Cloud ERP is Software as a Service (SaaS) that allows users to access Enterprise Resource

Planning (ERP) software, other applications, infrastructure and data storage, over the Internet. Cloud
ERP generally has much lower upfront costs because computing resources are leased by the month
rather than purchased outright and maintained on premises. Cloud ERP also gives companies access
to their business-critical applications at any time from any location.

Cloud ERP is an enterprise resource planning (ERP) system that runs on a vendor’s cloud
platform as opposed to an on-premises network, allowing organizations to access over the internet.
ERP software integrates and automates essential financial and operational business functions and
provide a single source of data, including inventory, order and supply chain management and help
with procurement, production, distribution and fulfilment.

Because it’s hosted by the ERP vendor and provided as a service to businesses, cloud ERP
software supports the same, or better, functionality as on-premises systems without most of
downsides, like upfront licensing fees. In its report, IDC said “demand for cloud-based ERP systems
continues to grow because of their ability to access and analyse massive amounts of data in near real
time.” That means real-time inventory insights to sales teams and freeing finance teams to keep a
close eye on cash runway and quickly respond to audits or other calls for performance data.

Components of Cloud ERP Software

All cloud-based ERP software provides core financial and accounting functionality. From there, the
types of modules or applications an organization chooses to implement depend on its industry and
specific business needs. Available cloud ERP modules include:

 Financials and accounting

It’s important to understand some basic concepts associated with cloud ERP as we dive deeper into
the subject:

1. Deployment strategy: ERP software can be deployed on-premises/on private hosted servers or
purchased in an “as a service” model. Cloud ERP functionality can usually be delivered more
quickly, though in both cases, companies need to set aside time for planning, data migration,
customization and configuration and staff training.
2. Cloud-based ERP: Enterprise resource planning software that’s hosted offsite, on the ERP
vendor’s servers and provided as a service, accessed through a web browser.
3. On-premises ERP: Enterprise resource planning software that’s installed locally, on a
company’s computers and servers and managed by internal or contracted IT staff. The
software and its supporting infrastructure are managed, stored and maintained in-house.
4. Hosted ERP: A company or a hosting provider manages the deployment of ERP software as
well as associated infrastructure. Hosted deployment models are often utilized when
businesses seek to outsource IT operations. While this setup provides some cloud benefits, it’s
not a true “as a service” model.
5. End-to-end security: A secure and encrypted connection between a cloud-based ERP vendor
and its customers.
6. Subscription licensing: The company pays a fixed subscription fee at specific time intervals
(annually or monthly) to use the software. That fee normally includes all software
maintenance and upgrades and may be charged per user or per organization.
Types of Cloud ERP Software

Not all clouds are equal. Some legacy ERP vendors have retrofitted their software to run from their
own internet-connected data centres. Businesses that implement these ERP systems may miss out on
the full benefits of cloud-based ERP, such as simplified upgrades and the strength of the cloud data
centre model, where a massive pool of resources support applications versus dedicating infrastructure
to individual software components.

There are also multiple types of cloud ERP software:

 Multi-tenant SaaS: A single version of the ERP software and its associated infrastructure
serves multiple organizations. However, while each organization uses the same software and
is hosted on the same servers, one company’s data remains inaccessible to others. A true
cloud ERP system is typically a multi-tenant SaaS.
 Single-tenant SaaS: A single version of the ERP software and its associated infrastructure
serves just one organization. In other words, an organization’s data is hosted on private
servers running a unique software instance. Some cloud ERP vendors will give customers the
choice of running a private instance or a shared instance.
 Public cloud: Owned by the service provider, multiple organizations share cloud computing
services. However, each organization’s data and applications are inaccessible to others.
Examples of public cloud include Amazon Web Services, Google Cloud, Microsoft Azure
and Oracle Cloud.
 Private cloud: A service that is not shared with any other organization.
 Hybrid ERP: Just as it sounds, a hybrid ERP approach combines on-premises software with a
private cloud or public cloud for computing, storage and services.
Pros and Cons of Cloud Manufacturing ERP

Pros Cons
Lower ownership costs Fewer customizations
Lower upfront costs, less hardware and physical Cloud applications support customizations, but
servers, less IT infrastructure and maintenance, generally less than on-premise can support.
less future investments.
Faster deployment Required internet connectivity
Faster setup, can turn on in days. Requires internet connection and may not be
suitable for places where internet connectivity is
unreliable.
Improved system performance and uptime Heavy regulatory needs
System is always up-and-running with better, May not meet the full regulatory compliance
faster performance. data storage needs of certain industries.
Better security Vendor lock-in
Cloud providers are typically better at securing If needed, companies may find it difficult to
migrate their services from one provider to
your data than companies can locally.
another.

Centralized data
Multiple branch / project data stored in one
place, available anywhere.
Anytime, anywhere access
Access to real-time data anywhere at any time
on any device via the internet.
Continuous and painless system upgrades
Always up to date with the latest version to
ensure your system is future-proofed.
Data recovery
Automatic data backup on the cloud system.
On-premise hard disk crash or natural disaster
can be catastrophic for a business.