Cloud ERP: Key Concepts and Selection Advice

A solid understanding of Cloud ERP is vital for making well-informed decisions when selecting software solutions for your business.

Before continuing, if you are already familiar with the nuances of cloud ERP and would like to see our recommendations for the top cloud ERP systems, you can find them here.

Picture all your critical resources – finance, supply chain management, manufacturing, and operations – harmoniously managed and linked within one centralized platform, adapted specifically for your business, and accessible from any internet connection.

In contrast, on-premises ERP software is integrated into your company’s servers and computers locally, requiring costly physical storage and ongoing maintenance and accessible only in specific terminal locations. Generally, on-premises ERP software is paid through a hefty, one-time license fee. In contrast, cloud-based software is paid for on a per-user, monthly subscription basis.

Cloud ERP systems have various modules and features catering to different business processes.

Here’s a quick rundown of some standard cloud ERP software modules and features you should know about:

• Materials Management: This module helps you keep track of raw materials, finished products, and inventory levels. Features include material planning, stock control, and procurement to ensure smooth operations and cost control.
• Sales & Order Management: Streamline your sales process with order management, pricing, invoicing, and shipping features. This module helps you manage sales orders, track customer interactions, and ensure accurate and timely fulfillment.
• Financial Management: Stay on top of your business’s financial health with features like general ledger, accounts payable and receivable, cash management, and budgeting. This module ensures regulatory compliance, improves cash flow, and offers real-time financial insights.
• Production Management: Monitor and optimize your manufacturing processes with features like production scheduling, work orders, and shop floor management. This module helps you manage resources, reduce production bottlenecks, and improve efficiency.
• Supply Chain Management: Stay ahead of the competition with better supply chain visibility and collaboration. Features include demand planning, supplier management, and transportation management to help you streamline your supply chain and reduce costs.
• Customer Relationship Management (CRM): Nurture lasting customer relationships with CRM features like contact management, sales automation, and customer service. This module helps you gain valuable customer insights, improve sales, and enhance customer satisfaction.
• Additional Capabilities: Some cloud ERP systems offer extra features like project management, human resources management, artificial intelligence (AI), and business intelligence to provide a comprehensive solution for your business needs.
• Services & Support: Last but not least, look for cloud ERP systems that offer complete services and support, including implementation assistance, training, ongoing maintenance, and customer support, to ensure a smooth transition and maximize the value of your investment.

By understanding cloud ERP software’s various modules and features, you’ll be better equipped to choose the right system that aligns with your business needs and drives growth and efficiency.

Artificial Intelligence Features in Cloud ERP

As we move into 2024, artificial intelligence is all the rage in the world of enterprise software. Many businesses will be looking to leverage the benefits of AI to take their cloud ERP systems to the next level. 

Key AI capabilities like predictive analytics, virtual assistants, computer vision, and intelligent process automation are elevating supply chain planning, reporting, customer service, and more. Leading cloud ERP platforms infuse machine learning and AI solutions to drive greater forecasting accuracy, process efficiency, and data-driven decision-making. 

Be sure to check our AI ERP system comparison and guide, plus our research article on the future of AI in ERP, to stay on top of this major trend when evaluating cloud platforms. Prioritizing cutting-edge AI abilities will ensure forward-thinking solutions tailored for growth and competitiveness in 2024 and beyond.

Cloud-Based ERP vs. On-Premises ERP

When shopping for the best enterprise resource planning (ERP) software, you’ll come across two deployment options: on-premise and cloud-based SaaS. Most vendors offer their system in both options. Understanding the differences between cloud ERP and on-premise ERP and their individual benefits can help ensure that you get the best possible solution for your business needs, no matter your industry, budget, or operational goals. Since almost all of the top manufacturing ERPs offer cloud and on-premise deployment, this will undoubtedly be a decision you must make when selecting new software. 

The shift to cloud ERP is a prominent trend. In a 2017 Panorama Consulting study, most companies chose on-premise (67%). In 2022 the majority was adopting cloud ERP (65%). Another growing trend is for businesses with on-premises ERP software to upgrade to a new cloud-based ERP system.

Suppose you currently use a premise-based system and want to upgrade to a new cloud solution. In that case, it’s essential to understand the key differences between cloud ERP and on-premises ERP systems. Let’s dive into the pros and cons of each:

On-premises ERP

• Greater control: With an On-premises ERP, you’ll have complete control over your servers and data, allowing for a high level of customization.
• Data security: Your in-house IT team will manage the security of your servers, giving you peace of mind.
• Higher upfront costs: Purchasing and maintaining your own hardware can be expensive.
• Limited remote access: Accessibility is typically restricted to on-site locations, which could hinder remote work.

Cloud-based ERP

• Lower upfront costs: Cloud ERP systems generally have lower initial costs since they don’t require purchasing and maintaining hardware.
• Scalability: Cloud ERP systems can grow with your business, allowing you to add or remove users and features as needed.
• Remote accessibility: Access your data and tools from anywhere with an internet connection.
• Automatic updates: Your system stays current with the latest features and security measures.
• Security: Cloud providers typically employ stringent security measures, but you must trust them to protect your data.

Unique challenges and considerations of cloud ERP vs. on-premises:

• Data security and privacy: Cloud ERP systems store data in the cloud, making security and privacy concerns paramount. Ensure your vendor has robust security measures and complies with industry regulations.
• Internet connectivity and speed: A reliable and fast internet connection is crucial for smooth cloud ERP operation. Consider your current infrastructure and whether it can support your new system.
• Vendor dependency: With a cloud ERP system, you’ll rely more on your vendor for system maintenance, updates, and support. Thoroughly evaluate your vendor’s reputation, reliability, and support offerings.

When deciding between cloud ERP and On-Premises ERP, consider factors such as your budget, the need for customization, the level of remote access required, and your need to scale over the next five years.

Cloud ERP Deployment Models

As you explore cloud enterprise resource planning options, it’s essential to understand the different available types, as each has its own benefits and potential drawbacks.

Let’s break down the various types of cloud ERP software deployment models:

• Public Cloud: In a public cloud ERP, the software is hosted on a cloud provider’s infrastructure and shared among multiple users. This model typically offers lower costs and faster deployment times. Public cloud ERP is best suited for small and medium-sized businesses that seek an affordable, scalable solution with minimal upfront investment.
• Private Cloud: Private cloud ERP systems offer dedicated infrastructure only your business can access, ensuring enhanced security and control. While these systems deliver higher levels of customization and power, they also come with higher costs and require more maintenance than their public cloud counterparts.
• Hybrid Cloud: Hybrid cloud enterprise resource planning combines the best of both public and private clouds. It allows businesses to store sensitive data on a private cloud while leveraging public cloud resources for less critical operations. Hybrid cloud ERP is suitable for companies that want the flexibility of both deployment models and have specific security, compliance, or customization needs.
• SaaS (Software as a Service):Cloud ERP is a type of software as a Service (SaaS). SaaS refers to software applications delivered over the internet with a subscription rather than installed locally on a user’s computer or a company’s servers.

You may run into the terms multi-tenant SaaS and single-tenant SaaS. It’s essential to know their meaning.

Multi-tenant SaaS and single-tenant SaaS can both be found within the three primary cloud deployment models: public, private, and hybrid clouds. Here’s how they fit in:

• Public Cloud: Multi-tenant SaaS is more common in public cloud environments. Multi-tenant SaaS applications running on public clouds allow various organizations to use the same application instance, making it cost-effective and efficient. Single-tenant SaaS can also be deployed in a public cloud. Still, each organization would have a separate instance of the application running on dedicated resources.
• Private Cloud: Single-tenant SaaS is more common in private cloud environments. This model provides greater control and customization options for the organization, making it suitable for single-tenant SaaS deployments. However, multi-tenant SaaS can also be deployed on private clouds, although it’s less common and might be used for specific cases where multiple departments or subsidiaries of the same organization need separate instances.
• Hybrid Cloud: In this model, organizations can deploy single-tenant SaaS applications in their private cloud for better control and customization while using public cloud resources for multi-tenant SaaS applications to leverage cost-efficiency and scalability.

Understanding the differences between these enterprise resource planning software types will help you decide which solution is best for your business. Remember your company’s needs, budget, and security concerns as you evaluate your options. We have an additional article to help you with this decision: Choosing the Right ERP Deployment Option for Your Business and Budget.

With cloud software, you’re free from handling hardware and server management, software updates, and other infrastructure-related concerns.

Say goodbye to physical servers and hello to flexibility.

Common Advantages of Cloud ERP

Cloud ERP provides businesses with a cost-effective, scalable solution that enables remote access to essential data and tools. With automatic updates and improved collaboration capabilities, your team can work seamlessly from anywhere (including mobile devices). Moreover, robust security measures from cloud providers ensure your business data remains protected and secure.

In a nutshell, cloud-based ERP software streamlines your operations, offering convenience, flexibility, and cost savings. With these benefits, it’s no wonder that more and more of the businesses we serve at Top10ERP​.org are moving to the cloud.

Key Benefits of Cloud ERP

The shift of IT spending continues accelerating toward the cloud. A recent study by Gartner indicates more than half of Enterprise IT spending will shift to the cloud in 2025.

The benefits of cloud-based ERP software are numerous and can significantly impact how businesses operate. These are some of the main advantages and reasons we guide our clients to select cloud ERP software when it is the right fit for their business:

More Affordable Up-Front Costs

The initial cost of implementing cloud ERP software is lower than that of an on-premises ERP system because it doesn’t require additional server, infrastructure, or hardware costs. Though you may pay more over time compared with an on-premises system due to perpetual licensing fees, you can expect what you’ll pay over time. You get more flexibility should your system not meet your needs long-term.

Faster to Implement

Because these ERP systems are web-based and require no lengthy, space-hogging installations, they essentially offer plug-and-play functionality. You’ll almost always gain immediate access to the platform when you activate your license. It’s important to note that you’ll still need to spend time on training, customization, and data transfer once you’ve chosen an ERP system. Still, by and large, implementation is speedier on the cloud.

Always Up-to-Date

Because Cloud-based ERPs are hosted on the web, they are automatically updated. On the browser, changes can be implemented in real-time, so you always get the latest version of the software without the need for time-consuming updates. 

Enhanced Security

Enhanced security is another crucial advantage of using a cloud-based ERP system. Cloud ERP providers prioritize the security of your business data, investing heavily in state-of-the-art infrastructure and employing strict security protocols to safeguard your sensitive information from cyber threats. By trusting a reputable cloud ERP vendor, your business can enjoy peace of mind knowing that your data is well-protected, enabling you to focus on growth and innovation without worrying about data breaches and cyberattacks.

More Flexibility and Access

Because most cloud-based software is paid via a subscription-based model, it offers more flexibility in terms of growth and access. Need to add more users? Upgrade your subscription to include new licenses. No new hardware or installations are needed, even if you onboarded several new hires. Need to access the software while you’re out of the office? Pull it up on any browser, mobile device, or desktop. Cloud services are always ideal for teams needing remote access and rapid scaling.

More Agility

We all know that for a company to be successful in the current digital landscape, agility is required, not optional. When you opt for a cloud-based ERP — or any cloud-based software, for that matter — you get next-level flexibility and analytics. This means you can make faster changes in real-time to adapt to the ever-changing needs of your customers, clients, or employees. The software is agile and constantly evolving (often without you even noticing), much like your business.

Cloud ERP for Small Businesses

Let’s talk about small businesses and cloud enterprise resource planning systems. They’re a match made in heaven, offering the perfect blend of power, flexibility, and affordability.

According to a study by Aberdeen Group, small and medium-sized businesses using Cloud ERP witnessed a 17% reduction in administrative costs and a 13% reduction in operational costs compared to their peers using on-premise solutions.

For small businesses looking to cut costs, cloud-based ERP solutions are a no-brainer.

With robust systems designed to cater to your unique needs, you’ll stay competitive and primed for growth.

So, let’s explore why cloud ERP can be your advantage and what you should consider when choosing the right system:

• The impact of cloud ERP: As a small business owner, you know that efficiency and adaptability are crucial. Enterprise resource planning software streamlines your processes, boosts productivity, and gives you real-time insights, significantly impacting your performance. Plus, with remote access and seamless collaboration, your team can work smarter, not harder.
• Choosing your cloud ERP: When it’s time to pick, keep these essential factors in mind:
  1. Ease of use: Intuitive and easy to navigate.
  2. Affordability: Great value that pays for itself in three years.
  3. Integration: Works well with your favorite tools, such as Shopify and Quickbooks.
  4. Support: Help when you need it because we all run into issues.
  5. Features, reviews, white papers, and case studies: Do your homework to ensure the system meets your requirements.
• Top contenders: The best cloud enterprise resource planning platforms for small businesses include Netsuite, Cetec ERP, Global Shop Solutions, JobBoss2, Sage Intacct, SAP S/4HANA, and Microsoft Dynamics 365 Business Central. These systems are user-friendly, affordable, and packed with features tailored to your growing business.

Investing in the right system unlocks opportunities for your small business. See a side-by-side comparison of the best cloud solutions for small businesses here.

Cloud ERP for Manufacturing Businesses

For most manufacturing businesses, cloud enterprise resource planning will boost efficiency and streamline operations.

Key features: For manufacturing businesses, a robust ERP solution should cover these essential aspects:

• Production planning and scheduling
• Inventory management
• Bill of materials (BOM)
• Shop floor control
• Quality control and assurance
• Supply chain management
• Real-time data and analytics

Compelling benefits: Implementing cloud ERP in your manufacturing business brings a range of advantages:

• Optimized production processes
• Greater visibility into operations
• Enhanced collaboration across departments
• Efficient inventory management
• Improved cost control and resource allocation
• Quick response to changes in demand
• Better quality and compliance management

With these improvements and added efficiencies, your manufacturing business will reach new levels of in efficiency and performance. Our manufacturing ERP guide covers all top manufacturing ERP systems.

In many cases, cloud ERP offers a faster ROI. In fact, a study by Nucleus Research found that cloud ERP deployments delivered 2.1x the return on investment (ROI) compared to on-premise deployments. The payback period was 50% shorter for cloud ERP implementations.

When searching for a cloud ERP platform, it’s essential to understand the costs and selection criteria to make an informed decision. Let’s break down some key aspects to consider in your search.

Pricing models

Cloud ERP software has various pricing models for different business needs and budgets. You’ll find subscription-based models (usually charged monthly or annually) and usage-based models that charge based on the number of users or transactions. Choose a pricing model that fits your company’s requirements and growth plans.

Subscription licensing:

• Subscription licensing has become increasingly popular for Cloud-Based ERP solutions, offering a pay-as-you-go pricing model. This approach provides flexibility and predictable costs and eliminates upfront capital expenditure. You’ll typically pay a monthly or annual fee based on your required number of users, modules, or resources.
• While subscription licensing can lead to cost savings and easier budgeting, it’s essential to carefully assess the long-term costs and potential price increases over time.

Total cost of ownership (TCO)

Don’t just focus on the upfront costs of the software. Consider the total cost of ownership, which includes subscription fees, implementation costs, maintenance, and upgrades. You should also factor in the cost of training employees and any potential downtime during the transition. Analyzing the TCO gives you a clearer picture of your investment’s long-term value.

Other factors to consider when selecting a cloud ERP

It’s not just the costs. You’ll want to weigh these other essential factors when comparing the suitable cloud ERP systems for your business. 

Some key considerations include the following:

• Customization and flexibility: Can the software adapt to your industry needs and business processes? Does it require costly customization options to tailor the system to your requirements?
• Scalability: Will the software grow with your business, supporting increased users, transactions, and functionality over time? Will scaling up impact the overall costs of the system?
• Integration: Can the cloud ERP integrate seamlessly with your existing systems and tools, ensuring a smooth workflow and reduced disruption?
• Security and compliance: Does the software EXCEED your industry’s security and compliance standards?
• Vendor reputation and support: Research the ERP vendor’s reputation and the quality of their customer support. Are they responsive and reliable when you need them? Make sure they have many satisfied customers in your industry and sector.

By understanding the costs and carefully evaluating the selection criteria, you’ll be well on your way to choosing the perfect cloud ERP that meets your budget and business needs.

Selecting the ideal cloud ERP system for your business can be daunting, but with a well-thought-out approach and our help, you can find the perfect fit. We’ll walk you through the essential steps to ensure you make a wise and informed choice. Contact us for free selection help if you need more advice.

• Assessing your business needs: Begin by closely examining your organization’s unique requirements, goals, and challenges. This in-depth analysis will help you understand what you truly need from your cloud ERP software and set the foundation for your search. Include all departments, identify which problems need solutions, and determine what you need in the system.
• Identifying must-have features: With your business needs in mind, list the most critical features and functionalities you need in a cloud ERP platform. Keep the list focused on your core requirements by department to avoid being overwhelmed by endless options.
• Extensively compare systems: You mustn’t limit your list too early, but compare 7 – 10 systems that fit your needs, your business size, and your industry. Compare pricing, capabilities, modules, support, and case studies. We created Top10erp​.org to support rigorous comparisons, so please use our decision tools to build and evaluate your shortlist.
• Talk to customers using the system: You must find a system that is already working for a similar business. Ask for customer case studies and referrals to see how the system works in your industry. Ask if customization is needed, and be sure they have used the system for several years.
• Evaluating ERP vendor support and services: Partnering with a reliable and responsive ERP vendor is crucial for successfully implementing and maintaining your cloud ERP system. Check out user reviews, ask for customer references, and engage with vendors to gauge their commitment to your success. If you buy the system through a VAR (value-added reseller), ensure they excel in support and services. This, too, can be verified by talking with current clients.

Too many businesses are talked into the wrong system for the wrong reasons. To ensure your list of systems to consider has the most reliable and appropriate contenders, use our ​“Best Fit” ERP comparison tool at top10erp​.org to make your decision-making process even more efficient and accurate. By inputting your specific requirements, the tool will generate a tailored list of proven ERP solutions that align best with your needs. This means you start with only the best systems and can narrow further from a vetted list to determine the best ERP for your needs.

Cloud ERP Implementation: Steps, Best Practices, and Unique Challenges

While some aspects are similar to on-premise ERP implementations, cloud ERP has unique challenges and considerations.

Let’s explore the key steps, best practices, and distinctive challenges of cloud ERP implementation.

Key steps in the implementation process:

1. Planning: Identify your organization’s specific needs and objectives for the ERP system, and select a reputable provider that offers the features, scalability, and support your business requires.
2. Design: Assemble a project team, including IT staff, managers, and end-users, to collaborate on designing a cloud ERP solution that meets your business needs.
3. Build: Develop a detailed project plan, set milestones, and monitor progress while building the system. Ensure seamless data migration, system integration, and any necessary customizations.
4. Deployment: Train your team on using the new system, thoroughly test it before going live, and make any necessary adjustments. Deploy the cloud ERP and promptly address any challenges, such as user adoption. Assure each department has buy-in and is using the system successfully.
5. Ongoing Support and Maintenance: Continuously refine the system to maximize effectiveness, provide user support, and ensure regular software updates for the latest features and security measures. Have all departments routinely meet to discuss how the system works and what adjustments are needed.

Our ERP Implementation guide is also a great resource to dive deeper into this topic.

By following these steps and best practices while addressing unique cloud ERP challenges, you’ll be well-prepared to make your implementation a success.

Embrace the journey, and soon, you’ll reap the rewards of a more efficient, streamlined, and data-driven business.

We highly recommend trying out our Best Fit ERP comparison tool to compare all these top cloud systems and more. Use the tool to quickly narrow your options and identify the cloud ERP software systems that align with your unique needs.

You can also review the ERP white papers we have available for these vendors here.

Still trying to figure it out? Don’t hesitate to contact us for personalized recommendations.

Our team at Top10erp​.org can save you time and help you find the ideal ERP solution to drive your business forward.

Below are several common questions surrounding cloud ERP that we provide helpful answers to.

Why is cloud ERP so popular?

Cloud ERP’s popularity stems from its cost-saving benefits, scalability, and ease of access. Subscription-based pricing, no need for expensive hardware, and IT staff reduction lower costs. Scalability allows companies to adapt to growth or fluctuating demands, while anytime, anywhere access enhances collaboration. Regular updates also ensure the latest features and security measures are always available. Cloud also requires less upfront financial investment.

What is the difference between SaaS ERP and cloud ERP?

SaaS (Software as a Service) ERP and cloud ERP, while related, have distinct differences. SaaS ERP is a specific type of cloud ERP where the system is hosted by a third-party provider and accessed through a web browser. The provider manages maintenance, updates, and security. Cloud ERP, in a broader sense, refers to any ERP software hosted on a cloud platform. This category includes SaaS ERP but can also encompass other models like Infrastructure as a Service (IaaS) or Platform as a Service (PaaS), offering varying degrees of control over infrastructure and customization. Simply put, all SaaS ERPs are cloud-based, but not all cloud ERPs are SaaS.

How long does it take to implement a cloud ERP system?

The implementation time for cloud ERP software can vary depending on several factors, such as the size of your organization, the complexity of your business processes, and the degree of customization required. On average, implementation can take a few months to over a year. Poor implementations can take well over a year. To ensure a smooth and timely implementation, it’s essential to have a well-defined project plan, clear communication, and collaboration with your chosen vendor.

How does cloud ERP affect data security and privacy?

Cloud ERP vendors take data security and privacy very seriously. Most reputable vendors follow industry-standard security practices and comply with global data protection regulations, such as GDPR. They often invest in advanced encryption, firewalls, and secure data centers to protect your data. However, it is essential to evaluate each vendor’s security measures and ensure they align with your organization’s requirements and standards.

What are the ongoing maintenance requirements for Cloud ERP?

One of the benefits of cloud ERP is that the vendor takes care of most maintenance tasks, such as updates, bug fixes, and system upgrades. This means your IT team can focus on other tasks, and you won’t have to worry about managing hardware or software infrastructure. However, it’s essential to work closely with your vendor to understand their support and maintenance services and to communicate any specific needs or customizations you may have.

How do cloud ERP systems handle customizations and integrations?

Cloud ERP systems often offer a range of customization options to suit your business processes and requirements. Many vendors provide APIs (Application Programming Interfaces) and other tools for seamless integration with third-party applications, such as CRM, HR, or e‑commerce platforms. However, discussing your specific customization and integration needs with potential vendors and understanding their support level for these tasks is essential. Remember that excessive customization can sometimes make updates and maintenance more challenging and costly, so it’s best to strike a balance between customizing the software and adapting your processes to fit the system. The right system will not need extensive customization.