What Is Cloud ERP? A Comprehensive Guide For Businesses In 2024

Organizations constantly seek ways to improve efficiency, agility and competitiveness. Cloud ERP is a transformative solution that has changed how companies manage their operations. This innovative technology uses the cloud to integrate various business processes.

As we explore more about Cloud ERP in this blog, we’ll look into its features, benefits and industry-specific applications, highlighting why more businesses are adopting this solution.

What Is Cloud ERP Software? 

Cloud ERP software is a type of business management software that is hosted on a remote server, typically provided by a third-party vendor and accessed via the Internet. It integrates various business processes and functions, such as finance, human resources, supply chain management and customer relationship management, into a single, unified system.

As per the IDC, “demand for cloud-based ERP systems continues to grow because of their ability to access and analyze massive amounts of data in near real-time.” 

But, currently, as per NetSuite, only 21% of companies use cloud ERP systems or roughly one in five corporations.

Working Of Cloud ERP

Cloud ERP systems operate through a combination of technologies connected by high-speed internet networks. Hosted and maintained by the ERP provider, these systems are always online.

Users simply need to log in to access the ERP’s functionalities and data, potentially leading to a lower total cost of ownership compared to traditional on-premises ERP systems. Cloud ERP systems are designed to be accessible from both mobile devices and desktop computers. 

How Does Cloud ERP Differ From Traditional ERP Systems?

Cloud ERP and traditional ERP systems differ primarily in their deployment and accessibility. Traditional ERP systems are installed on-premises, requiring physical servers and infrastructure. It can lead to higher upfront costs and maintenance responsibilities. These systems are typically accessed only within the company’s network, limiting flexibility and remote access.

On the other hand, Cloud ERP is hosted on the vendor’s servers and accessed via the Internet. This means that businesses do not need to invest in expensive hardware or manage complex IT infrastructure. It provides greater scalability, as businesses can easily adjust their usage based on needs. Cloud ERP also enables real-time data access from anywhere.

Types Of Cloud ERP Software

When exploring the types of Cloud ERP software, it’s important to understand the different models (based on deployments) available, as each offers unique advantages and considerations:

Multi-tenant SaaS (Software as a Service)

In this model, a single version of the ERP software and its associated infrastructure serves multiple organizations. Each organization uses the same software and is hosted on the same servers, but data is kept separate and secure, ensuring that one company’s data remains inaccessible to others. This is often considered a true cloud ERP system and is typically more cost-effective due to shared resources. 

Single-tenant SaaS

Here, a single version of the ERP software and its associated infrastructure serves just one organization. The organization’s data is hosted on private servers running a unique software instance. This model offers more customization and control but may come at a higher cost compared to multi-tenant SaaS.

Hybrid ERP

A hybrid ERP approach combines elements of on-premises software with cloud-based services, either private or public. This model allows businesses to maintain critical operations on-premises while leveraging the cloud for additional scalability, flexibility and cost savings.

Public Cloud

In a public cloud model, cloud computing services are owned by the service provider and shared among multiple organizations. Examples include Amazon Web Services (AWS), Google Cloud, Microsoft Azure and Oracle Cloud. Each organization’s data and applications are kept separate and secure, but they share the underlying infrastructure.

Private Cloud

A private cloud is dedicated to a single organization and is not shared with others. This model offers more control and security, as the infrastructure is solely for the organization’s use. However, it may require more investment in terms of setup and maintenance.

Why Should Businesses Consider Moving To Cloud ERP?

Businesses should consider moving to Cloud ERP for several compelling reasons:

• Cost Efficiency: Cloud ERP typically operates on a subscription-based model, eliminating the need for substantial upfront capital investment in hardware and software. Additionally, the vendor manages maintenance and updates, reducing ongoing IT costs.

• Scalability: Cloud ERP allows businesses to scale their operations up or down based on demand easily. This flexibility is essential for growing companies or those with fluctuating needs. Cloud software vendors often aim for a high level of availability, commonly referred to as the “five nines” (99.999%) availability. This standard means that customers can expect less than eight minutes of unplanned downtime per year, which is a testament to the reliability and robustness of cloud services.

• Accessibility: With Cloud ERP, users can access the system from anywhere with an internet connection. This enables remote work and real-time collaboration and ensures that critical business information is always at your fingertips.

• improved Security: Reputable Cloud ERP providers invest heavily in security measures, including data encryption, regular backups and disaster recovery plans, offering a level of security that can be challenging for individual businesses to achieve on their own.

• Improved Integration: Cloud ERP systems are designed to integrate seamlessly with other cloud-based applications, facilitating smoother data exchange and simplifying workflows across various business functions.

• Faster Implementation and Updates: Cloud ERP solutions can be deployed more quickly than traditional systems, and updates are managed by the vendor, ensuring that businesses always have access to the latest features and security improvements without significant downtime. Cloud ERP vendors typically manage and deploy updates automatically, which can take as little as 30 minutes. These updates are often scheduled during off-hours or low-usage periods to minimize any potential disruptions to business operations.

• Real-time Data and Analytics: Cloud ERP provides real-time data and analytics, enabling businesses to make informed decisions quickly and adapt to changing market conditions.

• Focus on Core Business: Businesses can concentrate on their core activities by outsourcing the management of their ERP system to a cloud provider.

Businesses That Should Opt For Cloud ERP

Cloud ERP is suitable for a wide range of businesses. Small to medium-sized enterprises (SMEs) can benefit from the lower upfront costs and ease of deployment, while larger enterprises can use cloud ERP for global operations and real-time data access. 

Industries such as retail, manufacturing, services and technology, which require agility and quick adaptation to market changes, are ideal candidates. Additionally, businesses with a distributed workforce or those undergoing rapid growth will find the scalability and accessibility of cloud ERP advantageous. 

Additionally, businesses aiming to reduce IT infrastructure costs and maintenance burdens while benefiting from advanced security measures and automatic updates should consider making the switch. The decision to transition to cloud ERP should align with the company’s long-term goals and readiness for digital transformation.

Cloud ERP Global Market

Research and Markets report highlights the projected increase in the cloud ERP market value from $43.91 billion in 2023 to $65.89 billion by 2027, with a compound annual growth rate (CAGR) of 10.7%, indicating a strong and sustained demand for cloud ERP solutions. This growth is likely driven by the need for businesses to improve operational efficiency, improve data accessibility and support remote work, among other factors.

Its major applications can be seen:

Industry Applications Of Cloud ERP

Cloud ERP systems offer industry-specific applications to meet the unique requirements of different sectors, providing a comprehensive solution for managing business processes.

• Manufacturing: Cloud ERP enables manufacturers to simplify production processes, manage supply chains and monitor quality control.

• Retail: Retailers benefit from cloud ERP through improved inventory management, improved customer experiences and integrated e-commerce platforms for online and offline sales.

• Healthcare: In healthcare, cloud ERP supports patient management, billing, regulatory compliance and supply chain operations, ensuring smooth and secure operations.

• Construction: For construction companies, cloud ERP offers project management tools, financial tracking and resource allocation features to manage complex projects effectively.

• Professional Services: Service-based businesses can utilize cloud ERP for project management, time tracking, billing and client relationship management, optimizing service delivery and profitability.

Best Practices For Successful Cloud ERP Implementation

To ensure a successful Cloud ERP implementation, organizations should follow these key steps:

• Discovery & Planning: Begin by researching potential ERP systems and selecting the one that best fits your business needs. Set up a dedicated project team and define detailed system requirements. This foundational phase is important for setting clear objectives and expectations for the implementation.

• Design: Building on the initial planning, the design phase involves developing a detailed blueprint for the new ERP system. This includes outlining new workflows and business processes that will be supported by Cloud ERP.

• Development: In this phase, the actual configuration and customization of the Cloud ERP software takes place. The system supports the redesigned processes, and integration with existing business applications is established to ensure better operations.

• Testing: Rigorous testing is conducted to ensure the system’s functionality, data integrity, and user acceptance. This phase is important for identifying and addressing any issues before the system goes live. It often involves a loopback to the development phase for fixes and adjustments based on test results.

• Deployment: This is the phase where the Cloud ERP system is officially launched and goes live. It’s a critical moment that requires thorough preparation and readiness to address any potential issues that may arise. Adequate support should be provided to users to ensure a smooth transition.

• Support & Updates: After deployment, the focus shifts to maintaining the system, addressing user feedback, and implementing updates and new features. Continuous support is essential for ensuring the long-term success of the Cloud ERP implementation.

Other Key Considerations 

• Choose the Right Partner: Select a Cloud ERP vendor and implementation partner with a proven track record and expertise in your industry. A good partner will understand your business requirements, offer best practices, and provide support.

• Involve Key Stakeholders: Engage stakeholders from all levels of the organization in the planning and decision-making process. This will help ensure buy-in, address concerns, and align the ERP system with the needs of different departments.

• Focus on Data Migration: Data migration is a critical aspect of the implementation. Ensure that data is accurately mapped, cleaned, and tested before migration. Consider running parallel systems for a short period to validate the data and processes in the new system.

• Prioritize User Training: Provide comprehensive training for users on how to effectively use the Cloud ERP system. Ongoing training and support will help ensure that users are comfortable and proficient with the system.

Challenges Of Cloud ERP Software

When transitioning to cloud-based ERP solutions, organizations may encounter several challenges:

• Legacy Systems Integration: For businesses with long-established on-premises ERP systems migrating to a cloud-based solution can be complex. It often requires significant time, expertise and careful planning to ensure a smooth transition and integration of data and processes.

• Resistance to Change: Larger organizations with substantial IT and administrative teams may face resistance from stakeholders accustomed to traditional ways of working. The shift to cloud ERP can lead to a perceived loss of control over processes that become automated and a reduction in hands-on management of maintenance and infrastructure by internal IT teams.

• Regulatory Compliance: Companies subject to strict cybersecurity policies and regulations, such as those governing the handling of customer data, may face challenges in fully using cloud-based ERP solutions. While major SaaS providers have made significant progress in complying with regulations, businesses must ensure that their cloud ERP solution aligns with their specific compliance requirements.

• Cost Management: While cloud ERP can offer cost savings compared to traditional on-premises systems, organizations must carefully manage ongoing subscription fees, additional costs for customization and potential expenses related to data storage and bandwidth usage to ensure a positive return on investment.
• Migration: Data migration is a challenge in implementing Cloud ERP systems. It involves transferring vast amounts of data from legacy systems to the new platform, requiring meticulous planning, mapping, and validation to ensure accuracy and integrity. Any errors in this process can lead to disruptions and data loss.

Top Cloud ERP Softwares

The leading cloud ERP vendors in the market offer diverse solutions for various business requirements. Below is an overview of some key players:

Oracle NetSuite

Oracle NetSuite is a comprehensive cloud-based ERP solution that offers a wide range of applications, including financial management, CRM, e-commerce, and supply chain management. It is designed to scale with businesses of all sizes and is widely used across various industries. In 2023, notable companies such as Accenture and Rutgers University were among the 3,700+ organizations that began utilizing Oracle ERP Cloud.

SAP S/4 HANA Cloud

SAP’s S/4 HANA Cloud is a powerful ERP solution that provides advanced analytics, machine learning capabilities, and a user-friendly interface. It is particularly popular among large enterprises for its ability to integrate various business functions and provide real-time insights.

Microsoft Dynamics 365

This suite of cloud-based ERP and CRM applications is known for its flexibility and scalability. Microsoft Dynamics 365 integrates efficiently with other Microsoft products and offers solutions for different industries, making it a versatile choice for businesses.

Workday

Workday specializes in human capital and financial management solutions. Its cloud ERP system is favored by organizations looking for good HR and finance functionalities, along with a strong emphasis on user experience and analytics.

Infor CloudSuite

Infor CloudSuite provides industry-specific ERP solutions with a focus on sectors such as manufacturing, healthcare, and retail. It offers customized functionalities to meet the unique needs of each industry.

Acumatica Cloud ERP

Acumatica offers a flexible and customizable cloud ERP solution with a unique pricing model based on resource consumption rather than user licenses. This makes it an attractive option for small to mid-sized businesses seeking scalability and affordability.

Epicor ERP

Epicor provides cloud-based ERP solutions designed for manufacturing, distribution, and service industries. It emphasizes ease of use, industry-specific features, and collaboration tools to enhance productivity and efficiency.

How To Choose The Right Cloud ERP Software?

Choosing the right cloud ERP software involves considering several factors to ensure it aligns with your business needs and goals. Here are some steps to help you make the right choice:

Assess Your Business Requirements

Identify the specific needs of your business, including functional areas like finance, supply chain, HR and CRM. Determine the scalability and customization options you need to support your business growth.

Evaluate the Vendor’s Industry Expertise

Look for a vendor with experience in your industry. They should understand your business processes and compliance requirements and offer industry-specific functionalities.

Consider Integration Capabilities

Choose a cloud ERP that can efficiently integrate with your existing systems and third-party applications. This will ensure a smooth flow of data across your business operations.

Check for Scalability and Flexibility

Ensure the ERP solution can scale with your business growth and adapt to changing market conditions. It should allow you to add or modify functionalities as needed.

Analyze Total Cost of Ownership

Consider not just the subscription fees but also the costs associated with implementation, customization, training and ongoing support.

Review Security and Compliance Features

Ensure the ERP vendor offers security measures and complies with relevant regulations and standards in your industry.

Request Demonstrations and References

Ask for product demos to see the ERP in action and speak to existing customers to gauge their satisfaction with the software and vendor support.

Consider Vendor Support and Community

Evaluate the vendor’s support services, including their responsiveness, availability and the presence of an active user community for peer support and knowledge sharing.

What Makes NetSuite A Preferred Cloud ERP Solution?

NetSuite is a preferred cloud ERP solution due to its comprehensive features and flexible architecture. It provides a holistic view of the business, enabling better decision-making. NetSuite also delivers real-time analytics and customizable dashboards, offering insights that drive strategic decisions. Additionally, it has 37,000+ customers and supports global business management with multi-language, multi-currency and multi-subsidiary capabilities, making it ideal for businesses with an international presence.

NetSuite enables customizations and efficient integration with other systems through SuiteScript and SuiteTalk. 

Furthermore, it provides pre-configured solutions for various industries, ensuring that businesses get a system that fits their unique requirements. 

Make Smarter Decisions With Oracle NetSuite Cloud ERP 

No matter the size of your business, from small enterprises to large multinationals, NetSuite offers the necessary tools to manage today’s business complexities and make informed decisions that drive your organization forward. Grow your business with our NetSuite Implementation Services. Transform operations, boost efficiency and accelerate growth.