We looked early this month the Introduction to Cloud Enterprise Resource Planning (ERP) and saw there are some different types of Cloud ERP. All Cloud ERP involves replacing onsite servers, but some Cloud ERP (true Cloud ERP) also allows for sharing of core software, given significant economies of scale.
Now, in the second and last article in the series, we will look further at some of the benefits of Cloud Enterprise Resource Planning (ERP) for non-profits
8 Benefits of Cloud ERP Software
Upfront infrastructure and operating costs. One of the biggest benefits of a cloud-based ERP solution is overall reduced costs, which begins at implementation. With on-premises ERP, a business will incur upfront costs in purchasing servers, database creation, initial implementation, consultants, IT staffing, security and backup.
- Cost savings. Organisations with an on-premises ERP system will encounter additional costs for maintenance, specialised in-house or on-call resources, upgrades and updates, as well as additional servers as the company grows. Cloud ERP generally costs about 30% less than on-premises ERP. Since the cloud ERP vendor hosts and manages the software on its own servers, businesses avoid upfront infrastructure costs as well as additional costs for IT staff, maintenance, security and updates. The vendor provides ongoing IT support.
- Implementation speed. One of the biggest hurdles of any new ERP solution is the implementation time, which can directly affect organisation downtime and time to value—in one study, about half of organisations said their implementations finished in the projected time. An organisation can normally get up and running more quickly on a cloud-based ERP system than on-premises as it does not require selecting and setting up hardware or hiring and training IT staff.
- Accessibility. Cloud-based ERP users can access organisational information in real time, from anywhere and on any device. This ensures employees across the organisation are working with the same data, no matter the organisation unit or location, and can make decisions faster and more confidently.
- Scalability. Without the challenges of adding more servers for more users, locations or subsidiaries, cloud-based ERP solutions make scaling a social enterprise or charity easier. As the organisation grows, the cloud ERP grows.
- Customisations and agility. Just as cloud-based ERP can scale with an organisation, it can also be more easily customised to fit business needs—from the start or over time, as a business grows and evolves. While on-premises ERP software can be customised, those customisations are tied to the current software and maybe difficult to reimplement with future versions, particularly if integrations were developed in-house. This is one of the main reasons some businesses avoid upgrading their on-premises ERP systems and continue running out-of-date technology.
- Upgrades. Cloud ERP vendors typically manage all system upgrades and updates on an ongoing basis, keeping up with evolving business needs and ensuring customers are using the most up-to-date technology. Updating or upgrading on-premises ERP software requires more time and may even involve hiring contractors to manage the process. With cloud ERP, updates can take as little as 30 minutes and usually occur during off hours to prevent business disruptions.
- Security, compliance and disaster recovery. Relying on an external vendor to safely house an organisation's data is an understandable concern for many organisations. However, cloud-based ERP providers may offer better security and compliance than charities could otherwise afford. Furthermore, a charity can remain confident that its data is always backed up, and the vendor is armed with planned and practiced disaster recovery procedures.
- Storage resilience and access. If on-premises hardware fails, a charity could spend a considerable amount of time and money transferring data to a new storage system. With cloud-based ERP, data is housed in the provider’s data centres, usually redundantly and geographically dispersed. This is also beneficial in terms of providing access to organisational information and data over the internet, an important consideration as more jobs and operations move online and companies seek to automate and streamline business processes.
An organisation can start with the basic, core functionality and add more as needed—without adding more hardware. Not to mention, a cloud ERP solution allows users across the globe to access organisational information by simply connecting to the internet. No local servers are necessary, so as a charity grows by merger or simply increasing its impact organically, new delivery teams can be brought online quickly. Cloud vendors typically own data centres around the world and will keep each customer’s data in multiple locations, providing better and more reliable service than most organisations could manage themselves. Cloud software vendors typically strive for 99.999% availability—which translates into customers seeing less than eight minutes of unplanned downtime each year.
Furthermore, cloud ERP systems tend to integrate well with other cloud-based products, and new modules can be added to a cloud ERP system without downtime or additional hardware. This kind of agility enables a charity to remain proactive instead of reactive, adjusting more quickly to industry changes, consumer trends, unforeseen circumstances and more.
Unless organisations have a disaster recovery and business continuity plan, on-premises ERP solutions come with the risk of catastrophic data loss in the case of hardware or software failure or a natural disaster, fire or break-in.
Cloud providers typically offer enterprise-grade security and end-to-end encryption of data between the vendor and the organisation. Note that companies are responsible for identity and access management of cloud ERP users and securing devices, like PCs or smartphones.
Cloud ERP Challenges
While the trend is clearly toward more use of cloud, there are potential challenges organisations may face:
Legacy systems. If a larger organisation that’s been using an on-premises ERP system for many years seeks to shift to cloud-based ERP, the migration may be challenging and require significant time and expertise.
Resistance to change. Bigger charities with large IT and administrative teams may experience push back from key stakeholders. Moving the ERP software offsite results in administrators losing some control over processes that become automated, and with the vendor managing all maintenance and infrastructure, IT teams lose control over certain operational processes.
Regulatory compliance. Charities with especially strict cyber security policies, restrictions around hosting customer information in the cloud and regulatory compliance issues may not experience the full benefits of a cloud-based ERP solution. Still, major software-as-a-service providers have made strides in complying with regs such as HIPAA and GDPR and can usually accommodate mandates around data sovereignty and locality, so don’t assume you’re restricted to on-premises ERP.
On summary, Cloud ERP provides a great opportunity for organisations to focus on increasing impact rather than building and running core IT infrastructure.