Traditional ERP systems were deployed on-premise, where the company took responsibility for everything, including installing the hardware, running the system, and most IT issues. Manufacturers are now able to choose a different deployment method – cloud ERP – as the backbone of their digital transformation strategy. A cloud-based ERP solution is located off-premises, and is accessed using the Internet. The software vendor is responsible for maintaining the hardware and dealing with IT issues. There are many other benefits of cloud ERP for mid-size manufacturers.
Considerations and Benefits of Cloud ERP
- Financial considerations
Considerations for deploying a cloud-based ERP include cost and time-to-value. Various reports mention significant savings on IT infrastructure, and a shorter time for Return on Investment. A cloud-ERP results in lower capital expenditures compared to on-premise implementations. For manufacturers, cloud ERP can reduce the total cost of ownership and decrease maintenance costs.Manufacturers considering a cloud ERP should ensure that it complies with data sovereignty and data residency legislation in their locations. Cloud ERP providers should offer data residency options and ensure data is stored within the specified jurisdictions to comply with regulations.
- Business benefits
Cloud ERP solutions keep up-to-date with technology innovations, allowing manufacturers to make use of the latest developments, such as Industry 4.0 and IoT.The scalability of a cloud ERP system allows manufacturers to scale operations with lower marginal cost. If a new site is created, it is easy to connect it with the rest of the organization via the Internet. If production operations are subject to seasonal demands – expanding or reducing production – the company can quickly scale up or down its use of cloud ERP resources.
For back-office staff and other stakeholders, a cloud ERP system provides location independence, allowing them to access the system remotely from anywhere and at any time.
A cloud ERP system can improve and expand the business ecosystem by giving suppliers, customers and other partners an easier way to integrate their systems with the manufacturer.
- Technical benefits of cloud ERP
A cloud ERP removes the stress and effort associated with maintaining applications on-premise. An ERP in the cloud is looked after by a skilled team of technical staff who are certified in all the knowledge needed to run an ERP system.Maintaining an ERP system usually involves upgrading it periodically as new features and functions are introduced. For an on-premise system, this usually entails a lot of work before upgrades are implemented, and the live system has to be taken offline to install the upgrades. The benefit of a cloud ERP is that downtime is significantly reduced. For certain industries which need their systems to be compliant, a cloud ERP allows companies to test changes first on a separate cloud instance to ensure the compliance of the new system can be signed off before it is made live.
Cloud ERP systems usually provide much better disaster recovery services than most manufacturers can afford. This ensures that data and operations can be restored quickly in case of a disaster.
- Data management benefits
It is easier and more cost-effective to manage data in the cloud than in many on-premise systems.With almost unlimited data storage in the cloud, it is easier for manufacturers to leverage the deluge of data that’s coming in from connected sensors in their factories, inventories, and raw materials, and from signals along the supply chain.
Greater data security and privacy are other benefits that a cloud ERP offers. For example, cloud ERP providers will be ISO27001 compliant (a standard for information security management). Another standard that a cloud ERP will have is SOC compliance, which certifies that customer data and other sensitive information are protected.
- Extensibility and integration benefits
Cloud ERP systems have greater options for extensibility, allowing them to connect to many other services in the cloud. These services can be on other cloud platforms.A cloud ERP will also have the integration capability to connect not only to cloud services but also to on-premise services. This allows it to integrate with production systems like shopfloor data collection which can be implemented across all production locations to improve job scheduling.
Cloud ERP – the key to digital manufacturing success
Manufacturers in the SMB sector need to decide how to allocate scarce funds to ensure the business can grow. The key to success in the digital era is selecting a cloud ERP platform, designed for manufacturers, that is cost-effective, scalable, secure, and allows adoption of new technological capabilities. A cloud ERP is the best strategy to enable business growth as it is scalable and adaptable to accommodate future growth and evolving business needs.
