Cloud-based ERP: types, benefits & best platforms

February 8, 2024

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Cloud-based ERP

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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.

Total cost of ownership

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.

ERP consulting

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
Software selection
Implementation support

ERP architecture design
Strategy creation and roadmapping

ERP implementation

We provide end-to-end ERP implementation services that include all or some of the following activities:

ERP integration
ERP testing

ERP migration
ERP support and maintenance

Client spotlight

Cloud-based ERP system for a repair and maintenance service company

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%.

Odoo-based fleet management solution in the cloud

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

Retail & ecommerce

Inventory and warehousing
Order fulfillment
Return management
Customer relation management

Suppliers and partners management
Shipping and distribution
Accounting and finance

Construction

Contractor and subcontractor management
Project management
Field services
Inventory and warehouse management

Supplier management
Accounting and finance
Сonstruction health and safety plan

Manufacturing

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

Automotive

Customer order management
Procurement management
Supply chain and inventory management

Production management
Field service
Finance and accounting

Oil & gas

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

Insurance

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

Real estate

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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