15 Top Cloud ERP Benefits and Reasons to Move
Michael Hickins | Content Strategist | March 21, 2024
As the role of chief financial officer becomes more strategic and influential, cloud ERP applications give CFOs a vital tool for centralizing and analyzing data from various financial and operational systems. For example, the applications can trigger automated responses to predefined events (such as inventory replenishment when stock reaches a predetermined level) and generate reports with timely data to help business leaders make decisions.
Given the accelerating pace of change and the vanishingly short amount of time it takes for events in one part of the world to impact another, finance and other leaders rely on cloud ERP applications to help them identify and take action on critical issues that affect their businesses.
What Is Cloud ERP?
Cloud ERP is software as a service that helps business leaders manage their organizations by centralizing data from interconnected operational and financial systems. Cloud ERP systems typically encompass capabilities around financials and accounting, budgeting and planning, procurement, inventory, manufacturing, supply chain, and more. They also can integrate with cloud applications for human resources, sales and marketing, and customer service and support, making the data accessible through a single dashboard. That data is actionable through a combination of automated triggers and reactions to the data made by people in their different roles.
Because cloud ERP applications are served over the internet, they’re accessible to users from wherever they may be located, on most any device of their choosing. Moreover, the application provider is responsible for delivering regular feature upgrades and security patches, also over the internet, with no interruption in service.
Key Takeaways
- Cloud ERP applications are the financial and operational systems businesses use to run day-to-day.
- Cloud ERP provides greater flexibility than on-premises ERP because it allows businesses to ramp usage up and down around seasonal spikes without worrying about performance slowdowns. And because it’s delivered as a subscription service, it frees up cash that would otherwise be tied up in capital expenditures.
- With cloud ERP, the onus of security patching, maintenance, and upgrades falls on the cloud provider rather than on the customer.
- Most cloud ERP applications are easier than on-premises applications to integrate with other back-office systems, especially when they’re part of a unified suite. That integration makes it simpler for businesses to report, analyze, and act on data that reflects current business conditions and operations.
Cloud ERP Vs. Traditional ERP
Cloud ERP is generally easier to implement, access, maintain, secure, and update with new features, with cloud-based solutions offering a more agile and user-friendly approach compared to their on-premises counterparts. For example, cloud ERP can be implemented in a matter of months as opposed to years, while maintenance, functionality updates, security patching, and infrastructure are all handled by the cloud provider—with on-premises ERP, those are all the responsibility of the company. Cloud ERP systems can be accessed from beyond the workplace through a browser or mobile device, while that functionality is unlikely to impossible with on-premises systems.
Overall, cloud ERP systems provide enhanced flexibility, scalability, and accessibility compared to traditional on-premises solutions. They reduce the demand on internal IT resources, offer cost savings on infrastructure, and deliver up-to-date data and features that support modern, mobile-first work environments.
| On-Premises ERP | Cloud ERP | |
|---|---|---|
| Speed of implementation | Can take a year or more | Measured in months |
| Access from outside the office | Difficult to impossible | Accessible with an internet connection, browser, and password |
| Maintenance | In-house responsibility | Cloud provider’s responsibility |
| Security patching | In-house responsibility | Cloud provider’s responsibility |
| Feature/functionality updates | Need to be prioritized by IT | Automatic and regular |
| Infrastructure requirements | Need to be supported internally | Handled by cloud provider |
| Adaptation to mobile form factors | Unlikely | Table stakes |
| Relevance/timeliness of data | Depends on timing of batch processing | Data is updated frequently, often in real time |
15 Cloud ERP Benefits
The term “enterprise resource planning” originated in the 1990s, but the software category goes back to the material requirements planning systems of the 1960s. Cloud-based ERP applications improve upon previous generations of on-premises ERP systems in a number of ways. They are easier for companies to implement, are updated more frequently, are accessible outside the office, and feature user interfaces that more closely resemble consumer apps.
1. Faster implementation
It isn’t unusual for cloud ERP implementations to take as little as several weeks to a few months, whereas traditional on-premises implementations generally take at least a year and can, for the biggest ones, add millions of dollars in consulting fees. Because cloud ERP systems are more modular and easier to implement than on-premises systems, businesses can start using the applications more quickly.
2. Stronger security
Major cloud providers have larger security teams than many of their customers have total IT employees, and those teams focus solely on protecting their systems and their customers’ data. Companies that run their ERP systems in-house often delay applying critical security patches to newly discovered vulnerabilities because they lack the IT resources to test and then implement those updates in a timely fashion. Cloud providers also generally make it easier for customers to implement role-based access controls.
3. More flexibility
With cloud ERP, it’s easier for companies to take a phased approach to rolling out new IT capabilities. For example, an organization could start with cloud financials, adding risk management, procurement, analytics, supply chain, and other functionality down the road.
4. Real-time data
Cloud ERP applications are designed to integrate with various data sources, allowing data to flow into users’ dashboards as soon as it becomes available rather than through daily batch updates, as is the case with legacy on-premises systems. For example, if a procurement team can get more timely updates on the company’s need to boost production because of increased customer demand, it can order the necessary supplies sooner.
5. Easier scalability
If use of a cloud ERP system varies over the course of the quarter or year—around the quarterly close, for instance—the cloud provider is responsible for managing those ups and downs. The customer’s IT organization doesn’t need to worry about allocating additional server capacity or storage to handle the spike. Customers can also add or reduce seat subscriptions if the number of users changes over time. In contrast, on-premises ERP deployments require devoted IT resources to expand or reduce software and hardware capacity, even when opening new offices or acquiring firms.
6. Better support
Because of the relative ease with which customers can move from one cloud application provider to another, their providers are incentivized to provide strong, 24/7 support and 99.999% uptime. And because the providers know their applications better than anyone else, they’re better placed to provide support than their customers’ in-house IT staff, who are responsible for managing a patchwork of different applications and infrastructure types.
7. Lower operating costs
Cloud computing allows businesses to pay only for the number of employees actually using the ERP applications, and they can adjust that number up and down according to need. In addition, cloud services shift the burden of installing and maintaining the applications and underlying hardware to the providers. And as previously mentioned, cloud ERP services reduce the need for consultants and integrators, as well as the need for in-house data centers and IT staff to manage system maintenance, security, and updates.
8. Improved visibility
In contrast to on-premises systems that tend to store data in silos, inaccessible to many users and analysts, cloud ERP applications make it easier for customers to aggregate, report, and analyze data from different systems, such as those for marketing, human capital management, supply chain management, and inventory management. For example, having integrated data from sales planning, marketing campaign management, and inventory applications can help financial teams improve the accuracy of revenue forecasts and manage cash more effectively. Cloud ERP systems also improve visibility by giving users access, via any mobile device, when they’re out of the office.
9. Easier collaboration
Related to the above, cloud ERP systems let stakeholders log onto the system from any location, as well as to report and analyze data from a single data set. This not only lets people in different departments see the same data in the same formats, but it also makes it possible to enter updates that can be shared and reflected in operational dashboards in real time. For example, data from a warehouse management system or module can be reflected on the same dashboard as data from an order management system, making it easier to see whether there’s enough stock in inventory to fulfill new orders. Moreover, cloud applications were developed with user friendly point-and-click interfaces, which are more suited to millennials and other recent workforce entrants than the command-driven applications of legacy on-premises applications.
10. Faster updates
Unlike legacy on-premises applications, which typically get a major upgrade once every three years, cloud ERP applications are updated with the latest features frequently, usually every quarter, without the need to take down systems. For example, cloud ERP systems are regularly updated to align with GAAP, Sarbanes-Oxley, and other financial standards, aiding compliance.
11. Mobile accessibility
ERP and other cloud applications not only are available on any web browser on any mobile device, but increasingly they have associated mobile apps that make it easy to accomplish basic tasks and generate reports. For example, managers can quickly approve employee expenses from a cloud ERP system’s expense app on a mobile device. Mobile functionality is critical for businesses whose employees travel frequently, work in the field, or need up-to-date information from a shop floor.
12. Reduced carbon footprint
Data centers used by cloud providers to deliver ERP services use less power for cooling, compute, and storage than do the aggregate of the many thousands of individual companies doing the same in their separate data centers. Cloud providers have a financial incentive to reduce their power costs by using state-of-the-art load balancing and other power-saving techniques, which lower the carbon footprint of these applications. They’re also able to reduce the overall power used to run these applications as they’re shared among all their users.
13. Industry agnostic
Many cloud ERP systems are developed for specific industries, such as construction and retail. But when it comes to business processes, most industries have more similarities than differences. The most useful cloud ERP applications are those that leverage best practices from across all industries, offering modules or extensions to accommodate specific industry needs, such as room management modules in the hospitality industry. This gives users the best of both worlds—functionality that reflects best practices across industries and a reliable code base that isn’t riddled with customizations (which are costly to maintain and patch). Some cloud ERP suites include modules that handle industry-specific reporting requirements and practices.
14. Improved efficiency
Moving ERP applications to the cloud lets companies deploy IT resources to other, higher-value areas of the company. It also improves efficiency by providing a single source of data for all internal and external reporting, and it enables all stakeholders to access data and reports from wherever they’re working. Increased automation and widely shared data minimize the time spent on manual processes, while connecting and quantifying processes.
15. Easier integration
Modern cloud ERP applications are built to integrate data from different sources while maintaining appropriate levels of security and access restrictions. Integrating an ERP application with an HR one, for instance, could allow the finance department to see the ratio of employees to expected sales.
Making the Case for Cloud ERP
As covered earlier in this article, cloud ERP helps companies in several ways, including by making it easier to implement, access, maintain, secure, scale, and update these critical applications, while reducing capital expenditures and carbon footprints. Teams and individuals tasked with building a business case for cloud ERP will still have to provide company decision-makers with detailed context on those benefits and why the investment in time and resources will pay off. That should include tying the cloud ERP system to the company’s business strategy; laying out costs and implementation timelines; and quantifying the value of new capabilities such as AI (showing how it can improve revenue forecasting and other business functions).
Upgrade to the Cloud with Oracle Fusion Cloud ERP
Businesses using Oracle Fusion Cloud ERP get the benefit of state-of-the-art financial, manufacturing, procurement, and other functionality, in applications running on Oracle’s high performing cloud infrastructure. Oracle Cloud ERP is an integrated suite of applications that puts financials, supply chain, risk management, performance management, and other business data into one common model. It has been developed to ease integration with other applications—from Oracle and third-party providers.
Cloud ERP Benefit FAQs
How long does it take to implement cloud ERP?
Depending on required integrations, the extent of their legacy ERP footprint, and the amount of data that needs to be migrated, it can take companies anywhere from several weeks to several months to implement a cloud ERP system.
Why is cloud ERP more secure?
Cloud providers have large, expert teams dedicated to securing customer applications and data, applying the latest technologies and practices, whereas companies that run applications out of their own data centers generally don’t.
How does cloud ERP save time?
Cloud ERP systems provide faster time to value because they’re delivered as a service, letting customers start deriving benefits faster than if they were deploying ERP systems themselves (with the help of consultants) in their own data centers.