Enterprise Resource Planning systems have been around for a while. First invented in the 1960s under the name Materials Requirements Planning (MRP), these were bulky computer systems that assisted factories with manufacturing, purchasing and delivery. We look at 5 benefits of using cloud-based software for ERP.
A History of ERP
The term ERP was first invented by the Gartner Group in the 1990s and was used to describe MRP systems that encompassed other functionality which supported company’s back office requirements.
When ERP systems first became available, the only option was to install an in-house system. This method typically involved a hefty installation cost and a lengthy and labour-intensive installation process.
As technology evolved with the dawn of the new millennium, so too came the invention of Cloud-based technology. Cloud technology was a method of accessing software from anywhere in the world that did not require a lot of hardware being installed and simply required the user to have access to a web browser.
As Cloud technology develops, more and more people are adopting it for their Enterprise Resource Planning. In recent years the cloud-based system has seen a rise in popularity in small to medium-sized businesses due to its lack of initial set up fees, convenience and potential for scalability. In this blog, I’m going to look at some of the benefits of utilising Cloud-based systems over in-house ERP systems.
Benefits of Cloud-based Technology for ERP
When cloud-based software first came around many were sceptical about the security and were concerned for their data safety and privacy. As more businesses adopted the Cloud and demonstrated that actually, this option provided a higher level of security, the critics were soon silenced. Cloud ERP solutions ensure that data is secure and protected.
Certain Cloud providers also back up your data to remote servers meaning data loss will not occur. External data centres will regularly audit their security processes as their customers’ data security is paramount to their reputation as a business.
One of the main features that draws many businesses to Cloud-based solutions is the low setup cost. Cloud-based solutions usually involve a monthly subscription fee and little to no initial set up cost. Companies also do not have to spend large sums of money investing in hardware installations as all they need to access their ERP is a web browser.
Companies that switch to Cloud-based ERP systems from an on-premise system will also experience immediate savings as they no longer have to manage their own data centres. This can be particularly crucial for smaller businesses where IT costs can typically make a big impact on a company’s budget.
A key benefit of using the cloud is the ease at which you can scale up your business. A business that operates with an in-house ERP system and is looking to scale up would have to audit their current processes and see if the hardware they have currently in place is sufficient for growth.
If the hardware is not sufficient, this could mean installing additional servers on site which may mean downtime for your system. There is then the issue of powering and cooling the hardware, this would also need to be considered when looking to up-scale your business.
All of these issues amount to increased investment in time and labour hours which can have a significant impact on your business efficiency and profit margin. With Cloud, as your data centres are managed externally, scaling up the business is as easy as buying additional licences, meaning no time is lost on installation.
Access Data Anywhere
The main draw of SaaS is that it can be accessed from anywhere, which is particularly useful if you have staff that work remotely. This also means that if you wanted to work from home but forgot to email an important file to your personal computer you can simply log in from home and access the files.
For salespeople who go out to visit customers and secure deals on the road, having a Cloud-based system they can access in real time is incredibly useful. Having accurate stock levels is crucial to ensure customers are not let down. It would be incredibly embarrassing if the salesperson agreed a sale only to then find when they got back to the office that the order cannot be fulfilled.
Not only is cloud technology secure, due to it being provided by external companies that make data security their top priority, the technology itself is governed by a stringent set of laws and regulations that ensure best practices are maintained.
These regulations are also by no means static, and the laws and regulations are constantly evolving as the technology itself evolves. It is the responsibility of your cloud provider to adhere to these regulations and ensure they are compliant with the most up to date legal requirements. Therefore, anyone using Cloud technology should be safe in the knowledge that their system is secure and fully compliant.
While this list is by no means extensive it does highlight some of the many benefits of adopting a cloud-based system over an in-house ERP system. As previously mentioned, for small to medium-sized businesses, Cloud solutions can be a very lucrative investment with minimal risk, and huge scope for scalability.
Even larger businesses can benefit from implementing cloud solutions. Being able to access the software remotely is a massive benefit for any company who sends salespeople out to make demonstrations on site and they can comfortably implement this technology knowing that cloud’s enhanced security means they are protected wherever they access their data. Also, as cloud technology is heavily regulated then businesses do not have to worry about keeping up with current compliance laws, which will be particularly useful for the coming implementation of GDPR.