The “cloud” has become a technology norm in the consumer market, with cloud-based music, video, file storage, and other services providing access from virtually any device, anywhere. But the cloud isn’t just for consumers. Albeit later to the party, the cloud has moved from buzzword to common terminology in business circles too. Many technology products and services previously available to businesses through traditional means are now offered in the cloud:
- Enterprise-grade file sharing (e.g., Microsoft OneDrive for Business);
- Office productivity software (e.g., Google G Suite);
- Fully functional phone systems (e.g., RingCentral);
- Fully managed information technology (IT) services (minimizing the need for on-site IT support); and
- Enterprise resource planning (ERP) software.
This article focuses on ERP software, which can manage various aspects of your business, including sales, service, purchasing, finance, inventory, production, and more. Regardless of your industry, reputable ERP solutions can meet your day-to-day business operation needs. Today, many of these products are available in the cloud.
Public cloud enterprise resource planning (ERP)
ERP systems can be run in the cloud in several ways. The most commonly understood concept is that of the public cloud, where users log in to their organization’s ERP system via the software provider’s website, web-enabled desktop application, or mobile app. With the public cloud, the software provider typically maintains the servers and IT infrastructure required to publish the ERP application. Many organizations will be supported on a common set of secure servers, and all users across all organizations automatically get software upgrades as they become available. All the user really needs to do is install the app and log in. You’ll likely pay for this service via a subscription fee.
Other cloud alternatives
Although cloud purists may disagree, there are other options for delivering a cloud ERP solution. First is the concept of private cloud, where an organization’s ERP system is maintained on IT infrastructure designated specifically for that business. The benefits include increased security and control and the freedom to upgrade (or extend) the solution more autonomously, while leaving management of the environment to the provider. Private cloud systems usually operate with a per user, per month fee.
Some organizations may choose to run their ERP solution in an on-premise private cloud format, meaning the system is maintained on infrastructure within their own facilities, just as they might have with a traditional ERP system. In our experience, the most common reason for this approach is security considerations that may result from the nature of the business’s customers (e.g., healthcare or defense) or other unique industry requirements.
The key difference with private cloud is the ERP technology used to deploy features to users both in the office and in the field, using mobile applications, web browsers, and so on. Properly implemented, a private cloud ERP solution can deliver many of the benefits of a public cloud solution.
Choosing from among the different options comes down to who’s managing it for you and what’s included in the fee.
You should expect all the same features you would in a traditional ERP, addressing all your business requirements – and perhaps more.
What’s different in the cloud?
How is running a business in the cloud different from using a traditional ERP? In many ways, it isn’t: you should expect all the same features you would in a traditional ERP, addressing all your business requirements – and perhaps more – not just sales or finance. Cloud solutions that offer only customer relationship management, for example, are not cloud ERP systems.
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In addition to full ERP features, your solution should be accessible anytime from anywhere you have an internet connection. Accessing your ERP system from your mobile phone, tablet or laptop using inflight WiFi should be a normal expectation when running in the cloud.
There are other inherent benefits that weren’t a consideration before the advent of the cloud. Onboarding new employees is easier: there’s no need to install software on their computer; simply add a new user subscription, assign security privileges based on their role, and let them log in. Furthermore, cloud ERP systems generally offer more contemporary, user-friendly interfaces that new users more easily learn and adopt. That means less training effort and potentially fewer user errors.
Another often misunderstood benefit of cloud ERP systems is simplified IT management. Using the cloud, your organization is typically freed from worrying about backups, developing an ERP disaster recovery plan, and even the complex planning for upgrades associated with legacy ERP systems. These services should largely be included in your subscription or support fee.
Lastly, your system will be more secure. Yes, the cloud really is generally more secure because you’re leaving the security to the experts, typically employing multiple levels of security and safeguards against attack, not to mention a higher-grade data centre facility designed to protect against disaster more fully than a typical office building. Many business owners falsely think their system is more secure on a server in their office.
Eyes wide open
Cloud ERP systems are widely available and are delivered and priced in various forms by a variety of global vendors. A trusted local provider is your best bet for ensuring that your interests are protected. Understand where your data will be stored and whether any third parties are involved. Being in the cloud means your data could be stored anywhere, and you may want the peace of mind of knowing it’s backed up by IBM or Amazon, not a two-person shop in Timbuktu.
When engaging with a cloud ERP provider, understand who owns your data and how you obtain it if you terminate the service. Some providers will embrace an “own the customer, own the data” philosophy, making it difficult for you to extract your data. Some may even charge a significant fee for the privilege. Understand what your options are and get it in writing. Having a reputable partner will go a long way to giving you peace of mind.
The cost structure of cloud ERP systems differs from that of traditional solutions; recurring subscription fees are the norm. Cloud systems can have a lower cost of entry and even lower ongoing cost of ownership, but less reputable providers may hide fees. Ensure you understand all the costs and what’s included in implementation fees and recurring fees, including the level of support, upgrades, and system maintenance.
An often-overlooked plus of cloud ERP systems is the cost of supporting current infrastructure, which can be greatly reduced with a simplified environment. For example, we recently implemented a cloud-based phone system in our own business. We were surprised to learn that as a result, we could eliminate several seemingly unrelated services we use. So our new system will cost significantly less than we paid before but has greater capabilities.
A brave new world
Managing your business in the cloud can open up new opportunities while improving efficiency and productivity. In our experience assisting local small and mid-sized companies with their ERP needs – cloud and traditional – we have seen businesses grow dynamically, mature, and even move onto the world stage in significant ways. You should expect the same of your ERP solution, particularly as you shift to managing your business in the cloud.
First published in the March 2018 edition of The Business Advisor.