Cloud-Based ERP: Definition and The Benefits for Your Business! (2022)

“Which one, Cloud-based ERP or conventional ERP?” That’s the question that arises when a company considers implementing an ERP solution to their business. With a variety of new systems being introduced on the market, companies are becoming skeptical about Cloud-based ERP solutions. Choosing between Cloud-based ERP and conventional ERP is similar to buying or renting a house. Therefore, it is very important for companies to consider the best and most trusted type or brand of ERP. You can get a price calculation for HashMicro software based on your business requirements just by downloading our software pricing scheme calculations.

When someone rents a house for the long term, the total amount they spend on rental costs will probably be quite large. If they add a little more amount, then they might be able to buy the house. In a rented house, of course, our opportunity to modify the house is limited, but if you have your own house, we can modify it according to our wishes, depending on the budget. If we want to live somewhere in the short term, renting a house is a better option because we can break the contract and move somewhere else. So whether buying or renting a house, it all depends on the desired lifetime, modification needs, and cost factors.

Choosing Cloud-based ERP software is similar to renting a house and choosing a conventional ERP is similar to buying a home. When it comes to long-term use, conventional ERP solutions will be more cost-effective. Cloud-based ERP covers usage and licensing fees over a period of time.

Table of Content

  • Cloud-Based ERP vs Conventional ERP
    • Cloud-based ERP software
    • Conventional ERP software
  • Large Enterprises that Use Cloud-Based ERP
  • Types of Cloud-Based ERP Solutions
    • SaaS (Software as a Service) model
    • Hosted ERP model
    • Hybrid ERP model
  • How Do You Choose the Right Type of ERP for Your Business?
  • Conclusion

Cloud-Based ERP vs Conventional ERP

Cloud-Based ERP: Definition and The Benefits for Your Business! (2)

Choosing between a cloud ERP and a conventional ERP is similar to the paradigm of buying or renting a house! When someone rents a house for the long term, the total amount they spend on the rent is considerable. If they add some more amount to it they could have probably bought the house. In a rented house, restricted modifications are allowed but the owner of a house can modify the house as they want, depending on their budget. If the tenant is looking for a short-term stay, renting a house is a better option as they can just cancel the contract and move on when they decide. So whether to buy or rent a house depends purely on the tenure of use, whether it requires any modifications and the cost factor.

(Video) Benefits of Cloud Based ERP Solutions

Cloud-based ERP software

HashMicro’s ERP solutions are a better option when the company does not have a large amount to invest in the initial implementation. The only investments companies need in this case of it are workstations for data entry and secure high-speed internet connections. An on-site workstation will connect data to a web-based server over an internet connection. This the company does to retrieve the processed data from the server and send the data to the server for processing and storage. Any software or hardware development you need is done on the server end without affecting the end-user or client.

Lately, some companies in the defense and aviation sectors have chosen to implement Cloud-based ERP. Cloud-based ERP for government agencies is also an option to automate administrative and operational processes in real-time and securely. Many major players in the e-Commerce sector including Amazon are successful after adopting Cloud-based ERP solutions for their companies.

Microsoft came up with its new Cloud platform under the name Microsoft Azure Stack. Microsoft’s cloud is targeting companies that were previously anti-use of the Cloud platform because of concerns about data security and regulatory issues. Microsoft Azure Stack offers a private Cloud for enterprises with system support such as PaaS or Platform-as-a-Service and IaaS or Infrastructure-as-a-Service.

Conventional ERP software

Another problem with conventional ERP software is if the company decides to end the business. If this happens, the ERP you are implementing becomes obsolete. In such cases, the entire investment in ERP implementation is a loss because you cannot sell or transfer to a third party. If you use cloud-based ERP, the disadvantage is the license or usage fee you have paid before.

The organization can decide to discontinue using the particular ERP service and move on with another product that suits the new business. Data security is another concern for many organizations, dealing with classified or highly secure data. Though security is a must for all cloud-based ERP, if the organization cannot take risks, conventional ERP will be a better option. Here, the organization will manage all the data under its servers. So data security is entirely at their risk when it comes to conventional ERP solutions.

(Video) Benefits of a Cloud ERP System

Also read: Original Equipment Manufacturer: Definition, Characteristics, and Benefits

Large Enterprises that Use Cloud-Based ERP

Recently a few organizations in the defense and aviation sector have chosen to implement it. Many big players in the e-commerce sector including Amazon are succeeding after adopting the cloud version of ERP solutions for their organizations. Microsoft is coming up with its new cloud platform called Microsoft Azure Stack. Microsoft’s new cloud release is targeted at companies that stayed away from the cloud platform because of data security and regulatory issues. Microsoft’s Azure Stack offers a private cloud for the organization. It intends to support PaaS or Platform-as-a-Service and IaaS or Infrastructure-as-a-Service.

Types of Cloud-Based ERP Solutions

Cloud-Based ERP: Definition and The Benefits for Your Business! (4)

(Video) Business benefits of an ERP System

Cloud-based ERP can be your choice to improve the company’s performance to be more optimal and efficient. This system can also be your choice that does not have a large amount to invest in the initial implementation. However, you need to know that there are three types of cloud ERP solutions. Here’s the explanation:

SaaS (Software as a Service) model

The cloud ERP solution provider shares the hardware or server with many small businesses. A small service fee or a subscription fee is charged for each user or business subscribed to their ERP solution. This is the most popular model for small businesses as the subscription fee is negligible when compared to the implementation cost of on-site ERP. It is equivalent to buying a server space to host a business portal.

Hosted ERP model

Each customer or business has a dedicated server. This is comparatively expensive but preferred by larger organizations. This has many advantages over the SaaS model. Since the server is not shared, data is more secure. Issues with the data of one business do not affect the others, as each business has a dedicated server.

Hybrid ERP model

Certain modules are in the conventional model and the remaining are in the cloud-based model. Businesses with an existing installation of conventional ERPs can adopt this model for upgrades and additional modules. They can retain the already implemented ERP on-site and at the same time utilize the cloud-based models for additional functionalities without disturbing the existing model.

Also read YOY Growth: Get to Know the Benefits and How to Calculate It!

(Video) Cloud-based ERP vs On-Premise ERP for Small Manufacturing Business

How Do You Choose the Right Type of ERP for Your Business?

Cloud-Based ERP: Definition and The Benefits for Your Business! (5)

After knowing the importance and its types, you will choose which type of ERP is right. Are you having trouble choosing because of the many exciting options? You do not need to worry because factors can help you determine the right ERP choice. In short, the key factors in deciding on the type of ERP to be implemented are:

  • The implementation cost for an on-site ERP that includes new or upgraded IT and human resources is very high. Add to that the cost of training the employees to use a new system. A cloud ERP solution is the better option for your company.
  • If your company is planning to use the ERP for more than 10 years, a conventional ERP would be more cost-effective. It is because considering the subscription or licensing fee that will be charged by the cloud ERP solution provider.
  • You can choose a conventional ERP if you need extensive adjustments. This is because cloud ERP doesn’t support too many customizations.
  • Does your data need to be extremely secure? Then go for the on-site ERP implementation. This is because data security requires considerable investment.
  • The maintenance and up-gradation costs for on-site implementations will be higher than the cloud ERP solutions. Upgradations for this ERP are done in such a way that the downtime is minimized.

Keeping all these factors in mind, the organization can decide whether to consider a conventional on-site ERP solution or a cloud-based solution.

Conclusion

There are pros and cons regarding which ERP options are suitable for your company. It has many benefits, such as simple implementation and being easily accessible, etc. You also won’t get these benefits from conventional ERP. The ERP has many benefits, such as simple implementation and being easily accessible, etc. There are three types of cloud-based ERP: the Saas model, the hybrid model, and hosted model.

(Video) ERP in the cloud - Use cases & benefits

Are you experiencing confusion in determining the best cloud-based ERP provider? HashMicro cloud-based ERP software can be your choice to improve an enterprise’s performance easily, quickly, and accurately. Hash Core ERP is a cloud-based ERP that can help you to drive your company’s growth. You can also choose the right ERP vendor after calculating the ERP software pricing scheme. Tell us about your type of business and industry and we will offer you the best business solutions. If you want to get a free demo of our tour product, click here!

FAQs

What are some benefits of using a cloud based system ERP? ›

Some advantages of a cloud ERP solution include:cessary infrastructure is already in place.
  • Lower capital requirements to access innovation. ...
  • Better and faster scalability. ...
  • Automatic upgrades. ...
  • Fewer infrastructure costs. ...
  • Trim operational expenses. ...
  • Dramatically shorter deployment times for better ROI.

What does cloud based ERP mean? ›

What is cloud ERP software? Cloud ERP is enterprise resource planning software that is accessible over the Internet. As the IT backbone or “brains” of a company, cloud ERP software provides advanced functionality for all the core processes in an organization.

What is an ERP system and how can it benefit your business? ›

ERP, or Enterprise Resource Planning, is software that helps your business manage its back-end processes. From finance to accounting, supply chains and inventory, and even tasks like scheduling, an ERP is a centralized program that can handle all of the essential functions that make your business run.

What are the benefits and business value of ERP? ›

ERP software enables you to be more cost effective through gained efficiencies in these areas (and more): Faster financial close. Improved inventory planning and accuracy. Accurate forecasting.

What is the main benefit of cloud based? ›

Whether you experience a natural disaster, power failure or other crisis, having your data stored in the cloud ensures it is backed up and protected in a secure and safe location. Being able to access your data again quickly allows you to conduct business as usual, minimising any downtime and loss of productivity.

Is a cloud based ERP system? ›

Cloud-based ERP is a system of enterprise resource planning software and tools that are hosted and managed offsite in the cloud by your vendor. With cloud deployment, you can focus on running your business rather than IT administration.

What is an example of a cloud ERP? ›

The best cloud-based ERP software is NetSuite ERP, as it automates essential business workflows across multiple industries efficiently. It also provides robust tools for complete accounting, purchase processing, order tracking, as well as advanced modules for warehouse, shipping, fulfillment, and compliance management.

What is the importance of ERP? ›

It also helps to streamline business processes and improve overall business functions. Typically, an ERP solution covers broad and deep end-to-end processes such as finance, human resources, warehousing, manufacturing, customer relationship, order management, marketing, sales, project management, and more.

What is ERP explain the features and benefits of it with example? ›

ERP provides the ability to automate repeatable business tasks, such as payroll, order processing, invoicing, reporting and more. Automation minimizes the time spent on manual data entry, reduces errors and lets employees focus on more value-added tasks.

What are two benefits of a cloud based system? ›

Speed to market: Developing in the cloud enables users to get their applications to market quickly. Data security: Hardware failures do not result in data loss because of networked backups. Savings on equipment: Cloud computing uses remote resources, saving organizations the cost of servers and other equipment.

What are 2 benefits of using a cloud database? ›

The Benefits of a Cloud Database. As cloud services mature and reduce in cost, moving your database to the cloud can offer flexible, affordable, and scalable database management. Your team's applications rely upon a robust and efficient connection to a database.

What is cloud what are its benefits and challenges? ›

Cloud allows us to quickly and easily access store information anywhere, anytime in the whole world, using an internet connection. An internet cloud infrastructure increases organization productivity and efficiency by ensuring that our data is always accessible.

What is the most important function of an ERP system? ›

Primary Functions of ERP

As the name suggests, ERP's primary goal is to manage the various resources within the company to make sure they are being utilized in a cost-effective way. It is also designed to make sure that all resources are being used efficiently.

What is a cloud based system? ›

Simply put, cloud computing is the delivery of computing services—including servers, storage, databases, networking, software, analytics, and intelligence—over the Internet (“the cloud”) to offer faster innovation, flexible resources, and economies of scale.

Is cloud based ERP safe? ›

The Cloud ERP solution is safe and secure to use as the Cloud Server Providers ensures its security from any data breach attacks through advanced Firewall protections, Multi-level Encryption, and various other methods.

What are cloud based services? ›

Cloud based services provide information technology (IT) as a service over the Internet or dedicated network, with delivery on demand, and payment based on usage. Cloud based services range from full applications and development platforms, to servers, storage, and virtual desktops.

What are the 3 types of cloud computing with examples? ›

Types of Cloud Computing
  • Infrastructure as a Service (IaaS) ...
  • Platform as a Service (PaaS) ...
  • Software as a Service (SaaS)

What are examples of cloud based solutions? ›

What are some examples of cloud services? Common SaaS services include Dropbox, Salesforce, Cisco WebEx. PaaS services include Google App Engine, Apache Stratos and OpenShift. Some well-known IaaS services are Amazon Web Services (AWS), Cisco Metapod and Microsoft Azure.

What is the difference between ERP and cloud ERP? ›

The basic difference between on-premise ERP and cloud ERP is clear: On-premise ERP solutions are installed locally on your company's hardware and servers and then managed by your IT staff while cloud ERP—also called SaaS, or Software-as-a-Service—is provided as a service.

What is the best definition of ERP? ›

Enterprise resource planning (ERP) refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations.

What is ERP definition? ›

What is ERP? Enterprise resource planning (ERP) is a type of software system that helps organizations automate and manage core business processes for optimal performance.

What is the 5 advantages of cloud computing? ›

Other Important Benefits of Cloud Computing

Offers Resilient Computing. Fast and effective virtualization. Provide you low-cost software. Offers advanced online security.

What are the advantages of cloud based ERP systems quizlet? ›

-Cloud-based ERP solutions are scalable, meaning it is possible to extend ERP support to new business processes and new business partners (e.g., suppliers) by purchasing new ERP modules.

What are 4 advantages of cloud? ›

Cloud infrastructures support environmental proactivity, powering virtual services rather than physical products and hardware, and cutting down on paper waste, improving energy efficiency, and (given that it allows employees access from anywhere with an internet connection) reducing commuter-related emissions.

Why is cloud computing important for business? ›

The main reasons why cloud computing is important for business is that it allows organizations to scale, maintain flexibility, and focus their efforts on business operations – not managing complex IT infrastructure. One of the best ways to optimize cloud computing for your business is by working with a cloud partner.

What are three benefits of cloud computing IT answers? ›

Cloud computing benefits
  • High Speed – Quick Deployment. ...
  • Automatic Software Updates and Integration. ...
  • Efficiency and Cost Reduction. ...
  • Data Security. ...
  • Scalability. ...
  • Collaboration. ...
  • Unlimited Storage Capacity. ...
  • Back-up and Restore Data.
5 Jul 2018

What are 3 uses of cloud computing? ›

Top 7 Most Common Uses of Cloud Computing
  • Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) ...
  • Software-as-a-Service (SaaS) ...
  • Hybrid cloud and multicloud. ...
  • Test and development.
  • Big data analytics.
1 Aug 2022

What is the most important advantage of cloud-based computing? ›

Scalability and flexibility

Cloud computing gives your business more flexibility. You can quickly scale resources and storage up to meet business demands without having to invest in physical infrastructure. Companies don't need to pay for or build the infrastructure needed to support their highest load levels.

What are the advantages of cloud-based ERP systems there are more than one answer? ›

Advantages of Cloud-based ERP

With cloud-based solutions, the provider takes care of hosting the solution and the support, so there's no need to hire and train additional IT resources. Scalability: One of the most appealing features of any cloud-based ERP is the ability to easily scale as a company's needs change.

Is a cloud-based ERP system? ›

Cloud-based ERP is a system of enterprise resource planning software and tools that are hosted and managed offsite in the cloud by your vendor. With cloud deployment, you can focus on running your business rather than IT administration.

What are the advantages and disadvantages of cloud services? ›

Pros and Cons of Cloud Storage Back
  • Advantage #1: Disaster Recovery (DR) ...
  • Advantage #2: Access your data anywhere. ...
  • Advantage #3: Low cost. ...
  • Advantage #4: Scalability. ...
  • Advantage #5: Security. ...
  • Disadvantage #1: Lack of total control. ...
  • Disadvantage #2: Difficult to migrate. ...
  • Disadvantage #3: Requires Internet.

What are at least 5 benefits of using databases? ›

A database management system helps improve organizational security, integration, compliance, and performance.
  • Improved data sharing and data security. ...
  • Effective data integration. ...
  • Consistent, reliable data. ...
  • Data that complies with privacy regulations. ...
  • Increased productivity. ...
  • Better decision-making.

What is cloud computing and its benefits? ›

Cloud computing refers to the use of hosted services, such as data storage, servers, databases, networking, and software over the internet. The data is stored on physical servers, which are maintained by a cloud service provider.

What are 4 benefits of using a database? ›

Database benefits
  • reduce the amount of time you spend managing data.
  • analyse data in a variety of ways.
  • promote a disciplined approach to data management.
  • turn disparate information into a valuable resource.
  • improve the quality and consistency of information.

Videos

1. Why Cloud Based ERP Software and Accounts Payable Automation Are Critical to Business Growth
(Tipalti)
2. Is Cloud ERP The Right Choice For A Small Business
(Intelligent Technologies Inc)
3. Cloud based ERP for Small Manufacturers
(Winning Moves OBB)
4. Enterprise Resource Planning to the Cloud
(FORVIS)
5. On-Premises vs. Cloud-Based ERP Solutions
(NetSuite)
6. What Does A Cloud Based Solution Mean | Gurus Solutions Whiteboard
(Gurus Solutions - NetSuite & Oracle Cloud Solutions)

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