Table of contents
1.
Introduction
2.
Components of Cloud ERP
3.
Setting up Cloud ERP
4.
Terminology
5.
Cloud vs. On-Premises ERP
6.
Benefits
7.
Challenges
8.
Frequently Asked Questions
9.
Conclusions
Last Updated: Mar 27, 2024
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Cloud ERP

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Introduction

ERP stands for Enterprise Resource Planning. It is an integrated management system for the main business processes. ERPs can either be Local or Cloud-based. In this article, we will solely look at Cloud-based ERPs. 

Cloud-based ERPs are hosted by the ERP vendor. They perform the same or even better functionalities performed by the Local-based ERPs without the common downsides, like upfront licensing fees. 

Components of Cloud ERP

The Cloud-based ERPs provide crucial accounting and finance-related functionalities. There are nine essential components of a Cloud-based ERP system,

  • Inventory Management
  • Procurement
  • Project Management
  • Human Resource or Capital Management
  • Financials and Accounting
  • Customer Relationship Management
  • Order Management
  • Supply Chain Management
  • Material Requirements Planning

Setting up Cloud ERP

Cloud-based ERP helps in setting up an efficient system for an organization by managing and improvising the resource usage of the company. Cloud-based ERP systems and their connected solutions provided by the vendors can be easily accessed from a connected, flexible, and mobile device like a laptop or a phone. Cloud-based ERPs also help deliver informed business decisions by providing security, notifications, accurate information, and insights in a real-time scenario.

All businesses have different financial requirements. Thus there are separate Cloud-based ERPs for all companies. Companies hire an ERP vendor or consultant to derive a plan to meet their individual needs and make their system more efficient and secure. 

Terminology

Let us look at the basic terminology linked with the Cloud-based ERP systems,

  •  End-To-End Security: Cloud-based ERP systems provide a secure and encrypted connection between the consultant and the client.
  • Deployment Strategy: ERP strategies can be deployed on private or premises servers. Cloud-based ERP models can be delivered faster and more efficiently than the Local-based ERP models. In the Cloud-based ERP model, the companies don't have to worry about the customization and installation process.
  • Subscription Licensing: The companies agree to a particular subscription license and pay the subscription fee on a monthly or yearly basis to access the software.
  • On-Premises ERP: All the ERP-related resources are installed locally on the company premises and are managed by the company employees or contracted ERP specialists. 
  • Cloud-Based ERP: All the ERP-related resources are installed on a cloud- server, and the data can easily be accessed using remote devices.

Cloud vs. On-Premises ERP

Cloud ERP

On-Premises ERP

In a Cloud ERP, all the ERP-related resources are installed on a cloud- server, and the data can easily be accessed using remote devices. In an On-Premises ERP, all the ERP-related resources are installed locally on the company premises and are managed by the company employees or contracted ERP specialists. 

Above are some of the differences between Cloud and On-Premises ERP.

Benefits

Let us look at some of the benefits of using a Cloud ERP over On-Premises ERP,

  • Reduced Costs: Cloud ERPs are subscription-based and help cut down on a lot of setup and installation costs.
  • Protection: All the data is stored in a cloud. Thus, the information is protected from any data breach or data loss.
  • Efficiency and Productivity: Cloud ERPs are much more efficient and productive than the traditional On-Premises ERP models.
  • Customer Satisfaction: Since the Cloud ERP models are more efficient and secure, they provide better customer satisfaction and customer experience.
  • Scalability: Cloud ERP models easily adjust to the growing needs of the company as the company expands, whereas the On-Premise ERP model takes longer to adapt to the ever-increasing demands of a company.
  • Agility: Cloud ERP models can be easily accessed using remote and flexible devices, thus making them more agile than the On-Premises ERP model.

Challenges

While Cloud ERP has its advantages, it also has a few drawbacks. Let us look at some of the disadvantages of using Cloud ERP,

  • For a larger business, the transition from an On-Premises ERP to Cloud ERP can be a very time-consuming and tedious process.
  • Although Cloud ERP models remove the hassle of maintaining the system, it also takes away some of the admin's control over the processes.
  • Cloud models can be less customizable as compared to the On-Premise models, and the company could also have assurance issues regarding data security. 

Frequently Asked Questions

  1. What is ERP?
    ERP stands for Enterprise Resource Planning. It is an integrated management system for the main business processes. ERPs can either be Local or Cloud-based.
  2. What is On-Premise ERP?
    In an On-Premises ERP, all the ERP-related resources are installed locally on the company premises and are managed by the company employees or contracted ERP specialists.
  3. What is Cloud ERP?
    In a Cloud ERP, all the ERP-related resources are installed on a cloud- server, and the data can easily be accessed using remote devices.
  4. What are some of the Cloud ERP software?
    Some of the commonly used software for Cloud ERP are Multi-Tenant Saas, Single-Tenant SaaS, Public Cloud, Private Cloud, and Hybrid ERP.
  5.  What is subscription licensing?
    The companies agree to a particular subscription license and pay the subscription fee on a monthly or yearly basis to access the software.

Conclusions

This Blog covered all the necessary points regarding the Cloud ERP models. We then looked at the working and the benefits of using Cloud ERP. We also discussed the difference between Cloud-based and On-Premise ERP and the drawbacks of using Cloud ERP.

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