Five years ago, many analysts predicted that cloud based ERP systems would gain total dominance in business and resource management over the course of several years. Today we can appreciate the real advantages of ERP for enterprises. Revealed by the practice of their implementation.
ERP demand is growing
Experts note a steady annual growth in demand for ERP approximately in the range of 10-15%. Every manufacturing company that has overcome a start-up stage and is firmly on its feet is forced to solve management tasks at a level that meets modern requirements. Which means the need to automate business. Today, customers will not wait for their applications to overcome all internal bureaucratic obstacles. Until a supplier representative is ready to respond to the request. Instant response to applications has become the norm, and in many respects it is a merit of the implemented ERP. Below given are some benefits of cloud ERP implementation:-
Speed up and make more convenient document flow.
Simplify the planning of the company.
To form a single network for collecting and exchanging information, at the same time solving the problem of accumulation and systematization of data.
To delimit access to internal information for employees of different levels.
Organize high-quality personnel records.
Work effectively with suppliers based on current, current information.
Improve customer service, speed up order fulfillment, minimize errors, improve demand and sales analytics.
Increase productivity and increase the operational period of equipment, reduce downtime due to timely service and maintenance.
The result of competent business automation, as a rule, is expressed in pleasant indicators of profit growth and cost reduction.
Why companies choose the cloud ERP format
Introduction of ERP system at many enterprises occurred back in the zero years. And today these systems no longer require updating, but complete re-deployment. Their functionality is hopelessly outdated. It is impossible to fix this problem with a regular update. Hence, there are two ways to solve the issue: the purchase of licensed software and the transition to the cloud format.
The first option involves a rather large one-time costs. Which includes paying for a software product, purchasing modern servers and training personnel. Here the entire responsibility for the stable operation of the system lies with the enterprise itself. It is not surprising that many companies choose to work in the cloud. Because many aspects of implementation and operation in this version look much more attractive.
ERP cloud hosting is two to three times faster than the licensed local product. Even with the deployment of the system in regional branches and divisions.
The most convincing for a business is the absence of large expenses at the initial stage. The company does not pay for the purchase of software and equipment. It only need the current implementation costs, which are then reduced to regular subscription fees. The user can choose from the entire volume of functionality only those directions that he really needs. Whereas when buying a license, the software product is delivered and paid in full. At the same time, concerns about maintaining performance completely lie with the vendor, and not at the subscriber enterprise.
Significantly simplified configuration and upgrade system. The provider itself takes care of the updates. And the current user settings are fully preserved, and there is no need to hire specialists for this.
High speed of work with applications is maintained even during periods of peak network loads. If necessary, the cloud system attracts additional resources, providing optimal performance.
Cloud ERP is available to employees at any point where there is Internet access. The company's specialists are not tied to their office and with the same efficiency can work both in the office and at a remote facility, at home or being at a resort, from a stationary work computer, tablet and even from a telephone.
Nevertheless, not all companies still prefer cloud solutions, despite their many advantages.
Cloud Implementation Challenges
The main reason for which enterprises are not in a hurry to switch to the ERP cloud format is their doubts about the reliability of the protection of commercial information on the provider's servers. According to surveys, this consideration prevails in two-thirds of cases of refusal from the SaaS format. More business representatives are concerned about the lack of control on their part of the updates of the system used. And the excessive dependence of business processes on the state of Internet connection lines.
Indeed, when using cloud-based ERP systems, all user data is stored on the provider's servers. Which are responsible for their safety and for the quality of the Internet connection. But a potential user can verify the quality of the security system. This is done by ordering its audit to a third-party organization.
As for updates, everything is somewhat more complicated here. Since their integration with applications used within the company is not always painless. Anxiety about the quality of the internet connection is rather psychological. Practice shows that companies using cloud ERP for small business suffer from data loss less often than those who use licensed software.
Expert commentary
The use of cloud ERP for SME does not always give the expected effect. First of all, we are talking about adapting a software product to the specifics of a company. Package solutions often do not meet customer needs. In fact, the provider imposes on the enterprise its own principle of organizing business processes. And this does not benefit all the customers.
As a rule, customers are offered a choice of several packages with standard functionality. However, in practice it turns out that the client is forced to pay for some functions that he does not need.
A single solution on the basis a particular business will cost the client less. However, only few vendors go for this type of cooperation with customers. Since this requires additional knowledge of the features of the client’s business or at least related industries.
Until now, cloud solutions with individual implementation schemes remain a rather innovative direction in ERP integration, but their high efficiency shows the future is in them.
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