What Is Cloud ERP Software & How Does It Work? (2022)

10 Min. Read

November 16, 2021

What Is Cloud ERP Software & How Does It Work? (1)

One of the advantages of living in the age of the internet is how easy it can make life. This is especially true for businesses and business owners. In today’s market, there’s a software option for just about any business activity you can think of. There are even entire packages of software that help a business function from the very beginning. One of the most helpful software options available today is enterprise resource planning (ERP) software. This software has been around for a while, and more modern entries are actually becoming cloud-based.

If you’re looking for cloud-based ERP software, you’ve come to the right place. We’re going to cover everything you need to know about cloud ERP software for your business.

Here’s What We’ll Cover:

What is Cloud-Based ERP Software?

The Components of Cloud ERP Software

Comparing Cloud-Based Options with On-Premises Options

Different Types of Cloud ERP Systems

What Are the Benefits of Using a Cloud-Based System?

(Video) What is Cloud ERP?

Key Takeaways

What is Cloud-Based ERP Software?

Cloud-based ERP software is similar to ERP software, but it’s based in the cloud entirely. What does that mean, though? It means that the system, as well as its data, is located in a remote storage space. It is then accessed by using an internet connection. The remote server and storage location is something you’re familiar with already; the cloud.

Many cloud vendors and cloud platforms are able to be accessed in real-time, and from anywhere. This is a huge advantage over the technology of yesterday. It means that you, as well as your employees, can access the information vital to doing business when it’s needed.

While cloud-based ERP options have been available for a while, they became much more mainstream recently. This is largely due to the global pandemic. As businesses shifted to remote work, employees needed a way to access their software from home. A cloud-based ERP solution was the answer for many companies.

The Components of Cloud ERP Software

ERP software itself is fairly large. It contains many different components, designed to help an enterprise-sized corporation run. As you can expect, these components are all specialized, meant to help with certain processes. Most ERP software comes with financial and accounting functions. However, many cloud-based ERP systems come with much more. Below you’ll find many of the components offered by different software providers.

Financials and Accounting

These are the core business processes that ERP options aim to assist with. Arguably, they are the most important functions for any business. Cloud core financial management options offer access to financial data from anywhere. The same goes for the accounting side of things. You’ll want to have easy access to this so that you can stay on top of your business’s finances.

Human Resources Management

Many responsibilities covered by human resources can benefit from cloud-based software. It allows your recruiters and interviewers to obtain candidate information while on the go. It also means that all documents pertaining to human resources policies can be accessed easily.

Customer Relationship Management

Often, you’ll find that people confuse ERP software with customer relationship management (CRM) software. However, CRM software can be included in an ERP package. The same cannot be said for standalone CRM software. CRM programs are centred around customer service. They help streamline the customer service process, leading to a better customer experience. Customer satisfaction is a big part of being a successful company. If you have a largely customer-facing business, you’ll want CRM software with your cloud ERP program.

Inventory Management and Order Management

These two functions go hand in hand. Having a cloud solution for inventory management can help your business operations run smoothly. You’ll be able to tell when you’re running low on inventory, and make sure that you can order more. Being able to do both from the same program can save time and money for a business. This makes these functions an important part of cloud-based ERP options. Some even include options for warehouse management, as well.

Supply Chain Management

Manufacturing companies need to be able to manage their supply chain. Some of the largest issues we’ve seen during the global pandemic have been related to supply chains. Being able to handle all of your business’s supply needs in a single program eliminates wasted time and efforts.

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Project Management

Businesses run on projects. Most processes can be made more efficient through a project, and expansion requires project management, as well. As such, making sure that you’ve got good project management functions is essential. A great cloud-based option for ERP software will allow your project teams to work together from anywhere. This makes projects far more efficient, in most cases.

Comparing Cloud-Based Options with On-Premises Options

You may be wondering how cloud-based software and traditional software are different from each other. Traditional software, also known as on-premises software, has some drawbacks by comparison. Let’s compare the two, starting with on-premises ERP software.

On-Premises Software

On-premises software is installed and managed by a company’s staff. The department responsible for this would be the IT department. When you use on-premises software, it has to be purchased or licensed outright. This is the case for many business applications. Then, to be able to run the software, your company will have to have enterprise-grade servers. These can be purchased or leased, depending on your business’s needs. Without them, the company won’t have access to the data, nor will they be able to run the program.

In addition to the initial costs, businesses will also have to pay for other programs that work with the software. They’ll need to purchase security software, backup systems, and supplementary software. All of these will have to be provided by the business.

Cloud-Based Software

When you choose cloud-based software, you can take a more hands-off approach. Cloud-based ERP vendors are responsible for everything regarding the software. This means that they take care of the installation, data storage, operating systems, and servers. They also maintain the centralized database for the program. This takes a lot of the responsibility away from the business, making it much easier to use.

When you choose cloud-based softwares, you get an all-in-one option, too. They don’t need supplemental programs in most cases. Additionally, they handle all of the security, with regular security updates. This makes it a more cost-effective option for most businesses.

Different Types of Cloud ERP Systems

With technology constantly evolving, there are many different software options available. The same can be said when it comes to cloud-based options. Not all cloud-based software is the same. In fact, not all clouds are the same! As such, there are quite a few different ways to approach cloud ERP programs.

  • Multi-Tenant: As the name implies, multiple businesses use this software. The vendor manages it. However, even though multiple businesses use the software and the same servers, the data is segregated. This prevents possible issues with data breaches. Most cloud-based ERP systems are multi-tenant.
  • Single-Tenant: Similar to the multi-tenant option, but only a single business uses the software. This allows servers to be made unique to the business using them. Sometimes, software companies will offer a single-tenant option or a multi-tenant option.
  • Public Cloud: This is the type of cloud that most people are used to. It’s a cloud that is available to multiple organizations, but data and applications are only accessible to unique users. Examples of this are Google Cloud and Amazon Web Services.
  • Private Cloud: A cloud that is owned and used by a single organization. No other organizations can access it.
  • Hybrid ERP Software: A software that has both cloud-based and on-premises functions. Therefore, the software is a hybrid of the two traditional models.

What Are the Benefits of Using a Cloud-Based System?

Cloud-based systems come with a host of benefits that on-premises systems don’t. We touched on a handful of them earlier, but we’re going to dive a little deeper.

Accurate Upfront Costs

When you decide to use a cloud-based ERP option, you have the benefit of having accurate upfront costs. Because the software is an all-in-one solution, you don’t have to worry about finding add-ons. On-premises software will need supplementary programs, antivirus and security programs, and hardware upgrades. A cloud-based software comes with everything you need to get started. They’re designed so that companies don’t have to prepare anything for them.

Lower Operating Costs

An on-premises software option has to be managed by someone. This can be your company’s IT department, or a third-party vendor. Regardless, it will cost a good amount of money to install and maintain an on-premises ERP system. Cloud-based systems are maintained and managed by the vendor. That means that if an issue arises, or the program needs an update, they’re handling it for you. You can reduce your labor costs throughout the lifespan of the software.

(Video) How does Cloud ERP work with EHR systems?


Cloud-based software has the advantage of speed on its side. Because the software doesn’t have to be installed to every computer, it can be implemented quicker. This means that employees can get to work with it right away. It doesn’t have to be phased in or done in stages. It’s ready the minute you subscribe to it.


When you’re using cloud-based software of any kind, you get the advantage of access. Because all of the program’s information is stored on the cloud, most devices can get to it. When you use on-premises software, it’s installed on the computer you’re using at work. Cloud-based ERP software has no limitations on where it can go. In fact, many of them provide mobile access! This means that using mobile phones, or another mobile device, you can get to the software. It can be taken anywhere.


Cloud-based ERP software grows with your business. Many of the vendors that provide this software offer it in tiers. This means that you can get the services and access that you need. Then, as your business increases in size, you can increase the scope of the software. This is great for businesses that expect to see a lot of growth in the near future, of course. You’ll only ever have to pay for what you need, and nothing more.

Key Takeaways

ERP software provides many solutions for large businesses. However, cloud-based ERP software takes it a step further. Being able to take your software with you wherever you go means that you can access crucial data anywhere. It really makes managing a company much easier. If you’re looking for more finance and business articles, visit our resource hub. We cover a range of topics for professionals and industry enthusiasts!


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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.

How does ERP work with example? ›

For example, in the supply chain industry, an ERP system could automatically run a financial analysis and predict future stock needs to keep inventory at a healthy level. This process control ensures that the manufacturing department is performing at optimal capacity and in-demand products are in stock.

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.

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 ERP important? ›

So why cloud ERP? In a world where business colleagues can collaborate on documents and enter data from any location, ERP is most efficient when it's accessible via the cloud. The remoteness of the cloud also makes an ERP system easier to use because there is no onsite, laborious upkeep required.

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 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 two main functions of an ERP system? ›

Enterprise resource planning (ERP) is a method of using computer technology to link various functions—such as accounting, inventory control, and human resources—across an entire company. ERP is intended to facilitate information sharing, business planning, and decision making on an enterprise-wide basis.

What are the two functions of ERP? ›

Common ERP modules support back- and front-office functions like finance and accounting, procurement, manufacturing, inventory management, order management, warehouse management, supply chain management, customer relationship management (CRM) procurement and workforce management.

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.

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.

Is cloud ERP a SaaS? ›

SaaS ERP is a type of cloud-based ERP software that is sold through a monthly, per-user subscription and distributed as a service via the internet. SaaS ERP runs on a vendor's servers, and the vendor updates the software, typically on a quarterly basis.

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 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 the two examples of cloud computing? ›

5 Real-World Examples of Cloud Computing
  • Ex: Dropbox, Gmail, Facebook.
  • Ex: Maropost for Marketing, Hubspot, Adobe Marketing Cloud.
  • Ex: SlideRocket, Ratatype, Amazon Web Services.
  • Ex: ClearDATA, Dell's Secure Healthcare Cloud, IBM Cloud.
  • Uses: IT consolidation, shared services, citizen services.

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.

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 are three benefits of using 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 is the most important benefit of an ERP? ›

Real-time Data & Enhanced Reporting

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 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 the 3 characteristics of an ERP? ›

Key features of ERP systems
  • Enterprise-wide integration. Business processes are integrated end to end across departments and business units. ...
  • Real-time (or near real-time) operations. ...
  • A common database. ...
  • Consistent look and feel.
26 Sept 2022

Who uses ERP systems? ›

ERP is commonly used by companies working within the supply chain to help keep track of all the moving parts of manufacturing and distribution. However, ERP can be utilized by a number of different industries including those in healthcare, nonprofit groups, construction and hospitality.

How many types of ERP are there? ›

Different Types of ERP Software. While they are usually not marketed as such, Enterprise Resource Planning software can be divided into four different categories. Box ERPs, Large Scale ERPs, Intermediate and Flexible ERPs, and Industry Specific ERPs.

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 tool is best? ›

Top 10 ERP Systems
  • NetSuite.
  • Sage Intacct.
  • SAP Business One.
  • SAP S/4HANA Cloud.
  • SAP.
  • Acumatica.
  • Microsoft Dynamics 365 Business Central.
  • TallyPrime.
18 Nov 2022

How much does cloud ERP cost? ›

A 2022 ERP report showed that the average budget per user for an ERP project is $9,000. When you factor in how many users your system may have (especially for larger businesses), and added costs, you'll find an ERP implementation can cost anything between $150,000 and $750,000 for a mid-sized business.

Which ERP does Google use? ›

Google Cloud has an ongoing partnership with SAP to provide SAP-certified infrastructure for all of your SAP systems.

What language is ERP written in? ›

The ERP Next was developed using Javascript and Python-based ERP Programming Language. It is software backed by easy to use interface to ensure ease of accessibility. It is an affordable, powerful, and reliable solution for warehouses, retail stores, and large organizations to meet enterprise resource planning needs.

What ERP Does Amazon use? ›

What ERP System Does Amazon Use? Amazon has been using SAP as its ERP system for its business processes. While the detailed SAP modules implemented by Amazon can't be predicted, some of the modules that have been implemented by Amazon include; SAP Basis / NetWeaver Administration.

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 is the difference between ERP and SaaS? ›

A cloud-based ERP system offers a similar solution to the SaaS model but with a few key differences. Like SaaS, this type of ERP system is also hosted on the cloud and managed by your service provider. However, unlike SaaS, this web-based ERP application is a customizable, flexible, and a more economical solution.

What is the difference between cloud and SaaS? ›

Cloud computing lets you provide access to your data on those servers via the internet. SaaS is a subset of cloud computing. Besides SaaS, cloud computing offers two other service models, IaaS (infrastructure as a service) and PaaS (platform as a service).

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 long does IT take to implement cloud ERP? ›

How long does an ERP implementation take? Generally, there are no standard deadlines for an ERP implementation, but it normally takes 4 to 6 months, or sometimes even longer. It will always depend on many different factors such as: Size of the company.

How long does IT take to implement a cloud ERP system? ›

Every business has different needs but a typical implementation takes around 4 months. This implementation aims to set up your businesses core functionality and enables you to transfer the essential data over to the cloud.

What is cloud in simple words? ›

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.

What are the 4 types of cloud computing? ›

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 are the 3 components for the cloud? ›

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).

Is WhatsApp a cloud? ›

Emails, calendars, Skype, and WhatsApp are cloud computing examples that we use every single day. They make use of the cloud feature of remote accessibility of data to support our data in the cloud infrastructure, helping us access them thru the Internet anytime, anywhere.

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 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.

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.

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 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.

What are the features of Acumatica? ›

  • EASY-TO-USE. Work from anywhere and on any device with consistent performance across each platform and the same capacity as traditional ERP solutions. ...
  • Robust Modules. ...
  • No More Data Silos. ...
  • Go Paperless with the Cloud. ...
  • Web-based Features. ...

What platform does Acumatica use? ›

The Acumatica Cloud xRP Platform is built on industry standard Microsoft . NET, HTML 5, and Visual Studio Integrated Development Environment, ensuring a large worldwide talent pool.

How much does Oracle Cloud ERP cost? ›

Pricing based on feature set.

Oracle ERP Cloud can be purchased in three pricing plans, which are based on product features. A Financial Reporting plan comes for $175/month. Its Advanced Financial Controls plan for $80/user per month, while an Advance Access Control package is priced at $150/user per month.


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