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How SMBs Can Benefit from Cloud-based ERP Software

October 8, 2020 6:20:20 PM CDT

ERP (Enterprise Resource Planning) is management software, typically packaged as one bundle of applications that assists businesses to automate their data collection, management, storage and interpretation. ERP uses data from sources such as service delivery, inventory, marketing and accounting.

Innovation is essential for growth in the modern business environment, and the faster an organization can innovate, the better its chances of growing rapidly. However, on-site ERP software is often too rigid to match the pace of evolving business and technological practices. On the other hand, cloud-based ERP systems like Oracle NETSUITE offer suites of ERP applications over the internet and do not require installation on computers.

Cloud-based ERP solutions have become a popular choice among SMBs since they offer scalability, flexibility, can keep up with innovation and much more. Here are some of the benefits SMBs stand to gain from using cloud-based ERP solutions.

Cost Savings

The initial cost of acquiring traditional on-premise ERP technology is often a lot higher than the initial cost of cloud-based ERP. While cloud-based technology usually operates on a subscription cost basis, many CFOs in smaller organizations find more economic sense in minimizing capital expenditures compared to reducing operating costs, i.e., paying subscriptions for cloud-based technology is better than an in-house ERP.

Smaller organizations working with tight budgets often find the long-term costs associated with cloud ERP more affordable than on-site ERP. The difficulty of spreading the fixed infrastructure expenses demanded by on-site ERP equally over the entire enterprise does not justify its exorbitant cost. That said, most SMBs opt for multi-tenant cloud solutions to reduce their long-term costs while getting value for their investment.

Flexibility

A cloud-based ERP software like Oracle NETSUITE provides unparalleled flexibility that is typically not achievable with traditional on-premise ERP software. Through cloud-based technology, any authorized user with the required application security can access company data and add or edit fields in specific record types.

The additional features provided by NetSuite allow companies to match various applications to their business processes instead of forcing them to fit their operations into limited applications. This helps SMBs avoid unnecessarily expensive customizations.

Workflow Automation

Nowadays, many businesses in the service industry require significant automation in their business processes and workflow to manage their operations smoothly. By standardizing processes and automating processes through cloud-based ERP, businesses can manage and execute their customer engagement more consistently.

Businesses that automate their workflow using cloud-based ERP are typically more proactive in customer engagement by identifying negative trends early enough and developing corrective action. Consequently, proactive businesses typically enjoy high customer satisfaction scores and retention rates.

Better ERP Performance

One of the greatest drawbacks of in-house ERP is that it needs proper installation and maintenance to perform as efficiently as possible. This could make an otherwise well-performing organization suffer due to its poorly set up or maintained in-house ERP.

On the other hand, businesses can outsource all the core and non-core functions to an experienced provider for hosting via cloud-based solutions. Cloud-based ERPs promise more consistent peak performance thanks to a team of experts handling all the setup and maintenance around-the-clock.

Enhanced Business Intelligence

Over the years, the number of businesses using BI (Business Intelligence) has skyrocketed. Cloud BI enables employees across an entire organization to access company data remotely without robust IT staffing or complicated technical configuration.

Cloud BI adoption is particularly common among organizations that heavily rely on their sales and marketing departments since they require real-time information to analyze customer behavior and improve conversion rates. Cloud-based ERP has numerous benefits over on-site ERP on matters of data access and storage. Cloud ERP is more efficient for storing vast volumes of data, not to mention its ability to integrate data gathered from IoT (Internet of Things) technology.

Scalability

Cloud ERP solutions are very scalable compared to their on-site counterparts, allowing businesses to add both new modules and users without any complicated installations. This is a huge plus for rapidly growing businesses since they can scale their ERP to match their business needs.

For instance, if a business using NetSuite wishes to introduce incentive management to monitor the commissions of different sales teams or individuals, they only have to buy this module provided by NetSuite. This process is simple and requires no IT staff or consultations unless additional enhancements or configurations are necessary.

Also, businesses can scale their user count by adding or removing users to match their needs during various stages of the business cycle. Such scalability is virtually impossible using traditional on-site ERP since businesses have to buy the maximum user license count to accommodate any fluctuations in user count during a typical business cycle.

More Focus on Core Competencies

Many small organizations have inadequate IT staffing and lack the financial capacity to invest in the same resources as cloud providers. While a business may be endowed in IT, it does not necessarily make IT its core competency.

Cloud ERP essentially allows businesses to outsource most of their IT functions and pay more attention to their core competencies. For instance, retailers can invest in cloud ERP to focus more on customer satisfaction and sales instead of IT maintenance.

Employee Buy-in

Cloud ERP solutions tend to use more modern and simplistic UIs (User Interfaces) compared to on-premise software, meaning that most employees/end-users have shorter learning curves. However, this ease of use does not make end-user training obsolete.

The appeal of cloud ERP software to the end-users makes it less susceptible to resistance in most modern organizations. Regardless, any business with a technology initiative should communicate with its employees about the new technology’s potential benefits, with a strong emphasis on how it will make their jobs easier.

Minimal Environmental Impact

Any business seeking to achieve massive success must make environmental impact a key factor of its growth strategy. Due to the scale involved, adopting cloud ERP and other cloud computing technology is currently among the most environmentally conscious decisions a business can make. Since cloud providers use shared infrastructure to accommodate thousands of concurrent users, they can save energy by matching server capacity to current demand and use servers more efficiently.

Robust Data Security

Many businesses turning to cloud ERP can avoid security breaches since cloud vendors typically have impregnable hosting environments. Due to the high stakes involved, cloud ERP vendors tend to be very vigilant on security matters.

While it may sound counterintuitive, cloud ERP vendors are excellent targets for data breaches since they store valuable data for multiple customers. Such vulnerability forces cloud ERP vendors to adapt and develop sophisticated security mechanisms to protect customer data from unauthorized external access both when at rest and as it moves to and from host servers.

To provide internal data security, cloud ERP providers require users to have assigned accounts from which they can access the ERP system. This gives businesses control over who can view their data by assigning accounts and limiting access via a central admin panel.

Fast Implementation

Cloud ERP solutions are easier and faster to implement compared to on-site ERP systems. In 24 hours or less, businesses can have their cloud ERP’s technical environment configured. This gives businesses the freedom to focus more on how cloud technology will transform their operations. Business process management and change management need more or less similar time and resources, whether an organization is implementing cloud or on-site ERP.