Majority of the manufacturing businesses around the world have either been running on a legacy software, or on a more recent on-premise enterprise resource planning (ERP) system. However, the growing popularity as well as increasing need of Cloud ERP solutions has forced most of them to switch to cloud based ERP software.
An ERP being a massive investment for any organization, shifting such a major pillar of the business can cause anxiety and cautiousness for those wanting to change their existing ERP model to a contemporary Cloud solution. But the businesses need not worry about the umbrella, for these Clouds only rain digital transformation.
Moving to the Cloud can certainly help the process manufacturers build an efficient business structure. With there still being an ounce of uncertainty among the businesses about the concept of Cloud computing, and the risks involved, this blog aims to act as a one-stop destination regarding all the information on the subject. Continue reading:
What is Cloud ERP?
Provided as a service and hosted on ERP vendor’s servers, a Cloud based ERP software integrates and automates essential operational business functions to provide a single source of data to manage the critical supply chain components. In its case, the software and its data are managed centrally by the vendor at a remote datacenter, where updates and upgrades are also done.
Given the complexity, scope, reach, and magnitude of modern-day businesses, it has become essential for them to have an ERP that’s highly available at all their business units spread across the globe, and delivers a unified, up-to-date view of data. A Cloud based ERP system meets this requirement of businesses, as their employees can access the software over the internet; all that’s needed is connection and a browser.
In a Cloud ERP software, the maintenance and support costs get eliminated as the support is provided from the remote data center. This makes it cost-effective. Also, with an ERP on cloud, organizations get the benefit of secured data with back-up since it’s not stored on their servers locally, besides gaining the ability to access and analyze massive amounts of data in real time.
Components of a Cloud-based ERP Software
Cloud based ERP solution provide all the core business functionalities. The ones businesses choose entirely depends on their industry and specific business needs. The types of modules or applications a process manufacturing organization opts for while implementing an ERP on cloud include:
- Formulation, BOM, and R&D
- Financials and costing
- Inventory management
- Quality Control/Assurance
- Regulatory compliance
- Material requirements planning (MRP)
- Master Production Scheduling (MPS)
- Business Intelligence
- Customer relationship management (CRM)
How Cloud ERP differs from On-premise ERP
While on paper it may appear that the only difference between Cloud ERP solution and on-premises ERP is where the software is physically located and who manages it, there are other significant differences between the two.
An on-premises ERP has a database that resides on an onsite server and hardware. It involves heavy investment and is managed by the IT staff of the company which has implemented it.
Here, the cost involved in implementing is on the higher side due to the expenditure on hardware and data servers’ installation on-site, maintenance, troubleshooting, updates and customizations.
Whereas, if we compare Cloud ERP with on-premise ERP, it is hosted by the ERP vendor and provided as a service to businesses, hence it supports even better functionality as on-premises systems without most of downsides, like upfront licensing fees and other costs.
Here, it is the vendor who is responsible for maintenance of the application, data storage, servers, and installing security updates and feature upgrades. Cloud ERP deployment also offers a secured infrastructure, best-practice backups and disaster recovery, and guaranteed uptime, which an on-premise ERP doesn’t.
As opposed to an on-premise ERP, a Cloud ERP solution is more resilient and likely to operate continuously without failure for a long time. By connecting your employees, vendors, partners, and customers with accurate, real-time data, it ensures everyone can access secure, up-to-the-minute information across your entire value chain.
Cloud ERP concepts & glossary
It’s important to understand some basic concepts associated with cloud ERP solution to better understand the subject:
SaaS ERP: SaaS (software as a service) ERP is a software that is delivered and managed in the cloud. Here, your tools are hosted in the cloud, not on your local machines, and the vendor is responsible for the ongoing updates, management, and upkeep of your tools.
Deployment options: Deployment options refer to the choices businesses have with respect to how they implement and manage ERP software for their business. For ex: on-premises, cloud, managed hosting, SaaS single tenant, or SaaS multitenant.
End-to-end security: It refers to the secure and encrypted connection that exists between the businesses and their vendor, when they manage and access business and customer information in the cloud.
Mobility solutions: These are the tools, systems, and information that can be securely accessed by your team or customers via mobile devices such as smartphones, tablets, etc. from anywhere.
Disaster recovery: A world-class cloud-based ERP software delivers many security benefits, and one of them is the disaster recovery. It refers to the set of policies, tools, and procedures followed by the vendor to recover your data and systems in the event of any major disruption.
Types of Cloud ERP
Multi-tenant SaaS: A true ERP on Cloud is typically a multi-tenant SaaS, which means a single version of the ERP and its associated infrastructure serves multiple organizations. While each organization uses the same software hosted on the same servers, the data of one company can’t be accessed by others.
Single-tenant SaaS: A single-tenant SaaS ERP software is different from the multi-tenant version, as it serves just one organization. In other words, an organization’s data is hosted on private servers’ running a unique software instance.
Public cloud: Many organizations share cloud computing services. However, each firm’s data and applications are inaccessible to others. That’s public cloud for you. Examples of public cloud include Amazon Web Services, Google Cloud, and Oracle Cloud, among others.
Private cloud: Private cloud refers to the service which is not shared with any other organization.
Hybrid ERP: A hybrid ERP approach combines on-premises software with a private cloud or public cloud for computing, storage and services. It gives the company flexibility to adopt cloud applications while also retaining its on-site ERP resources.
The ‘True’ Cloud
These days, to encash the growing popularity of Cloud services, many software vendors are claiming to have “cloud” applications. But not all hosted software offerings marketed as “cloud” are true cloud solutions, as many are “cloud-washed” applications that offer a fake cloud solution, with the look and feel of the true cloud.
The vendors selling these fake cloud solutions sell their on-premise applications as a cloud solution. So, while they might be claiming to offer ‘true cloud’, at its core, the software remains an on-premise solution with no scalability, and higher associated hardware costs. Read this blog to understand what fake cloud means, and how is it different from the true cloud.
Why businesses are choosing to move to Cloud ERP Software?
The biggest benefit a cloud ERP solution offers is that it’s much less expensive (generally about 30%) than the traditional on-premise ERP systems. There are no upfront costs in purchasing servers, database creation, implementation, consultants, IT staffing, maintenance, security and backup, etc. involved.
However, cost is not the only reason companies are moving to the cloud market. There are many more reasons:
Agility: With a Cloud based ERP software, businesses can be up and running in virtually no time, as there’s no selecting and setting up hardware or hiring and training of IT staff involved.
Accessibility: A Cloud ERP software allows real-time access to business information, from anywhere, anytime, and on any device, thus ensuring employees across the different units & locations of an organization work with the same data.
Scalability: A good cloud-based ERP software grows along with your business. It scales up, and scales down on demand, without requiring addition of more servers for more users, locations or subsidiaries,
Customization & Integration: A Cloud ERP solution can be more easily customized to fit the evolving needs of your business. Furthermore, it can integrate well with other cloud-based products, without downtime or additional hardware.
Upgrades: With an ERP on cloud, updates and upgrades take as little as 30 minutes and occur on an ongoing basis, usually during off hours to avoid business disruptions.
Security, compliance and disaster recovery: Cloud based ERP software offer enterprise-grade security, end-to-end encryption of data between the vendor and the organization, and better compliance, assuring you that your business data is always backed up, and has robust disaster recovery plans in place.
- A Cloud ERP solution is generally more cost-effective by about 30% than on-premise. (FinancesOnline)
- Over 40% of businesses were worried about data security before moving to the cloud. After making the switch, 94% of businesses reported security benefits they had been unable to achieve with their previous on-premise ERP. (ComScore)
- 93% businesses experienced an increase in productivity outside of the office because of cloud technology. (Adynamics)
- Cloud ERP software improved 95% of businesses who implemented it. (HubSpot)
- 67% of manufacturers and distributors described their implementations as successful or very successful. (Ultra Consultant)
- 53% of CIOs said Cloud ERP was an investment priority for them. (ComputerWeekly)
The future of business technology
It is evident from the points mentioned above that a Cloud based ERP software, with its numerous benefits to a growing business, is the future of business technology. In fact, it’s already here, and is just not very evenly distributed with many businesses yet to make a move to the Cloud.
As businesses continue to scale their operations, Cloud ERP solutions will act as that dependable tool which not just helps them boost efficiencies, improve accessibility, and save costs, but also innovate and drive overall business growth.
In their journey towards achieving business objectives, formula/recipe-based manufacturing organizations can rely on BatchMaster ERP on Cloud. Are you ready to learn more? See how BatchMaster can help your process manufacturing business, by talking to our experts and talking to our experts.