What is Cloud ERP Software and How Does it Work?

Urmi Shah

Senior Writer

Chief editor

Chief editor

The sky is the limit for the Cloud!

The technology for sharing data, leveraging the internet without any local physical storage. Cloud storage has revolutionized our lives over the past few years. Don’t you agree?

Looking for ERP Software? Check out SoftwareSuggest’s list of the best ERP software solutions.

Do you remember when you’d store your data in a Pendrive/ CD and physically deliver it to the person or send write-ups over the mail and couldn’t collaborate in real-time? Well, those were the times we were unknown of cloud computing.

What is Cloud ERP?

Cloud ERP is software hosted in the cloud rather than on company servers. Companies with multiple locations, multiple currencies, and multi-product lines benefit from cloud ERP. And So do companies that want to provide their customers with seamless ordering and shipping, reduce costs and automate business processes.

Cloud ERP programs usually include accounting, manufacturing, customer relationship management (CRM), supply chain management, project management, and many more functions. Although ERP software was once only available to larger businesses, online ERP solutions are now designed for businesses of all sizes.

Today’s ERP in the cloud is used by companies of all sizes, from small to multinational corporations. It is a flexible and scalable solution.

The cloud offers many advantages over traditional on-premise technologies. Let’s take a look at some of the prominent benefits of cloud-based ERP.

Cloud ERP vs. On-premise ERP

Cloud ERP

A cloud-based ERP is one of the best cloud computing applications.  It is at the core of every business. An enterprise resource planning (ERP) program is designed to manage a company’s finances, resources, and human resources on a cloud server.

On-premise ERP

On-premise ERP is enterprise resource planning software that runs on in-house servers at your own or controlled locations. An on-premise solution provides the security and control of using your IT infrastructure to connect your people, processes, and systems.

How Does Cloud ERP Software Work?

Cloud ERP software use a High-speed internet network to connect several technologies.

Cloud-based software is accessed anywhere, anytime by linked local devices such as a laptop, phone, or tablet. It can deliver secure, reliable data, notifications, and insights in real-time to assist in making educated business choices.

Cloud-based ERP software is typically marketed as a SaaS solution. By developing a SaaS-based cloud ERP system, you will be able to address the demands of small, medium, and big organizations.

What are the Benefits of Using a Cloud ERP Software?

  1. Real-Time Data

    Cloud-based ERP allows sharing of up-to-date information, including inventory, sales data, and employee details. In addition, all this information is updated in real-time, eliminating bottlenecks and wasted time.

    For business managers, cloud ERP software represents a critical tool for making strategic decisions. Real-time access to the necessary information and analysis allows them to make immediate, data-driven decisions.

    Real time data

    Real-time data allows decision-makers across departments to communicate and collaborate more effectively. For example, if a business manager needs a new product, he can share that with another department, such as research and development. That department can then respond by suggesting product improvements, a marketing initiative, or additional research.

    Furthermore, it enhances the customer experience. Imagine receiving a customer’s purchase order and having it appear on your company’s ERP, CRM, and accounting systems within seconds. This would eliminate wasted time, increase sales, and boost your bottom line.

  2. Scalability

    Cloud ERP software can be scaled up or down as needed, and it’s ideal for organizations with unpredictable growth.

    Cloud-based ERP implementation led to business process improvement for 95% of businesses.
    One of the most fundamental advantages of the cloud is scalability. As your business grows, the cloud can scale with you. As your business grows, your cloud application can scale from as low as ten users to as high (or higher) as your provider allows.

  3. Data Analytics and Backup

    “Without big data, you are blind and deaf and in the middle of a freeway.” – Geoffrey Moore.

    Data Analytics is one of the most powerful and fast-growing technologies in the market today. It has helped organizations make better strategic and operational decisions and enabled them to achieve exceptional performance. With cloud-based ERP solutions, organizations can leverage data insights, analytics, and AI-based technologies to better understand their business processes, operational procedures, and market trends.

    For example, a manufacturing company with global operations can leverage cloud/web-based ERP solutions to gain insights into its supply chain processes, market trends, and industry dynamics.

    ERP in the cloud has the ability to leverage AI-based technologies such as Machine Learning to identify patterns, trends, and anomalies in data to provide valuable business insights and help organizations adapt their business processes according to changing market conditions.

    Advanced online ERP solutions can ultimately automate routine tasks, processes, and rules, empowering organizations to focus on more productive and value-added activities.

    Furthermore, the Cloud-based ERP software features automatic data backups, so organizations don’t have to worry about losing information.

  4. Ease of Access

    In today’s fast-paced and challenging business environment, being agile with the technology you use is critical. Cloud ERP software allows you to be agile in how you manage your operations.

    With cloud-based ERP software, you can access your data from any device with a browser, anytime and anywhere. This level of accessibility gives your employees instant access to data they need when they need it so that they can be more productive and more responsive to your customers.

    With cloud-based ERP software, you can access your data from any device with a browser, anytime and anywhere. This level of accessibility gives your employees instant access to data they need when they need it so that they can be more productive and more responsive to your customers.

    With an ERP in the cloud, you can work from anywhere, anytime, with an internet connection, and from any device. This allows you to be more productive and responsive to customer demands and allows your employees to work and give their best. You can also automate and standardize existing business processes, increase efficiency, and improve productivity.

  5. Cost-Efficiency

    One of the most significant advantages is cost. Compared with a standard on-premise application, a cloud application requires far fewer resources (such as CPU, RAM, and disk space) to run. This means the overall cost of running a cloud application (which can be as little as 10 cents per user per month) is much lower than running a traditional application.

    Cost efficiency

    The cloud allows you to pay as you go, not all at once. Instead of paying for a system that you may or may not use, cloud-based ERP for travel will enable you to pay only for what you use. Often, companies find they are overpaying for on-premise ERP.

    Additionally, the cloud is significantly less expensive to set up and maintain. The cloud eliminates the need for on-site hardware and IT staff, which lowers costs overall.

    It can help your business take advantage of the latest software technology without paying for expensive upgrades or maintenance fees. With cloud ERP, you can also scale your software to match your growth without investing in additional infrastructure.

    And unlike traditional on-premises ERP, ERP in the cloud doesn’t force you to make large upfront investments. Instead, opt for subscription-based cloud ERP, which allows you to pay for your needs.

    The cloud-based ERP also simplifies adding new users and accessing the system, so your company can grow without additional investments.

  6. Integration

    When you don’t have an integrated ERP software system, you waste time and money going back and forth between departments, which causes inefficiency and decreases productivity.

    Most ERP cloud computing is integrated, meaning it is built to work together. That means data can be shared between different departments, and companies can operate more efficiently. When multiple departments have access to the same data in real time, they can make better decisions, which improves efficiency and productivity.

    It provides users with a centralized view of all their business assets. That means employees can quickly and easily get the information they need, whether in the office, on the road, or at a customer’s office.

    Latest trend: By 2022, Gartner predicts that artificial intelligence (AI) will be integrated into ERP systems by 65% of CIOs.

    Cloud ERP has revolutionized how companies connect and share information. Data, communications, and applications are all integrated into the cloud.

    Business Benefits of ERP Integration

    • Drive Greater Efficiencies
    • Personalize Customer Experiences
    • Optimize the Value Chain

    The cloud is the next logical platform, with business software providers, such as Oracle, already offering their software as a service (SaaS) in the cloud. In addition, Google, Microsoft, Amazon, and IBM are also all pushing their cloud solutions.

    Companies with successful ERP implementations noted internal organizational elements like support from management, good change management programs, and due diligence as primary reasons for success

What are the Different Types of Cloud ERP?

Types of Cloud ERP

  1. Private Cloud ERP

    Private cloud models are a popular choice of many high-end organizations. The private cloud is typically a virtualized environment that provides computing resources to an organization through dedicated hardware. That hardware might be dedicated as a complete unit or a virtualized server with more than one physical server.

    Benefits of a Private Cloud ERP

    Private cloud-based ERP offers scalability, redundancy, and security. The private cloud solution lets you choose the infrastructure that best fits your business needs. For example, if your company proliferates, you can scale your infrastructure to support your growth. In addition, with each new server, you add redundancy and protection against single points of failure.

    Data security is also enhanced. With a private cloud, your data is not shared with anyone outside your company, eliminating the risk of security breaches. Security issues are more minor in the private cloud because your data is not stored on a server shared with hundreds of companies and thousands of users. The private cloud protects sensitive company data and eliminates the risk of data being misused.

  2. Public/ Community Cloud ERP

    Public cloud-based ERP is software-as-a-service (SaaS). By replacing the traditional “buy and own” approach with “rent and consume,” the SaaS model offers online ERP capabilities without the upfront cost of installing, managing, or upgrading the installation.

    Public cloud ERP, as the name rightly suggests, is accessible by everyone based on their subscription. You pay a monthly fee to access the application and its data. 

    Benefits of Public Cloud ERP

    ERP based in the public cloud is attractive for several reasons. For one thing, it eliminates up-front costs. Instead of buying software, you pay a monthly fee to use it, usually on a per-user basis. This allows for greater flexibility since you can pay as your business expands. It also brings significant savings on maintenance and updates since most cloud-based ERP applications update themselves automatically.

  3. Hybrid Cloud ERP

    Hybrid ERP is a flexible option for companies looking for the best of both worlds. Much of the industry’s functionality, including accounting, customer relationship management, supply chain management, and human resources, can exist in the cloud. The best thing about hybrid clouds is that they give companies complete control over their data.

    The hybrid cloud-based ERP relies on hybrid-cloud security solutions, which place sensitive data in private clouds and store less sensitive data in public erp cloud services. Only authorized staff members can access data — the organization can restrict access to sensitive assets, and employees can only access data in the clouds they are allowed to.

    Benefits of Hybrid Cloud ERP

    The hybrid approach also has the benefit of allowing companies to leverage their private cloud space along with the public. Cloud vendors frequently offer hybrid solutions that can be scaled to the needs of a business.

    Hybrid cloud-based ERP benefits provide organizations with increased flexibility and functionality, especially in terms of storage. It removes the issue of deploying an entire server on-site and can even improve disaster recovery times. However, not all data needs to stay on-site, and not all applications can function in the cloud. So, how would you use a hybrid solution to your advantage?

    We agree the cloud is impressive, but let’s not turn a blind eye to the potential challenges. Every new tech has its own set of challenges.

What are the Challenges of Cloud ERP?

Because these migrations typically happen in multiple steps over a handful of years, the payoffs for businesses come in phases.

Above all, implementing new technology can be taxing. It includes many structural changes, training, and new processes to finally get in tune with the latest tech. Although that doesn’t mean you hold back. Not taking a step further would be taking four steps back today.

The cloud-based ERP transition is an exciting time for your team. But it’s also a daunting one. As your organization faces this new landscape, you may face some unexpected challenges that only your most knowledgeable IT professionals and department heads can deliver.

IT professionals have spent years training and developing their skills. They’ve learned the ins and outs of your legacy data management systems. They’ve trained others on the inner workings of those systems. And often, they’re intimately familiar with the business challenges of the team. Their experience and training make them essential for your team’s transition to the cloud.

We can say that the transition is the hardest step, but it will get easier. When you have people who’ve been fighting with technology for years, it’s incredibly frustrating. It’s tough for them to see it change; sometimes, they don’t understand why it has to change.

But they’ll come around.

Step by step, checklist by checklist, the implementation process can be intimidating. Cutting corners and skipping steps can be tempting with so much on the line. That can lead to frustrating missteps and wasted time. However, with an experienced Implementation Consultant, those missteps and wasted time can be minimized or eliminated.

Change management, access, permissions and productivity, and Incompetency are a few challenges that might take up your time initially, but the best way is to be patient. Additionally, you could implement a few things to make the transitions as smooth as possible.

  1. Prepare Your Employees Mentally First

    Include them in the research and decision-making process. This will help everyone understand the motive behind the change and its benefits.

  2. Invest in Training

    Partner with a cloud ERP solution that offers support and training. Having dedicated resources and training your employees beforehand do you more good than you think.

    One other challenge/ rather a concern in businesses today is application/data security. Most companies already have systems to protect data locally, such as firewalls and anti-virus software. However, protecting applications in the cloud requires a different approach. Be sure to double-check the security measures and compliances with your partner.

To sum it up, cloud-based ERP is a solution that will empower your company to match today’s speed. Despite the challenges, it opens up a sea of opportunities. So, are you all set to step into the cloud? We can help you find the best Cloud ERP partner.

If not, what’s stopping you? Let us know your thoughts on cloud ERP. Our comment section is all yours!

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