Advantages of Cloud ERP for Manufacturers | Global Shop Solutions

This is the second in a three-part blog series that addresses the differences between Cloud ERP and On-Premise ERP for manufacturers.

For decades, manufacturing ERP software could only be implemented on-premise. Starting in 1998 Cloud ERP gave manufacturers a choice. Early adoption rates for the new platform were low, but the numbers have improved significantly with ongoing advances in the technology.

Cloud ERP is a platform that provides on-demand delivery of computing services over the internet, including servers, data storage, databases, networking, software, analytics, and intelligence. Instead of installing ERP software on servers in your manufacturing facility, it resides on cloud-based servers owned and operated by a cloud computing service provider.

Cloud ERP offers many advantages over the on-premise model, starting with low investment costs. You don’t need to purchase the servers required to run ERP software, and you don’t have to pay the labor costs of maintaining and upgrading them. Pricing for cloud-based services is based on a pay-as-you-go model for the services you need.

Three Types of Cloud Computing Services

All three cloud computing models install the user’s ERP system on a server operated by the cloud service provider, but there are structural, IT, and data management differences to consider.

• Infrastructure as a service (IaaS) provides on-demand access to IT infrastructure services, including computing, storage, networking, and virtualization (enables multiple operating systems with different configurations to run on a server at the same time). It provides the highest level of control over your IT resources and most closely resembles on-premise IT resources.
• Platform as a service (PaaS) offers all the hardware and software resources needed for cloud application development without having to manage and maintain your underlying infrastructure.
• Software as a service (SaaS) delivers a full application stack as a service, including the underlying infrastructure and maintenance. It also installs updates to the app software. In many cases the service provider manages and maintains the infrastructure.

SaaS Cloud ERP is currently growing faster than the market average due to many advantages over On-Premise ERP. These include:

• You only pay for what you use
• Predictable operating expenses
• No capital expenses
• Robust out-of-the-box functionality
• Easy scalability without adding hardware
• Automatic cloud backups and ERP upgrades
• Regular system updates
• Access your data from anywhere using the internet
• Faster internet processing speeds
• Increased efficiency

One of the most important advantages is the high-level data security. Cloud ERP solutions are hosted on secure platforms, many of which automatically encrypt the data that resides in them.

Disadvantages of Cloud-Based ERP Software

Every type of Cloud ERP has potential issues to contend with:

• Internet connectivity. When using a Cloud ERP system, your business relies on having a stable internet connection. An unreliable internet provider can wreak havoc on your business. In this case, investing in a second internet service provider dedicated to your ERP can solve this challenge.

• Lack of ownership. With Cloud ERP the provider owns the software. Some providers allow a limited degree of customization to your ERP; others do not.

• Unexpected costs. Without the need to buy servers and other technology, Cloud ERP costs less to implement. However, costs can increase over time by adding more users or services; this is true of both On-Premise ERP and Cloud ERP.  

Don’t Overlook These Cloud Features

Two of the most valuable cloud computing features are scalability and advanced security. When your business grows, cloud computing easily grows with you. The “pay only for what you use” model enables companies to scale faster and more efficiently without the time and expense of buying and maintaining on-site servers and data centers.

Many manufacturers don’t like having their data in the hands of a third-party. Yet, reputable cloud computing providers hire top security experts and use the latest in cybersecurity technologies to provide high-level data protection solutions. 

Another component to consider for Cloud ERP is whether your ERP provider will allow you to control when updates are applied. If the ERP provider shares servers among clients, you might wake up one morning to find they applied an update without notice or warning.

As Cloud ERP continues to evolve, now is a good time to consider making it your platform. It puts manufacturers ahead of the technology curve, simplifies your software, and boosts productivity.

Manufacturers who are cloud customers love the simplicity of being able to access their company’s data from anywhere. Many of them are seeing average efficiency increases of 30% after implementing Cloud ERP. Learn about the differences between On-Premise and Cloud ERP and how to make the best decision for your business by reading the other two blogs in this series – Cloud or On-Premise ERP: Which Is Right For Your Business? and Advantages of On-Premise ERP for Manufacturers.

Schedule a demo to see how Cloud ERP can simplify your manufacturing.