It's 10 PM, and you just had a brilliant idea for improving your inventory system. In the old days, you'd scribble a note and wait until morning to access your office computer. But instead, your entire business system — from finances to inventory to customer data — is available right on your phone, right now!
That's the magic of cloud ERP software. It moves your core business operations from physical servers gathering dust in a closet to secure online systems. Cloud ERP platforms are revolutionizing how small and midsized companies compete with the big players. No more expensive hardware, no more outdated software, and no more being tied to your desk.
In ten years in the ERP software industry, I’ve helped many companies evaluate whether cloud ERP could take them to the next level. This overview will walk you through how cloud ERP software works. You’ll see whether it’s right for your growing business and learn if now is the time to make the switch.
- What is Cloud ERP Software?
- How Cloud ERP Software Works
- Cloud ERP Systems vs On-Premises ERP Systems: What's the Difference?
- Benefits of Cloud ERP Platforms
- Challenges of Cloud ERP Platforms
- Is Cloud ERP Software Right for Your Business?
- Cloud ERP Software: An Affordable Option for Scalable Enterprise Resource Planning
What is Cloud ERP Software?
The “ERP” in cloud ERP software stands for Enterprise Resource Planning. All ERP software is business operations management software. But cloud ERP software runs on remote servers instead of on-premises servers.
That means you can access your cloud ERP platform through the internet. You log in through a web browser or app, and all your business data and tools are right there waiting for you.
The "enterprise resource planning" part means it connects all the important parts of running your business:
- Accounting and finances
- Inventory and supply chain
- Sales and customer data
- Purchases and supplier data
- Human resources
How Cloud ERP Software Works
Cloud ERP follows a Software-as-a-Service (SaaS) model. This means:
- The provider hosts all the software and your data on their servers
- You access everything through the internet
- The provider handles all maintenance, updates, and security
- You pay a subscription fee rather than purchasing software
When you use a cloud ERP system, you're renting both the software and the infrastructure it runs on. The provider takes care of the technical side, while you focus on running your business.
Cloud ERP software typically works on a subscription model. You can pay monthly or annually based on the functionality you need, monthly transaction volume, and/or how many people use the software.
Cloud ERP Systems vs On-Premises ERP Systems: What's the Difference?
To understand why cloud ERP software is so popular, let's compare it with the traditional on-premises approach.
On-Premises ERP Systems
On-premises ERP software is the older model that many companies still use. Here's how it works:
- Where it lives: You install the software on your own servers in your building
- How you pay: A large upfront payment to purchase the software license, then a smaller annual fee for maintenance and updates
- Who maintains it: Your IT team handles updates, security, and fixes
- Customization: Highly customizable, but changes can be expensive
- Implementation time: Usually takes 6-18 months to fully implement
Cloud ERP Systems
Cloud ERP software takes a completely different approach:
- Where it lives: On the provider's servers, accessed via internet URL
- How you pay: Monthly or annual subscription fees
- Who maintains it: The provider handles updates, security, and fixes
- Customization: Somewhat less customizable, but regular updates add new features
- Implementation time: Can be up and running in 6 months or less
The key difference is really about who owns and maintains the system. With an on-premises ERP platform, you own everything but have to manage it yourself. With a cloud ERP platform, you're paying for a service that includes both the software and its maintenance.
Benefits of Cloud ERP Platforms
1. Lower Upfront Costs
Cloud ERP software slashes those high initial costs. Instead of dropping a huge chunk of money on software licenses and servers upfront, you pay manageable monthly fees. For smaller businesses, this can be the difference between getting a powerful system now versus waiting years to save up for one.
2. Fast Implementation
Nobody wants to wait forever to get their systems running. A cloud ERP platform can be up and running in months. That means you'll see the benefits sooner and with less disruption to your business.
3. Automatic Updates
Hate dealing with software updates? Cloud ERP providers handle all updates automatically. You'll always have the latest features and security patches without your IT team having to lift a finger.
4. Work From Anywhere
Can you imagine checking inventory levels from the beach? With cloud ERP software, you can access your business systems from anywhere with an internet connection. Some can even connect through any natural language device, such as Alexa or Siri. This flexibility has been a game-changer, especially since COVID-19 pushed so many businesses toward remote work.
5. Easy Scalability
As your business grows, your ERP platform needs to grow with it. Cloud ERP software makes scaling up simple—just adjust your subscription to add more users or functionality as needed.
6. Better Security
Surprised? Many people think on-premises systems are more secure, but cloud ERP providers invest millions in security measures that most small or midsized businesses simply can't match. Your data is likely to be safer in the cloud than on your own servers.
Challenges of Cloud ERP Platforms
There are good reasons why most new ERP customers are opting for cloud ERP platforms — but no system is perfect. Here are some potential downsides:
1. Internet Dependency
If your internet goes down, so does your access to a cloud ERP platform. This can be a serious issue for businesses in areas with unreliable internet connections. But some third-party tools can offer offline mode for crucial operations such as POS, so you stay covered even if you lose your connection.
2. Less Control
With a cloud ERP system, you're putting your faith in the provider. They control the system, when updates happen, and where your data lives. Some businesses aren't comfortable with this arrangement.
3. Potential Long-Term Cost
While cloud ERP software costs less upfront, the subscription fees add up over time. After 7-10 years, you might end up paying more than you would have upfront for an on-premises system. But owning an on-premises system may also require you to invest in new infrastructure or upgrades over time. The cost of cloud ERP software is likely to be more flexible to your evolving needs.
4. Limited Customization
Cloud ERP systems typically offer less customization than on-premises options. If your business has highly specific needs, this could affect your decision. For example, a company may need to implement specific billing logic that goes beyond the standard settings available. This might mean that an on-premises option would give you the customization options you’re looking for.
Is Cloud ERP Software Right for Your Business?
Here's a quick guide to help you decide:
Cloud ERP software might be perfect for you if:
- You want to avoid large upfront costs
- Your business is growing rapidly
- You have limited IT resources
- Remote access is important to your team
- You want faster implementation
On-premises ERP software might be better if:
- You have strict data security requirements
- Your internet connection isn't reliable
- You need extensive customization
- You have a strong IT department
The Future of Cloud ERP Software
Cloud ERP systems aren’t just a trend — cloud is becoming the standard way to deploy. According to recent market research, the cloud ERP market is expected to grow significantly in the coming years as more businesses make the switch.
We're also seeing exciting developments in cloud ERP technology, including:
- AI and machine learning for better forecasting
- Mobile-first interfaces for on-the-go management
- Better integration with other business apps
- Industry-specific solutions for construction, manufacturing, etc.
Cloud ERP Software: An Affordable Option for Scalable Enterprise Resource Planning
A cloud ERP platform brings together all your business processes in one system that you can access from anywhere with an internet connection.
Unlike traditional on-premises systems, a cloud ERP system requires no hardware investment, offers automatic updates, and allows for easy scalability as your business grows.
Choosing the wrong system can cost your business time, money, and your competitive edge. The right cloud ERP platform will streamline operations, provide real-time insights, and help your business adapt quickly to changing markets.
Ready to see how cloud ERP could transform your business? Stellar One will guide you through every step of finding, implementing, and maximizing the value of your ERP system. We’re an Acumatica Gold Certified Partner, which means we have passed rigorous training and testing requirements and continue to deepen our staff proficiency each year. We guarantee the quality of our dedicated mission support.
Read more about how ERP Partners work with your team and the ERP software to give you the best results.
Sign up today for a free trial of our comprehensive cloud ERP solution from Acumatica, designed specifically for small and midsized businesses like yours.
