be extremely costly for a single business to try to replicate that on their own premises.
We encourage businesses to be educated on cloud ERP and security, and not just to subscribe to the myths that if you’re running your ERP in the cloud, your data is more susceptible to threats. It’s absolutely not true. The cloud is likely more secure than what many can realistically provide in house.
The role of cloud ERP in effective ‘digital transformation’
One of the biggest benefits of running ERP in the cloud is that it can help prepare your business for future changes via its inherent scalability and flexibility, particularly from an integration perspective. This is particularly essential as companies look ahead and consider future needs. For example, might an acquisition or merger come into play? Will growth plans include a global or national expansion strategy? Will new machinery, robotics or Internet of Things (IoT) initiatives be initiated? In all these scenarios, cloud provides ease of integration, to help connect people, processes, data, and things.
While ERP has always been associated with efficiency, today and going forward it’s more about delivering intelligence, insights, and predictability to sustain competitive advantage well into the digital age.
In addition, the new requirements of today’s digital age go beyond simply driving transactions. They require that organisations be able to make sense of large volumes of data quickly, to understand the greatest business opportunities and threats that must be addressed to support growth and profitability. This enables companies to continue to fine-tune their go-to-market strategies, customer management, inventory management, and financial health.
What’s more, the use of data and analytics is a powerful force in helping organisations anticipate and navigate disruption. Companies that can turn data into action will enjoy a significant advantage over slower-moving rivals.
What differentiates cloud and on-premises ERP? How do I choose between them?
We are currently seeing more businesses adopting either a cloud or hybrid approach to ERP as they start to understand the need for an infrastructure that enables them to deploy new technologies. This include mobility, as well as collecting, aggregating, and analysing data.
The momentum of the cloud is unstoppable, but, like any investment, cloud ERP requires proper due diligence. How and when you get there should be personalised to address the needs of your business for the greatest return on investment (ROI).
Many companies investing in ERP for the first time choose cloud to avoid the future transition. A growing trend among organisations with on-premises ERP is to start their cloud journey by adding specific cloud products (such as eCommerce or analytics) as satellites or complements to their core systems. Whatever your strategy, a phased approach allows you to design your own path to the cloud, where you can move higher priority areas of your business first to gain rapid ROI, revenue growth, and data-driven justification to expand.
It is important to consider a variety of options when choosing an ERP vendor and look at an option that empowers you to chart a course to the cloud that best serves your business. The last thing you want is concerns of losing mission-critical functionality, data security, or performance. The ERP solution you select should fit your business, be easy to deploy and extend, be easily usable, and allow you to achieve your business goals. By partnering with a reliable ERP vendor and pursuing a future-oriented cloud strategy, businesses can equip themselves with the means to remain competitive in our digital world.
Kerrie Jordan, senior manager of product marketing, Epicor Software
Image source: Shutterstock/Mikko Lemola