Cloud-based ERP: types, benefits & best platforms
February 8, 2024
Cloud-based ERP is an enterprise resource planning system that is hosted and managed in the cloud by a vendor and which users access on demand. Cloud ERP solutions have a much lower barrier to entry than on-premises ERP since they don’t require extensive up-front investments.
For over a year, cloud deployment has been topping the ERP trends. With the reliance on professional ERP implementation services, companies of all sizes are leveraging cloud infrastructure to expand their capabilities, maximize ROI on technology investments, and support digitalization.
Let’s see how cloud-based ERP software is distinct from on-premises solutions, explore cloud ERP types, their benefits and limitations, and overview a list of cloud ERP platforms worthy of your attention.
Cloud ERP market stats
projected global cloud ERP revenue by 2025
Statista
of decision-makers consider cloud ERP their investment priority
Computer Weekly
organizations hastened their switch to cloud ERP solutions
IDC
Cloud ERP concepts explained
Deployment strategy
cloud ERP software is deployed in a cloud using the software-as-a-service (SaaS) or platform-as-a-service (PaaS) model.
Infrastructure ownership
cloud ERP software exists and is managed in the cloud by an ERP vendor, which provides the software in an ‘as a service model’. The vendor is responsible for the servers, data storage, the underlying operating system, security, and feature upgrades.
Cloud hosting
an ERP platform may be deployed in a public multi-tenant cloud environment (computing resources are shared among multiple companies) or in a private single-tenant cloud environment (computing resources are dedicated to a single company).
Subscription fee
a fixed amount of money a company pays annually or monthly for using the ERP software, which includes software upgrades, maintenance, and security. It is charged per user or per organization.
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Cloud ERP vs on-premises ERP
An ERP solution, regardless of where the software is deployed and who manages it, generally supports the same business processes. However, there are many core distinctions between the two options, which makes the cloud vs on-premises decision a major one.
Cloud
Cloud ERP is provided on an ‘as a service ’ basis, thus you pay a subscription fee defined by the ERP functional scope, number of users, storage and compute resources. Adjusting costs according to your needs makes budget planning easier.
On-premises
On-premises ERP implies substantial upfront and continuous investments to purchase and manage the software and the hardware (servers, server room, cooling system, etc.).
Solution deployment
Cloud
Cloud ERP is associated with faster deployment, as there is no need to procure and set up an IT infrastructure – all resources are available as soon as the license is purchased. You can implement the software across multiple regions, subsidiaries, and divisions according to your requirements.
On-premises
As on-premises ERP software requires infrastructure deployment, the process may take considerably more time due to hardware acquisition, software configuration and launch, and IT specialists onboarding.
Technology expertise
Cloud
As the vendor manages all upgrades and resolves any ongoing issues, the requirements for in-house tech expertise are not high.
On-premises
On-premises ERP software requires an in-house IT department with relevant qualifications to install, manage, and keep the system operating in top form.
Scalability
Cloud
Up- and downscaling is quick and realized through purchasing additional licenses/computing resources.
On-premises
Hardware-related issues can impede the upscaling: reconfigurations or new hardware may be required.
System upgrades
Cloud
All new features become available to tenants immediately after the release by default. Cloud ERP solutions upgrades take place during non-working hours, and the previously implemented customizations and integrations automatically carry forward, which helps minimize the risk of process disruption.
On-premises
System upgrades are resource- and time-consuming. If on-premises ERP solutions undergo multiple customizations, upgrading the system to new releases may be difficult. You may need to re-implement previous customizations and integrations with every future system version.
Infrastructure & data control
Cloud
Cloud ERP implies minimal control over IT infrastructure.
On-premises
On-premises ERP is the best fit for a company that requires absolute control over its solution and the data it stores.
Performance
Cloud
Cloud ERP offers optimized performance. If more computing or storage resources are needed, the system automatically adjusts, providing additional resources.
On-premises
The performance of the on-premises ERP solution is closely bound to its scalability. A scalable solution will help meet the most deliberate requirements.
Availability
Cloud
As cloud ERP is accessed remotely over the internet, data accessibility is guaranteed as long as you have constant connectivity to reliable internet.
On-premises
On-premises ERP software doesn’t rely on external servers, thus high service availability and data accessibility are guaranteed unless there’s a local power outage.
Maintenance
Cloud
A cloud ERP vendor takes on system upgrades, security, data backups, software support and configuration.
On-premises
ERP software maintenance is the responsibility of a company. It includes system upgrades, data backups, hardware and infrastructure support and configuration.
Security
Cloud
Leading cloud ERP vendors use the highest security standards and offer comprehensive security such as continuous data monitoring and dynamic masking, end-to-end data encryption, and granular access control.
On-premises
By implementing on-premises ERP, you have absolute control over who accesses data and how they use it. The overall system security depends on the expertise of the in-house IT team.
Mobile-readiness
Cloud
Cloud ERP systems offer remote access, including via mobile devices, out-of-the-box.
On-premises
Setting up remote access for on-premises ERP systems entails extra costs and is more technically complex.
Customization
Cloud
Cloud-based ERP software has less customization capabilities. Although it makes the system less vulnerable to crashes, it could be a drawback for companies with complex workflows.
On-premises
On-premises ERP software allows for extensive software customizations to meet a company’s unique requirements. However, extensive customizations could be costly.
Types of cloud-based ERP software
Public cloud ERP software
runs on a remote server and is managed by a vendor, while cloud computing resources are shared among multiple customers.
Private cloud ERP software
is deployed and managed in a private cloud, which means compute resources are dedicated to a particular company and are not shared with other tenants.
Hybrid cloud ERP
runs in both private and public cloud environments for additional security, compliance, and cost-efficiency.
Multi-tenants SaaS
is a SaaS-based ERP, where multiple customers of a public cloud provider access the same software instance (e.g., data of multiple companies is stored in shared resources, but each company can only access its own data).
Single-tenant SaaS
is a SaaS-based ERP where data is stored and processed with private resources.
Best cloud ERP platforms on the market
Key features
- Billing and finance management
- Manufacturing management
- Production quality management
- Equipment and fleet management
- Inventory management
- Repairs management
- Human resources management
- Project planning and controlling
- Procurement and subcontractor management
- Contact management
- CRM
Best for
- Small companies
- Mid-sized companies
Deployment
- Public cloud
- Private cloud
Product differentiator
- Advanced integration capabilities
- Superior user experience
Limitations
- Challenging to scale and maintain
Key features
- Finance management and accounting
- Financial planning
- Human resources management
- Asset management
- Professional services automation
- Supply chain management
- CRM
- Billing
- Sales order management
- Opportunity management
- Built-in reporting
- Analytics and forecasting capabilities
- KPIs tracking and dashboards
Best for
- Companies of all sizes
Deployment
- Public cloud
- Private cloud
Product differentiator
- Built-in BI
- Rapid configuration and deployment in specific product-centric industries
Limitations
- Price hikes in the long run
Key features
- Financial management
- Accounting and budgeting
- Sales management
- Supply chain management
- Fixed asset management and inventory control
- Project management
- Service management
- Manufacturing management
- Workforce planning
- Analytics and reporting
Best for
- Small companies
- Midsize companies
Deployment
- Public cloud
- Private cloud
Product differentiator
- Built-in ad-hoc analytics capabilities
- Native integration with the Microsoft ecosystem
Limitations
- Broad partner ecosystem, making it difficult to choose an implementation partner
Key features
- Finance
- Accounts payable/account receivable
- General ledger control
- Cost accounting
- Cash and bank management
- Fixed asset management
- Financial analytics and reporting and more
- HR
- Payroll
- Personnel management
- Recruiting
- Task management
- Benefits and compensation management
- Employee performance and learning
- Workplace safety management
- SCM
- Asset maintenance control
- Cost management
- Sensor data intelligence
- Master planning
- Procurement and sourcing
- Manufacturing production control
- Sales and marketing
- Transportation management
- Warehouse management
- Project operations
- Project planning
- Project cost estimation and management
- Project scheduling
- Resource management
- Effort tracking
- Invoicing
- Expense management
Best for
- Midsize
- Large companies
Deployment
- Public cloud
- Private cloud
Product differentiators
- A unified platform for managing all core business processes
- Embedded AI for greater automation and advanced analytics
- Interoperability with the Microsoft ecosystem
Limitations
An extensive ecosystem of implementation partners and a complex customization process
Key features
- Billing and costing
- Financial and accounting
- CRM and customer service
- Inventory and order management
- End-to-end project management
- Supply chain management
- Asset management
- Document management regulatory compliance
- EDI support
Best for
- Companies of all sizes
Deployment
- Public cloud
- Private cloud
Product differentiator
- Advanced technology capabilities (AI, analytics and advanced user experience)
- Enhanced integration customization
Limitations
- High cost and complex licensing
- A lack of consistent consulting and support resources across regions
Key features
- Financial management
- Commerce management
- Order management
- Construction accounting software
- Project accounting
- Distribution management
- Field service edition
- Customer relationship management
- Material requirements planning
- Advanced planning and scheduling
- Manufacturing management
- Product configurator
- Analytics and reporting
- Mobile application
Best for
- Small companies
- Mid-sized companies
Deployment
- Public cloud
- Private cloud
Product differentiator
- Ease of use
- Speed of initial deployment
- Flexible pricing model
Limitations
- A steep learning curve
- No free trial
Need help with choosing the optimal tech stack for your project?
How to select an ERP software
Business process coverage
if the cloud ERP modules cover all core business functions and workflows and if the functional scope may be extended as soon as the need arises.
Industry expertise
if the ERP solution addresses industry-specific pain points and needs, has customized extensions, offers pre-built connectors to popular third-party applications and business intelligence, and ensures compliance with industry regulations.
Support
what levels of support are available, whether the support is available for your location, if a third-party vendor is needed to assist with the implementation.
Integration capabilities
if a cloud platform integrates well with the company’s IT systems, complementary third-party apps, industry-specific software, and analytics services.
System upgrades
if the ERP platform is frequently updated to meet the unique needs of the company, if the upgrades can improve business operations.
Costs
if the cost structure suits the company’s expectations and business mode (monthly or annual fees), if there are any extra or hidden costs for additional functionality, support level, and the number of users.
End-to-end implementation of cloud ERP
Itransition helps companies across industries implement scalable and future-proof cloud-based ERP solutions as well as upgrade or migrate existing ERP platforms to meet the needs of growing businesses.
Itransition’s ERP consultants provide advisory support along the ERP implementation and optimization, helping mitigate project risks and ensure high ROI by taking on:
- Analysis of business needs and technology environment
- ERP architecture design
- Software selection
- Strategy creation and roadmapping
- Implementation support
We provide end-to-end ERP implementation services that include all or some of the following activities:
- ERP consulting
- ERP integration
- ERP migration
- Custom ERP development
- ERP testing
- ERP support and maintenance
- ERP customization
Client spotlight
90%
manual tasks automated
Cloud-based ERP system for a repair and maintenance service company
Our team introduced an Odoo-based ERP solution, which helped the customer automate core business processes, reduce purchase order approval time by 50% and accelerate work order management by 100%.
80%
of manual tasks automated
Odoo-based fleet management solution in the cloud
Our team delivered an ERP system for the customer to reduce operational expenses by 50% and increase client satisfaction due to operations transparency.
Cloud-based ERP adoption roadmap
1
Analysis
An ERP consulting team defines and analyzes business processes, workflows, and existing infrastructure to elicit functional and non-functional requirements and outline the ERP scope.
2
Design
The expert team elaborates on requirements, designs the ERP solution’s architecture, outlines an integration scope, and draws up the optimal technology stack for it.
3
Planning
The project team outlines project stages and deliverables, timeframes and budget, resources and contingency plans, and develops a change management plan.
4
Configuration/Customization
The team proceeds with the configuration and customization of the cloud ERP platform. After that, they set up the integrations between the ERP platform and the existing technology environment.
5
Testing
The quality assurance engineers check the ERP solution for bugs, inefficiencies, malfunctions, and data quality issues by running functional, performance, usability, and compatibility quality assurance activities.
6
Deployment
ERP experts deploy the ERP platform to the production environment and migrate corporate information from legacy systems, third-party software, and other data sources to the ERP database.
7
Training
ERP consultants conduct webinars and live classes and offer onboarding training materials and support documentation to increase user acceptance rates and improve overall productivity.
8
Support
The ERP support team manages performance issues, resolves bugs, fine-tunes data flows, and performs technology upgrades on request.
Cloud-based ERP usage across industries
- Inventory and warehousing
- Order fulfillment
- Return management
- Customer relation management
- Suppliers and partners management
- Shipping and distribution
- Accounting and finance
- Contractor and subcontractor management
- Project management
- Field services
- Inventory and warehouse management
- Supplier management
- Accounting and finance
- Сonstruction health and safety plan
- Procurement management
- Production management and planning
- Inventory and warehousing
- Supply chain management
- Order fulfillment
- Recipe/formula management
- Compliance and quality management
Logistics
- Dispatch management
- Fleet resource planning and tracking
- Inventory control
- Fleet maintenance
- Cost management
- Security of goods
- Financial reporting
- Customer order management
- Procurement management
- Supply chain and inventory management
- Production management
- Field service
- Finance and accounting
- Asset management
- Project management
- Production and quality management
- Supply chain management
- Finance and accounting
- Risk management and compliance
Healthcare
- Patient management
- Appointments scheduling
- Patient accounting and billing
- Customer service
- Resource planning
- Inventory and medication management
- Claims management and underwriting
- Policy management
- Task management
- User management
- Supplier management
- Subscription management
Telecommunications
- Provisioning
- Field services
- Asset management
- Spare parts planning
- Billing
- Customer support
- Customer relationship management
- Accounts payable and receivable
- Construction management
- Marketing automation
- User portal
- Tenant and property management
- Finance management
Benefits of cloud ERP
These days more than half of organizations prefer cloud-based ERP solutions to on-site enterprise platforms, and there are significant reasons for this:
Lower up-front investments
Cloud enterprise resource planning software helps companies eliminate costly expenses associated with server purchasing and maintenance, IT staffing for initial solution implementation and ongoing maintenance, software license fee that is paid in full and upfront with on-premises solutions, security and backup costs. Having a low entrance barrier, cloud ERP solutions enable startups and small businesses to access the same ERP capabilities of large corporations.
Streamlined implementation
With vendor-supported cloud ERP implementation, companies don’t have to worry about hardware choice and installation, IT staff onboarding and training, security setup, and enabling free data access for authorized employees. As soon as the cloud ERP platform is configured, companies may get down to business process automation.
Instant scalability
Cloud ERP software allows for rapid up-scaling, which minimizes the risks of performance deterioration due to a sudden increase in the number of users or a drop in data volumes. You may then scale down and adjust software use according to fluctuating needs and cut operating costs dynamically.
Worry-free system maintenance
Most cloud ERP software vendors supply updates in automatic mode unlike upgrades of solutions deployed in private data centers, which consume significant IT labor resources and evoke possible disruptions in business processes. Software upgrades, functionality extensions, and security patches usually happen in the background or during off hours, so users experience no disturbance.
Improved data accessibility
Cloud deployment implies your team can access ERP data whenever and wherever there is a stable internet connection. Corporate information flows in real time, which means siloed departments can access timely and accurate data, collaborate, and generate accurate financial reports and statements, optimize the supply chain, identify process disruptions, achieve operational excellence, and boost profits.
Cost transparency
Cloud ERP solutions are offered under either usage-based (paying for the resources and functionality used) or fixed monthly/yearly subscription fees with no additional hidden expenses for security, system upgrades and maintenance.
Vendor support
Cloud-based ERP solutions may be supported 24/7 regardless of time zone and maintenance/upgrades required, which reduces the strain on the in-house IT department.
Integration flexibility
Cloud-based ERP software tends to integrate well with other cloud-based services and management software due to a library of pre-built connectors, easy-to-use APIs, and standardized interface protocols.
Disaster recovery
Data backups and disaster recovery capabilities of cloud ERP solutions are handled by professional experts, while on-premises ERP solutions can never eliminate the risk of catastrophic data loss in the case of hardware or software failure or a natural disaster.
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Cloud ERP challenges & how to overcome them
Challenge
Solution
Cloud ERP solutions do not allow for heavy customization, which may not fit companies with complex workflows that need a personal approach.
Companies may enable customization of cloud-based ERP by developing additional integrations, changing software configurations, and adding extensions. However, if heavy customizations are required and there is a high risk of application errors due to unsupported code, cloud-based SaaS ERP solutions may not be the best fit.
Flexible periodic payments, which may increase in the long run, can make cloud ERP an expensive option.
For companies that grow rapidly, cloud subscription costs may exceed the costs of running a legacy solution. To avoid that, many companies resort to professional consultancy that helps them assess both options, educate them about the most common cloud-based ERP cost structures and models, and match them up with the company’s current and future needs.
Deploying a cloud ERP solution or switching to the cloud from legacy ERP may entail some resistance from stakeholders and end-users.
Even if the interface and the functionality of a newly-delivered cloud ERP solution are intuitive and easy to use, companies still need time and support to adapt it. An elaborated change management plan and extra support from the ERP partner will simplify and streamline the adaptation.
Integration with legacy systems may hinder the cloud ERP solution’s success due to varying interface protocols, private APIs, and system documentation loss.
Before implementing a cloud ERP, a company should start with a comprehensive technology audit and build an ERP integration strategy, which may imply using various integration approaches or even creating a hybrid ERP solution.
Data security is a top concern for most companies considering cloud-based ERP software.
All major cloud ERP vendors offer a holistic approach to data security. They offer 24/7 system monitoring, end-to-end data encryption, dynamic data masking, multi-factor authentication, controlling physical access to the equipment, and system vulnerability assessment.
Ensuring the success of a cloud-based ERP solution
The success of a cloud-based ERP project begins with choosing a reliable technology partner that assists with the cloud ERP software selection and guides you through a rocky implementation process. With 25+ years in delivering enterprise software solutions for companies across industries, Itransition offers a full range of ERP services to help you effectively manage your business processes.
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