ERP systems sit at the center of a business.
Finance, purchasing, inventory, sales, manufacturing, reporting, and other critical processes can all depend on them.
So where that ERP system runs matters.
For years, businesses commonly operated ERP software on servers located inside their own facilities. That meant owning or managing the hardware, maintaining the infrastructure, handling upgrades, providing remote access, and keeping the environment secure.
Cloud ERP changes that model.
Instead of relying primarily on servers housed inside the business, the ERP system and its underlying infrastructure are hosted in the cloud and accessed over the internet.
In an episode of The ABCs of ERP & Beyond, Nirav Shah and Peter Nicholson discussed why businesses should consider moving ERP systems to the cloud.
Here are five of the biggest reasons.
Key Takeaways
Moving an ERP system to the cloud can help businesses:
- Reduce the infrastructure required to operate ERP.
- Shift some system maintenance away from internal IT teams.
- Provide easier access for employees working from different locations and devices.
- Scale infrastructure as the organization grows.
- Simplify software updates and security patches.
Cloud ERP is not automatically the right answer for every organization, but for businesses evaluating aging on-premise ERP infrastructure, these advantages are worth considering.
Watch the Full Podcast Episode
Want the full discussion?
In this episode of The ABCs of ERP & Beyond, Nirav Shah and Peter Nicholson discuss the benefits and considerations of moving an ERP system from traditional on-premise infrastructure to the cloud.
1. Reduce ERP Infrastructure Costs
Running ERP on-premise involves more than buying software.
The business may also be responsible for the infrastructure needed to keep that software running.
Depending on the environment, that can include:
- Physical servers
- Server racks
- Backup systems
- Battery backup and power protection
- Cooling
- Storage
- Networking
- Remote-access infrastructure
- Hardware maintenance
- IT resources
And eventually, hardware needs to be repaired, upgraded, or replaced.
Cloud ERP changes the economics of that infrastructure.
Instead of purchasing and maintaining much of the physical environment yourself, infrastructure becomes part of the cloud service.
That does not mean cloud ERP is free. Businesses still pay subscription, licensing, implementation, support, and potentially other technology costs.
But it can shift spending away from maintaining physical ERP infrastructure and toward services the business actually uses.
There is also an opportunity cost worth considering.
If your IT team spends significant time maintaining ERP servers, troubleshooting infrastructure, managing remote access, and installing updates, that is time they are not spending on other business technology priorities.
Moving ERP to the cloud can reduce some of that burden.
2. Strengthen the ERP Security Model
Security is one of the first questions organizations ask when discussing the cloud.
That makes sense.
An ERP system can contain financial records, customer information, supplier information, inventory data, employee information, pricing, and other sensitive business data.
But keeping ERP on-premise does not automatically make it more secure.
An on-premise environment requires the company to maintain the systems, access controls, patches, backups, infrastructure, and remote connections protecting the ERP environment.
The growth of remote and hybrid work has made that increasingly complicated.
Employees may need to connect from homes, customer locations, job sites, hotels, or while traveling.
Traditional environments have often relied heavily on VPN connections and internally managed infrastructure to provide that remote access.
Modern cloud environments can provide security capabilities such as encryption, multi-factor authentication, monitoring, identity management, backups, and ongoing security updates.
Of course, cloud technology does not eliminate security responsibilities.
Users still need appropriate permissions. Multi-factor authentication needs to be configured properly. Devices need protection. Employees need security awareness.
But cloud ERP can give businesses access to a modern security infrastructure without requiring the organization to build every layer itself.
3. Access ERP From More Places and Devices
ERP used to be something many employees accessed primarily from a computer sitting inside an office.
Business does not work that way anymore.
Salespeople travel.
Executives work from multiple locations.
Warehouse managers move around facilities.
Field employees may need information while visiting customers.
Employees increasingly expect to access business systems from laptops, tablets, and other modern devices.
Cloud ERP makes that significantly easier.
Rather than depending on an application installed on one particular machine or connecting back through an unstable remote-access environment, users can often access a modern cloud ERP system through a browser.
That can provide much greater flexibility.
A salesperson visiting a customer might review account information without returning to the office.
A manager working remotely can check operational information.
An executive traveling can review business performance.
An employee moving between company locations can access the same ERP environment.
The ERP system becomes less tied to a particular building or computer.
For businesses operating across multiple locations or supporting remote employees, that accessibility can be a major advantage.
4. Scale ERP as Your Business Changes
Businesses change.
They add employees.
Open new locations.
Acquire companies.
Expand product lines.
Increase transaction volumes.
Enter new markets.
Or sometimes they consolidate operations and reduce infrastructure needs.
An on-premise environment has physical limitations.
If the business grows beyond the capacity of the current hardware, it may need additional servers, storage, processing power, networking equipment, or other infrastructure.
That requires planning and capital investment.
Cloud environments are designed to be more flexible.
Infrastructure can often scale as requirements change without the company purchasing another physical server every time it needs more capacity.
That can be particularly valuable for growing organizations.
Instead of asking:
“Will our current server handle where we’re going?”
The conversation becomes:
“What resources do we need as the business changes?”
That flexibility can also matter during an ERP implementation.
Implementation teams, remote employees, different company locations, and external consultants may need access to the environment.
Cloud-based systems can make that easier without requiring everyone to be physically connected to the company’s internal network.
5. Make ERP Updates Easier to Manage
ERP upgrades have historically been painful for many organizations.
Older on-premise systems can require significant planning and IT resources to upgrade.
Servers may need updating.
Client software may need updating.
Compatibility needs to be checked.
Customizations may need testing.
Different users can sometimes end up running different versions if deployments are not completed consistently.
There may also be downtime to manage.
Cloud ERP can simplify parts of that process.
Software updates, security patches, platform improvements, and new capabilities can often be delivered through the cloud rather than requiring an IT team to manually update software across a collection of individual computers and servers.
That can reduce the technical overhead associated with keeping the ERP platform current.
There is another benefit.
Staying current matters.
Businesses operating outdated ERP versions may miss security improvements, performance enhancements, new integrations, usability improvements, and new functionality.
A cloud model can help organizations avoid falling years behind simply because upgrading has become too difficult.
Cloud ERP Is About More Than Where the Server Lives
The move from on-premise ERP to cloud ERP is not simply about relocating software.
It can change how the organization thinks about infrastructure, access, maintenance, security, scalability, and technology investment.
The five advantages discussed in the podcast are closely connected:
- Lower infrastructure requirements can free IT resources.
- Modern security capabilities can support a workforce connecting from more places.
- Better accessibility can make ERP useful outside the traditional office.
- Scalability can help technology keep pace with business changes.
- Simpler updates can help organizations stay on a more current ERP platform.
For an organization operating a stable, well-supported on-premise ERP environment, an immediate move may not always be necessary.
But if servers are aging, upgrades are becoming painful, remote access is cumbersome, IT resources are stretched thin, or the business is preparing for growth, cloud ERP deserves a serious look.
Is It Time to Move Your ERP to the Cloud?
If you’re evaluating an aging ERP system, replacing legacy infrastructure, or deciding between cloud and on-premise ERP options, the technology decision should start with your business requirements.
AdCirrus ERP can help you evaluate your current environment, understand your cloud ERP options, and determine the right path forward.
