Cloud-Based ERP Software: What is Cloud ERP and How Does it Work - Clockwise Software (2022)

Cloud services, including cloud-based ERP software, are becoming more and more popular for managing business operations. With a great number of benefits, cloud services are taking the lead and superseding traditional ERP software.

If you’re a young startup thinking about bringing your own cloud-based ERP system to the market, this article will help you understand the current trends and show how your cloud ERP software can benefit existing businesses. In particular, you’ll find out:

  • what cloud ERP software is and how it differs from on-premises systems
  • the principles of a cloud-based ERP system’s operation
  • the reasons for ERP software’s popularity
  • what value your cloud-based ERP can bring to existing businesses

Let’s start with the basics.

Types of ERP software

Enterprise resource planning (ERP) software brings together different tools to allow users to keep track of business processes. An ERP platform includes a number of tools for accounting; inventory, supply, and order management; human resource management; customer relationship management; and even project management. With such a wide variety of tools inside one piece of software, daily business operations become effortless.

ERP software can be hosted on-premises or in the cloud. Let’s consider the particularities and differences of on-premises and cloud-based ERP systems.

On-premises ERP system

Cloud-based ERP system


In-house servers

Cloud services

Best choice for

Businesses that want to have customized software to meet their specific needs and have full control over their processes

Businesses that want to organize straightforward processes and conveniently manage business data

Requirements for use

In-house IT staff, investment in maintenance and security

Need to migrate the system and train employees to use it; no maintenance or security concerns

On-premises ERP system

On-premises ERP software is installed on a company’s servers and is maintained by an in-house team of developers and system administrators. To use such a system successfully, business owners need to invest in hardware, the ERP software itself, experienced IT staff, security software, and system maintenance.

Cloud-based ERP system

Unlike on-premises software, cloud-based ERP software is hosted in the cloud. Cloud services operate in the following way: Information is stored on remote servers that users can access via the internet. These servers are located on numerous computers, allowing cloud-based apps to provide fast response times even if some of the computers fail to operate properly.

(Video) What is Cloud ERP?

Cloud applications are hosted by a hosting company. The largest and most famous hosting services are Amazon Web Services (AWS), Microsoft Azure, and Google Cloud web hosting.

By opting for cloud ERP software, business owners avoid the hassle of running an on-premises platform, since maintaining the system is the cloud ERP vendor’s responsibility. Depending on the deployment option, there are three types of cloud-based ERPs: public, private, and hybrid.

Cloud-Based ERP Software: What is Cloud ERP and How Does it Work - Clockwise Software (1)

A public cloud is an IT model of providing and sharing computing services over the public internet. ERP software can be hosted in a public cloud as a Software as a Service (SaaS) solution, and this is the type of solution you’ll want to build. SaaS platforms allow businesses to migrate to the cloud quite fast, since all hardware and software is provided. Despite the name “public,” all the data a company keeps inside an ERP solution hosted in a public cloud is available only to those whom the company grants access.

A private cloud means that a business has its own separate cloud infrastructure. When building your cloud-based ERP, you should keep in mind that some of your clients might want to use a private cloud. You can offer a private cloud as an upgrade option. This will help your users have peace of mind about their data security while giving you an opportunity to sell a more expensive service.

Hybrid ERP software is a mixture of on-premises and cloud solutions. This is a great choice for companies that store sensitive user data and need to pay extra attention to security. By opting for a hybrid ERP, business owners can have their main software on-premises while using private or public servers and databases.

Read also:What the SaaS Business Model is and How it Works

How does a cloud-based ERP system work?

Cloud-based ERP software is usually presented as a SaaS solution. With a SaaS product, you can allow users to take advantage of different functionality by choosing a suitable subscription plan: the more expensive the plan, the more functionality they’ll be able to use. Thus, by building a SaaS-based cloud ERP system, you’ll be able to meet the needs of small, midsize, and large businesses.

(Video) On-Premises vs. Cloud-Based ERP Solutions

As a rule, cloud ERPs offer different monthly or annual plans depending on the number of users. You can also allow users to try out your cloud ERP software’s functionality by offering a free trial.

Why is cloud ERP software in demand?

No matter the size and type of a business, it needs an enterprise resource planning system to run its operations effectively. At the very beginning of business operations, business owners might opt for Excel tables and Google Sheets to keep track of all their processes. But sooner or later, the business requirements exceed the spreadsheet’s functionality. Now is the time to target businesses that are encountering the limitations of their existing tools and offer them your cloud-based ERP for convenient process management. When should you offer businesses your cloud-based ERP?

  • The business is growing

The bigger a company becomes, the more data and processes it has to manage. For growing businesses, you can offer your cloud-based ERP to help them scale without hassle. By taking care of your cloud ERP’s performance and scalability, you allow your customers to increase their server capacity in several clicks.

  • The business spends too much on software

Your target users may not have a unified data management solution yet, and they probably purchase different software products to solve different tasks. By offering them a cloud ERP platform, you provide them with a universal system that brings all their processes under one roof. In addition to having all the necessary functionality to meet their business needs, they’ll be able to predict their expenses. Just make sure you provide information about your subscription plans.

  • The business has inefficient processes

No matter its size, a company might have trouble organizing processes.

A new business might not have tried any enterprise resource planning system. Business owners might have handled all information with the help of spreadsheets, task trackers, accounting software, CRMs, etc. Storing and processing information in different systems can lead to the inability to unify that information, inefficient data management, irrelevant reporting, and a lack of data-driven decisions. With a decent cloud ERP system, you can help your users solve these pain points.

As your user’s business grows, the challenges of effective process management grow too. That’s why midsize and large businesses will likely find it more difficult to adopt a cloud-based ERP than small businesses will. Owners of large businesses will have to spend a lot of time, money, and resources to migrate all their data to cloud ERP software. Thus, the sooner a company starts using a cloud-based ERP, the fewer organizational troubles they’ll face when the company grows.

While migrating to a cloud-based ERP system is a sensible decision for many businesses, some hesitate as to whether they should choose such software for their purposes. There are a couple of situations when your cloud ERP might be challenging for businesses to adopt.

  • The business stores sensitive information

Storing users’ data requires companies to pay extra attention to data security, so you have to make sure you’ll be able to provide data security in the cloud for your users. Make sure your cloud-based ERP solution complies with data security laws, regulations, and standards of whatever industry or industries you’re targeting. For example, to store healthcare clients’ data, your software should be HIPAA compliant. Any software that stores and processes users’ financial data should comply with the PCI DSS standard. For any solution that gathers users’ personal data and provides services to EU residents, GDPR compliance is a must.

(Video) What is ERP System? (Enterprise Resource Planning)

  • The business uses an on-premises ERP platform

Migrating from an on-premises system to a cloud ERP can take some time and effort, and the larger the organization, the more complicated the process. This can stop your target users from making a firm decision to migrate. But you can convince them that your cloud ERP is the most reasonable solution in terms of price and quality.

If despite all the possible challenges you decide to build a cloud-based ERP solution, you’ll have a chance to bring a number of advantages to your users.

Read also:How to Build a Cloud SaaS Application

The benefits your cloud-based ERP can bring to the market

Business owners wouldn’t opt for cloud ERP software if it didn’t have clear benefits. Let’s see what advantages you can offer to your clients with an ERP platform hosted in the cloud.

Cloud-Based ERP Software: What is Cloud ERP and How Does it Work - Clockwise Software (2)


Sooner or later, your target users’ business will start growing. Scaling on-premises software will business owners to purchase more hardware and software as well as involve more people in its maintenance. However, you can offer a better option. Cloud ERP software can easily scale. Persuade your users that they can seamlessly scale whenever they need and they will have a good reason to opt for your software.

Focus on business growth

Taking into account that your users don’t need to put much effort into running a cloud-based ERP system, they can focus on more strategic goals. For example, they can direct the money they save to hire more team members and grow their business.

Seamless updates

By choosing your cloud-based solution, your customers will take advantage of regular updates that don't affect their workflow and bring more value at the same time. Since it's your responsibility to work on your platform improvements to provide your customers with a better experience, they can forget about the hassle of staying up-to-date (as they would do with on-premises software). For your customers, automatic updates also mean no maintenance efforts.

(Video) What is Oracle Cloud ERP? [Introduction to Oracle ERP Cloud and Fusion]

Unlimited access

By storing all information in the cloud, a cloud ERP system allows users to access it from any device at any time. To use a cloud-based solution, a user only needs internet access and a browser on a PC, tablet, or smartphone.

Predictable expenditures

Show your target users your subscription plans so they can allocate their budgets wisely. It’s easy to calculate how much you’ll need to spend if you know the monthly or annual subscription fees.


Make sure you take good care of your cloud ERP software’s security. This is one of the most important concerns your target users can have as they entrust you with their essential business information. Work on providing your users with regular backups of their data so they have peace of mind concerning their data security. And don’t forget about compliance.


With the growing demand for cloud services, building a cloud ERP system seems like a reasonable choice for a young startup. Moreover, with the number of benefits such software can bring businesses, you have a good chance of addressing your target users’ pain points and offering the best solution.

Thinking about creating a cloud-based ERP?

Let us know what exactly you need and we’ll offer solutions.

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What is Cloud ERP and how does IT work? ›

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 the cloud-based software? ›

SaaS—also known as cloud-based software or cloud applications—is application software that's hosted in the cloud and that you access and use via a web browser, a dedicated desktop client, or an API that integrates with your desktop or mobile operating system.

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.

Why is cloud-based ERP better? ›

Cloud ERP systems are superior to on-premises ERPs for several important reasons. Cloud ERP systems are accessible from anywhere, are nearly always online, and don't require the same company IT resources for maintenance and upgrades. In the long-run, cloud ERP solutions may offer cost savings and better performance.

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.

Why is cloud based software important? ›

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.

What are the 4 main types of cloud computing systems? ›

Overview. There are four main types of cloud computing: private clouds, public clouds, hybrid clouds, and multiclouds. There are also three main types of cloud computing services: Infrastructure-as-a-Service (IaaS), Platforms-as-a-Service (PaaS), and Software-as-a-Service (SaaS).

What is an example of cloud based storage? ›

Some of the most popular cloud storage providers are Apple (iCloud), Amazon (Amazon Web Services ), Dropbox, and Google.

What are the 3 common types of ERP? ›

There are three main types of ERP systems that function with different deployment model options. The most common types of ERP systems include cloud ERP, on-premise ERP, and hybrid ERP.

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 is true Cloud ERP? ›

True Cloud is used to describe a platform that is not limited by number of users or amount of storage. It is a service that is held in a shared environment online, and is managed by a cloud service provider. This differs from a hosted solution in that it is not based from a physical server.

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 the benefits of cloud based solutions? ›

Cloud-based services provide quick data recovery for all kinds of emergency scenarios – from natural disasters to power outages. Cloud infrastructure can also help you with loss prevention. If you rely on a traditional on-premises approach, all your data will be stored locally, on office computers.

Why is cloud ERP cost effective? ›

Cloud ERP can cater to a large number of users and are flexible, allowing you to scale your business up and down as required easily. This can reduce costs in the long run, as you only pay for the functionality and number of users you require at any given time. On-premises ERP solutions do not have this flexibility.

What is the difference between ERP and software? ›

An ERP is generally offered as a customized solution that integrates systems based on the business. Accounting software is a standalone software package that focuses on just the accounting aspects of a business solely. It has comprehensive features that deal with the financial part of any business only.

Is cloud-based ERP SaaS? ›

SaaS ERP is a type of cloud-based enterprise resource planning software that runs on the vendor or cloud provider's servers, is sold through subscription and delivered as a service over the internet.

Is a disadvantage of cloud-based ERP systems? ›

Disadvantages of Cloud-Based ERP Systems

The main drawback of cloud-based solutions is that the provider can access your data. Many companies have lots of sensitive data, and accessing it requires a high level of clearance. This is a reason why many defense and aerospace vendors choose on-premise solutions.

How do cloud based programs work? ›

How Cloud Computing Works. Cloud computing works by having companies host or maintain massive data centers that provide the security, storage capacity and computing power to support cloud infrastructure. Clients pay for the rights to use their clouds along with an ecosystem to communicate between devices and programs.

What are 4 advantages of cloud? ›

Benefits of Cloud Computing
  • Faster time to market. You can spin up new instances or retire them in seconds, allowing developers to accelerate development with quick deployments. ...
  • Scalability and flexibility. ...
  • Cost savings. ...
  • Better collaboration. ...
  • Advanced security. ...
  • Data loss prevention.

What are the 3 basic components of cloud computing? ›

Cloud computing is a general term for anything that involves delivering hosted services over the internet. These services are divided into three main categories or types of cloud computing: infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS).

What are the 3 types of cloud storage? ›

There are three main cloud storage types: object storage, file storage, and block storage. Each offers its own advantages and has its own use cases.

Where is cloud based data stored? ›

The lesson here is simple: any data and apps you have in the cloud are physically stored on a server located at a data centre or server farm. The space is all yours and physically separate so that others cannot access it.

What is cloud simple example? ›

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.

Why is IT called cloud storage? ›

It is called cloud storage because it is storage, which takes place in the cloud, a vague shape of distant location. The cloud is there, but it does not have a definite shape as does a single server.

What are the five 5 ERP modules? ›

From financial management to inventory management, implementing the right ERP modules can help you manage your business more efficiently.
  • Supply Chain Management. ...
  • Financial Management. ...
  • Inventory Management. ...
  • CRM. ...
  • Human Resources.
14 Sept 2020

How many cloud types are there? ›

There are three main cloud types.

What are the types of data used in cloud computing? ›

Some of the different data types used in cloud computing are emails, contracts, images, blogs, text, Boolean, decimal, locale, number, date etc. The different data types define which operations can be safely performed for creating, transforming and using the variable in another computation.

What are main features of cloud services? ›

Top 10 features of Cloud Computers:
  • Self-service On-Demand.
  • Resources Pooling.
  • Easy Maintenance.
  • Economical.
  • Rapid Elasticity and Scalability.
  • Efficient Reporting services.
  • Automation.
  • Security.
18 Apr 2022

What is ERP in real time example? ›

Real-time ERP extends to the dock where trucks and trains are delivering or picking up containers. Straddle carriers on the dock move containers to and from the trucks and the quay-side STS cranes. Real-time ERP systems get the ship back underway and making money in the fastest possible time.

Is Oracle a cloud based ERP? ›

Oracle Fusion Cloud ERP is a complete, modern, cloud ERP suite that provides your teams with advanced capabilities, such as AI to automate the manual processes that slow them down, analytics to react to market shifts in real time, and automatic updates to stay current and gain a competitive advantage.

What clouds do SAP use? ›

Adoption of the SAP HANA Cloud Platform has increased steadily since the platform's launch in 2012, with SAP claiming over 4000 customers and 500 partners adopting the SAP HANA Cloud Platform.

What are the 3 common reasons to use the cloud? ›

Let's look at some of the most common reasons to use the cloud.
  • File storage: You can store all types of information in the cloud, including files and email. ...
  • File sharing: The cloud makes it easy to share files with several people at the same time. ...
  • Backing up data: You can also use the cloud to protect your files.

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 main benefit of ERP? ›

One of the biggest benefits of ERP is that it's a powerful data hub. An ERP system allows you to collect, store, and analyze data across your operations in one centralized location, providing a single source of truth and the visibility to act more strategically.

Is cloud ERP secure? ›

With cloud ERP, the costs of managing security are much lower because the cloud provider handles security responsibilities. The cloud provider will have systems in place for detecting and addressing security threats so that any potential threats are immediately handled according to predefined procedures.

What is Icloud ERP? ›

iCloudEMS manages the services of College ERP software which deals with integral modules like Online Admission System, Fee Payment Management, Attendance Management, Finance Management, Recruitment Management, Training & Placement Management, Library Management & Human Resource Management.

How do you build a cloud ERP? ›

This is how you can build an ERP system for your organization:
  1. Define the company's goal and requirements.
  2. Dive into UI/UX design.
  3. Consider tech stack.
  4. Integrate ERP modules.
  5. Choose the right development partner.
  6. Review the final product.

What is acumatica used for? ›

Acumatica is business-management software from basic online accounting to full ERP functionality, designed for a growing business. With Acumatica ERP you license only the modules you need now and add more when you are ready. All functionality can be used as a full SaaS, hosted private cloud or on-premises system.

What is SAP cloud ERP? ›

SAP S/4HANA Cloud is a future-ready enterprise resource planning (ERP) system with built-in intelligent technologies, including AI, machine learning, and advanced analytics.

Is Microsoft ERP cloud-based? ›

Dynamics on Azure. Make smarter decisions, redesign business processes faster, and fuel business growth using the cloud-based enterprise resource planning (ERP) solution built for, and on, Azure—bringing together ERP, business intelligence, infrastructure, compute, and database services.

Which ERP is used by Apple? ›

Apple uses SAP software for their App Store, iTunes, online store, and other online store services. They also use different SAP systems for their finance department and Human resources.

How cloud computing works step by step? ›

It uses a software, middleware, to ensure seamless connectivity between devices/computers linked via cloud computing. Cloud computing service providers usually maintain multiple copies of the data to mitigate instances of security threats, data loss, data breach, etc.

How do you create a cloud based application? ›

5 steps to building a cloud-ready application architecture
  1. Design the application as a collection of services. ...
  2. Decouple the data. ...
  3. Consider communications between application components. ...
  4. Model and design for performance and scaling. ...
  5. Make security systemic within the application.

What programming language is Acumatica? ›

Acumatica is built in . Net and C# on an XRP platform.

What type of software is Acumatica? ›

Acumatica is an industry-leading, cloud-based enterprise resource planning (ERP) platform designed to help small and midsize businesses reach their organizational goals. The suite of applications includes financial management, customer relationship management (CRM), project accounting and distribution management tools.

Is Acumatica a SaaS? ›

Acumatica SaaS is hosted on Amazon Web Services (AWS) to ensure we provide the world's best cloud infrastructure with Acumatica SaaS. AWS infrastructure and solutions are in compliance with regulations, standards, and best practices.

How does SAP cloud work? ›

SAP Cloud Platform was an open platform-as-a-service, which included the in-memory SAP HANA database management system, connects to both on premises and cloud-based systems running SAP or other third-party software and relies on open standards, like Java, JavaScript, Node. js and Cloud Foundry for integration options.

How cloud is used in SAP? ›

SAP Cloud Platform is the PaaS offering from SAP intended for application development. SAP Cloud Platform is an integration and extension platform that enables you to connect your landscape and create the application extensions based on business needs.

What is the difference between cloud and SAP? ›

The biggest difference between SAP Business One on the cloud vs. on premises is where they are located. On-premise software is typically locally installed on the computers and servers your business uses. Cloud software, on the other hand, is hosted on a vendor's server and can be easily accessed through a web browser.


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