Today we have something special for you guys because we are going to talk about cloud-based ERP (Enterprise Resource Planning) systems.
If you are responsible for maintaining and overseeing the operations of a business and if your business operates traditional on-site ERP systems then this blog is for you.
We are going to talk about how you can completely transform your ERP system into a cloud-based ERP system as we will talk about the costs associated with a cloud ERP system.
We are going to talk about the types of cloud ERP systems as well as all the benefits of a cloud-based ERP system over a traditional on-site server-based ERP.
So let us start the blog by understanding what is cloud ERP.
What Is the Meaning of Cloud ERP?
Every business needs an ERP system that is a unified system that helps the business or organisation to manage important functions such as finances and supply chain operations as well as human resources.
Traditionally every Enterprise Resource Planning (ERP) system used to be based on localised servers that would have to be operated manually and that would have to be hosted manually and locally.
These traditional on-site systems did not have redundancy or reliability and were vastly different from enterprise to enterprise.
You would generally have to custom-create systems for businesses and that would take up a lot of company time and resources not to mention a lot of training because localised ERP systems were not standardized.
Now imagine a system that is completely based on the cloud with no on-site servers as these cloud ERP systems can be run from any part of the world with just a basic Internet connection.
This means businesses can now operate a unified system that can be connected to and from any node and portal whether it is any kind of wireless communication device, smartphone or computer from a remote location.
This cloud ERP system is extremely easy to configure and can be integrated quite easily into your existing systems.
Cloud ERP systems are a scalable solution that does not require you to physically expand hardware and infrastructure if you just want to improve the capabilities of the system.
What Are the Cost Factors with Cloud ERP Integration?
Size Of the System
The first important factor that plays into the cost of a cloud ERP system and its integration is the size of the system because we need to understand that systems can vary depending on the scale of the organisation.
If you are looking at a small-scale business then the integration cost is going to be minimal because you are going to have less data migration needs and less storage issues. Accordingly, with a small-scale business, you are also going to need fewer features and modules (departments).
Additionally, the size of the system is also an indication of the number of users in the system as more users definitely mean a bigger system.
Complexity Of the System
One of the biggest factors that contribute to the cost of any cloud ERP system is the complexity of the system.
The complexity of the system depends on the number of modules you have in the system and when we talk about modules, we are talking about the different departments that need to be operated.
There are some basic departments or modules such as the HR module and then there is the very quintessential finance module. You also have other modules such as inventory and supply chain modules.
Apart from modules the complexity of the system also depends on the kind of business processes you want to conduct.
For example, if you want to look at a complex system then it can be the system for a business with multiple brands under its name and collaboration between all the brands and the primary business.
The best part about cloud ERP integration is that you can have as many levels of customisation as you want without bottlenecking the system. There are even load balancers to ensure there is no strain on the cloud ERP systems.
Licence or Subscription Costs
Cloud ERP systems have the advantage of being very affordable and the primary costs associated with running such a system fall into two categories.
You have cloud ERP systems that require vendor licencing to use the system and licensing fees can depend on the size of the system you are using as well as the size of the organisation and the number of users and modules in the system.
While this kind of setup is very popular, what is also popular is a subscription-based model.
A subscription system is usually more common and companies and organisations pay a subscription fee for using their servers and facilities.
It all depends on the size of the system as well as the size of the storage etc.
Sometimes the cloud providers are only going to provide the hosting and the server and the business needs to get the ERP software solution from another vendor.
Training and Support Costs
While cloud-based ERP systems are kind of standardized which means hiring an ERP expert can be quite easy. However, if you want to train existing staff and the new cloud ERP system then that is not very challenging.
However, having dedicated permanently recruited ERP staff is generally not so common with cloud ERP solutions.
In the case of cloud ERP solutions, the business or organisation usually outsources the management and maintenance to IT professionals and IT companies that take care of everything.
Having said that, if you choose to then you can also have ERP professionals permanently on your payroll but that is impractical and it is going to cost your company resources unnecessarily to train them to use a cloud ERP system although online ERP training courses are readily available.
That is where we come to support costs because cloud ERP systems usually need support in the form of cloud integration and maintenance professionals.
They take care of everything from making sure the system is capable of handling all the types of integrations youth throw at it.
Integration or Migration Costs
One of the biggest costs associated with cloud ERP systems is the integration as well as migration cost because when we talk about integrating with ERP, there can be some challenges to that.
You might already be using systems that may not be compatible with the desired cloud ERP platform you wish to integrate with and for that, we need a lot of testing and troubleshooting in order to make sure there are no compatibility issues.
The compatibility issues become even more serious when there is a migration going on between the old on-site ERP system and the new cloud ERP system.
That can be fixed with the utilisation of third-party integration tools as well as APIs.
Cloud ERP systems and platforms are very versatile and ready to deal with older systems and migration is never impossible, you just need experienced support professionals to do the integration or migration.
Here Are the Common Types of Cloud ERP Integration Systems Used by Enterprises
There are several types of ERP integrations namely Pre-Built Cloud Integrations, Point-To-Point Integrations, Enterprise Service Bus (ESB) Integrations as well as Integration Platform as A Service(iPaaS) and many more.
Let’s understand what they mean.
Pre-Built Cloud Integrations
The first option is the easiest to integrate because pre-built cloud ERP systems already come pre-configured and you just need to choose them according to your needs.
These kinds of systems do not need a lot of configurations and have been created by software vendors so that small and medium-sized business can integrate their operations with these systems with minimal technical expertise.
They offer easy connections with existing CRM systems and they are also very good for eCommerce businesses with platforms that need ERP solutions.
Point-To-Point Integrations
This is a very specific kind of ERP system that is exactly what the name suggests, it connects points and we are talking about specific software systems.
This is a very unique use case and this is generally not utilised by small and medium-sized enterprises looking for minimal customisability.
This kind of solution is not really provided by ERP vendors and can only be created with the help of ERP experts.
However, if you do not want to compromise on performance and if you are looking for the very best solution when it comes to ERP integration then this is it.
Enterprise Service Bus (ESB) Integrations
If you are operating a very large organisation with a lot of ERP and CRM systems as well as multiple other systems and connecting nodes between them then this is the perfect integration solution for you.
This is because ESB will allow you to create a centralised hub that will be excellent for the exchange of data and integrations between multiple software platforms.
Creating something like this requires a lot of technical skills and only senior ERP experts and professional cloud integration companies can provide a custom solution like the ESB.
We have to understand that this is not for everyone and if you run a small or medium-sized enterprise or business then you prob bly do not need a specialised solution like this but you must keep this in mind because every business expands and we sure hope you are business the grows to a point that you need an ESB system.
Integration Platform as A Service(iPaaS)
And finally, we have the iPaaS system. This is a type of pre-built system that allows organisations to create integrations much more easily.
This is one of the most flexible solutions out there and if you are bottlenecked with the basic solutions of ERP integrations then this can be a good option for you.
This is specially very helpful because it comes with tools and connectors which makes the process of integration quite easy.
While this is not as complicated as the other specialised solutions we have talked about above but this is also for a very specific purpose of when a business is just willing to expand a little bit more with their ERP system.
Here Are the Benefits of a Cloud ERP System
Cost Efficiency
The first and most important reason why anyone moves to a cloud-based ERP solution rather than an onsite traditional ERP is simply because of cost efficiency.
When you are going with a cloud ERP solution, you are not paying for the infrastructure and you are not paying for the energy requirements or even the costs associated with equipment upgradation and insurance of the equipment.
You are just paying for a service with the help of a subscription model which you can cancel any time or upgrade any time.
This just makes much more sense and is much more practical.
Updates and Maintenance
Speaking of updates and maintenance, you do not really have to do a lot of maintenance because much of that is automatic including automatic update patches and this is one of the primary reasons why companies go with a system like this.
Compare this to having your own on-site system and you have to take care of every update out there because sometimes you are existing systems might not work with third-party integrations.
You need to handle all that yourself and if you do not do that then you are business operations are going to stop.
Cloud ERP solutions mean you get access to the latest features automatically with the help of updates which might be a little bit more complicated than updating any app on your smartphone.
Scalability
Cloud ERP solutions are scalable which means you can upgrade the size of the system according to the growth of your business.
This is very different from having a traditional on-site ERP system which is as difficult upgrading as installing a new system.
Cloud ERP solutions do not require you to buy new infrastructure and it is all about going to your profile and clicking on a single button to add modules or add storage etc.
Downgrading is also possible on the opposite end for when you are not happy with a big cloud ERP system and you want to downsize things.
Compare downgrading a cloud ERP system with a traditional ERP system and it is nearly impossible to downsize and downgrade a traditional system without incurring losses.
Security
If you operate a traditional ERP system then the entire responsibility of security falls under your authority which includes additional resources and investments and hiring of extra professionals in order to make sure your system is airtight.
Cloud ERP solutions on the other hand already come with multiple forms of encryption and follow industry compliance standards and regulations.
In addition to that, new security enhancements are continuously being added and upgraded as we speak as cloud ERP vendors need to have better security because businesses rely on them.
Collaboration
A cloud ERP solution is also excellent when it comes to collaboration between different departments.
This is possible because it allows the sharing of real-time data across locations and you are not limited to a single location which is the case with on-site ERP systems.
This also makes it possible for better accessibility and can help organisations with sharing access to their system with off-site employees.
Having a system like this is important because now you can access your cloud ERP system from anywhere on the planet.
This also means better and easier options for collaboration between companies and now you can outsource your business operations to other smaller companies or even take in projects and integrate with other ERP systems easily.
This provides a greater level of flexibility for any business and having more options and more flexibility is always better.
Redundancy
Redundancy is one of the biggest advantages of any cloud solution compared to any traditional server solution.
Let us simplify this for you. Let’s say you need to access a few pictures from time to time and you have saved them on your computer.
Now imagine the storage of your computer gets corrupted or maybe the system gets attacked by malware that overwrites the data.
Your images are gone.
Now imagine saving those same files on multiple locations like your personal computer, your friend’s and your sister’s computer. That way even if one option gets damaged, you can still recover the data from other areas.
That is redundancy.
That is what happens with a cloud solution. With a cloud solution, you do not even have to think about redundancy because every cloudy solution comes with automatic redundancy which means you do not even have to think about how they are going to store the data.
This is because professional cloud vendors and companies rely on multiple levels of redundancy of having storage of servers across multiple continents. This level of redundancy is simply impossible to achieve with a traditional on-site system.
We hope this blog has been helpful for you to understand cloud ERP integration solutions and if you are looking for such a solution from a seasoned professional cloud ERP company, we are here for you.
We are Think To Share IT Solution and we are renowned for our cloud integration and migration as well as implementation solutions. We provide some of the most comprehensive cloud ERP integration solutions in the industry.
We have extensive experience in creating custom ERP solutions for clients of all sizes and types across countries and continents and we would love to extend this experience and expertise to your business needs.
We welcome you to visit our website and check out everything we do.
