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What is Cloud ERP and how SMBs take the advantage of low Total Cost of Ownership (TCO)

Korcomptenz - Total Transformation Blog

Posted on May 30, 2018

Why Cloud Computing is Changing the Game for Businesses Utilizing ERPs

If you're looking for a new Enterprise Resource Planning (ERP) system for your business, you might be overwhelmed with all the available choices. One of the most important decisions will be whether to go with a traditional on-premises ERP or a cloud-based solution.

What is an ERP?

An Enterprise Resource Planning system is an industry term for a software that integrates all functional units of your enterprise in a synergistic way. This software combines the complete range of an organization's processes and functions to present a holistic view of the business. The broad set of activities that ERPs perform can help enterprises manage different parts of their business, encompassing fields like purchasing, inventory management and customer relationship management (CRM). ERP applications can also include modules for the financial and human capital management aspects of an organization.

What is the Cloud?

Traditionally, businesses had to use physical and on-premises infrastructure to host their applications and ERPs. In addition to the upfront software purchase, any implementation fees, and ongoing support and licensing, you needed to deploy and maintain infrastructure to run the application, usually a server and backup system including replacements every 4-5 years.

Cloud-based computing (also called Software as a Service, or SaaS) allows users access to software applications that run on shared computing resources managed by cloud vendors via the Internet. These computing resources are maintained in remote data centers dedicated to hosting various applications on multiple platforms.

The Cloud can be particularly valuable to small and medium-size businesses as it provides access to full-function applications at a reasonable price without you having to pay substantial upfront costs for both hardware and software.

One of best available cloud hosting option is AZURE from Microsoft. It is well trusted and used by 90% of Fortune 500 Companies. Azure has most number of hosting regions (Datacenters) than any other cloud hosting provider. Azure is also has 70+ compliance certifications that suits most regulatory needs a customer may need.

What is a Cloud ERP?

A Cloud ERP is a Software as a Service (SaaS) that enables users to access ERPs over the Internet. Unlike on-premises systems, cloud ERPs increases accessibility via the internet and enables users to share and transfer data across business departments, as well as externally, in real time. Because it is cloud-hosted, businesses are notified of any updates to the software immediately. Cloud-based ERP also comes with availability, backup and disaster recovery plans from providers to reduce interruptions to the software.

Cloud ERP solutions are provided via the Software as a Service model. Different ERPs are offered in the market as cloud-based systems. The cloud based ERP should be accessed via a user's browser over the internet without installing or configuring the system at the user side. One of the most recognizable cloud ERPs in the software market are Microsoft Dynamics 365 suite of products, SAP Business ByDesign and NetSuite.

Reduce Operating Costs

Cloud ERP solutions are provided via the Software as a Service model. Different ERPs are offered in the market as cloud-based systems. The cloud based ERP should be accessed via a user's browser over the internet without installing or configuring the system at the user side. One of the most recognizable cloud ERPs in the software market are Microsoft Dynamics 365 suite of products, SAP Business ByDesign and NetSuite.

Cloud ERPs draw a stark contrast because hosting, maintenance, software updating, etc. is solely the responsibility of the cloud vendor. This effectively reduces both costs and time spent in ERP maintenance by eliminating the need to hire dedicated IT staff. For these reasons, ERP cloud hosting is especially advantageous to businesses on tight budgets. You can avoid the hefty upfront costs of setting up on-premises servers – instead opting for simple monthly and annual subscription from cloud providers like Microsoft.

Allows for Scalability and Improved Flexibility

Cloud ERPs are also more scalable and flexible than traditional on-premises solutions because they can easily adapt to fit your constantly changing/growing business. Adding or removing users can be done on demand to suit your staffing requirements without affecting your monthly subscription fee – highly beneficial to seasonal or cyclical businesses that adjust team sizes to meet peak demands. The Microsoft Azure model also allows for new configurations without affecting production, meaning you can set up multiple environments without the need for dedicated staging and development environments. This allows you to scale both resources and application infrastructure much more easily than on-premise solutions.

Automatic and Hassle-Free Software Upgrades

With on-premises ERP solutions, you are required to wait for the new releases to gain the latest features, upgrades, and newest security patches. The process needed to deploy a newer software version can also be costly, complex, and disruptive. This forces your organization to make a decision whether the updates are "worth" the hassle and cost. That's one of the main reasons many companies avoid upgrading their on-site ERP software and settle for running their business with out-of-date technology.

A whopping two-thirds of mid-size businesses are running outdated versions of their ERP software – ceding a potential advantage to competitors who are enabled with the latest advancements. Even after you decide to upgrade your on-premises ERP software, upgrading your important customizations can be very difficult, and you might find yourself saying "goodbye" to functionality that meets the unique needs of your business.

Cloud technology enables vendors to automatically upgrade and add features to your software without the loss of any customizations or settings. Businesses leveraging the cloud always have the latest technology at their disposal to boost their productivity. The unique architecture of the cloud versions of the software allow you to maintain your previous implemented customizations and integrations, automatically carrying them forward when the solution is updated without additional investment or hassle.

Improved System Performance

Cloud ERPs often perform better than on-premise solutions. Since Cloud software is designed specifically for maximum network performance, they can work much better than traditional infrastructure. Cloud-based ERPs also offer optimized performance that can adapt to your needs. For example, if there is a spike in your business, cloud ERP automatically adjusts and dynamically provisions additional resources to handle the surge. NetSuite commits to 99.5% availability for its customers, and has had an average of 99.98% uptime performance over the past 12 months. This uptime performance information is available to all customers at all times on their website. A local IT department is unlikely to be able to achieve these results, and may not even be able to regularly report their system uptime results to management.

Unparalleled Accessibility + Security

Another advantage a cloud-based ERP solution can have over on-premise software is accessibility to your data. Cloud ERPs provide real-time data that can be accessed via the Internet anywhere at any time. This means that staff can't say, "The Server was down last night" when you ask about the latest reports. Authorized associates can access company laptops, smartphones, and tablet devices even while they travel or telecommute—all without the extra setup fees and costs that come with traditional on-premise solutions.

Cloud ERPs can provide greater security as well. Providers like NetSuite and Microsoft Azure spend billions of dollars to make sure their systems are secure, providing strong, industry standard data security certifications such as compliance with PCI DSS and SAS 70. Moreover, these cloud vendors also follow other rigorous security, disaster recovery, and back-up procedures that ensure that your data is safer on their servers then your own infrastructure.

Businesses are always looking for new ways to capitalize on the latest trends in technology to make every interaction count. Speed and competency is essential in all markets and while on-premise systems can help achieve these needs, cloud-based solutions are quicker to implement, easier to customize, and enable your company to operate at peak performance. More and more companies are turning to Cloud ERP solutions to help them become a more competitive force in their industry, leveraging the power of cloud computing to enable peak performance.

Benefits of Hosting your ERP on Cloud

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Engage KORCOMPTENZ for a complimentary consultation to find out more about how to use the power of cloud computing to leapfrog your competition. Korcomptenz is Microsoft Cloud Services Partner and can help you to configure, migrate and support your cloud infrastructure for all your critical business applications.

Harrishraj Antony

Sr. Manager – Infrastructure Services

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