The Advantages and Disadvantages of Cloud-Based ERP Systems

Conventional on-site ERP systems were once the norm for companies, but today cloud ERPs have emerged and are still thriving. There are a few important elements for businesses to consider to determine if a cloud-based ERP system is right for them.

Size, Assets, and Usability

Cloud ERPs are great for small or mid-sized businesses, mainly because of their lower operational difficulty in comparison to larger companies. Fewer users and transactions can mean lower subscription fees for cloud-based ERPs, but larger companies may not benefit as much from them.

Budget, Time, and Data

Standard ERPs used to require high upfront investments, but today many system providers offer financing. While the small recurring payments of cloud-based ERP systems seem desirable, business owners need to look at the accrued costs for using these subscriber-based services long-term.

Factoring in time is equally important. Unfortunately, program execution times are tricky to pinpoint, particularly once all the variables have been considered like software customization, complexity, and available company resources.

Data is also worth considering when deciding on whether to go with cloud-based ERPs. Some companies might need to be in full control of their system, in which case on-site ERPs are probably their ideal solution. But for businesses that don’t require as much control, a cloud ERP system definitely a potential format option.

Other Cloud ERP Considerations

Some ERP systems might require frequent updates, which may conceivably lead to higher training expenses or software glitches. Another possible risk to consider with new cloud systems is their limited merchant stability. An abrupt end to software support might result in the inability to access business info and applications, which could wind up costing a company a lot of money.

Still another potential issue with cloud ERPs is sending and receiving large files across the web, which may be too slow or raise the risk of losing data for companies that need immediate results. According to recent reports,

Using a Two-Tier ERP System

In a two-tier ERP system, the first-tier ERP handles the majority of administrative operations like payroll and human resources. The second-tier ERP platform works with the individual needs of the different operational business departments, which includes processing, product sales, and inventory management. By employing this approach, a business can operate by combining on-site and cloud-based ERP systems to satisfy particular company needs while maintaining greater versatility at a similar cost.

Is a Cloud-Based ERP System the Best Fit?

Cloud ERP programs can be perfect for smaller companies with low IT requirements. Small and medium-sized businesses with high remote access requirements that need to drive down their upfront costs should seriously look at cloud-based ERP systems as a viable strategy.

 

Large companies can also benefit from using a cloud-based ERP in combined or double-tier ERP arrangements, which can help minimize expenses while enabling greater flexibility between business departments. Given that the features of cloud-based ERP platforms are continually being enhanced, businesses should consider taking a look at all available resources to thoroughly assess these programs for their capacity to maintain and strengthen company systems.

1 comment
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