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March 12, 2013

Is a Cloud ERP Solution Right for Your Business?

Doing business in the cloud has moved beyond the fad stage; it’s now officially a professional way of life.  Cloud ERP is growing in popularity by significant margins, with more vendors offering software solutions each season.  Cloud ERP implementation can be highly customized or more off-the-shelf, and there are many factors to sit with before diving in.  For business owners that do not yet have an intimate understanding of the cloud’s complexities, the decision to switch can feel intimidating.  Here are a few thoughts to let simmer as you’re considering your options.

Understanding the Technology

What is Cloud ERP?  Cloud computing  is defined as hardware and software that deliver a service over a network – usually the Internet.  The name “cloud” came about through the symbol used to express the complexity of the infrastructure it contains in system diagrams.  ERP stands for “enterprise resource planning,” a system that makes use of cloud computing platforms and services, giving businesses more flexibility in activities such as purchasing and inventory management.  ERP applications also include finance and human capital management functionalities as well.

Costs and Requirements

One of the key decisions when considering any major system change is the incurred costs, and related savings.  When considering cloud ERP, you’ll need to spend less time looking at upfront costs and focus on the complete expenses required over the life of the contract.

Most cloud ERP software providers only require that users have an Internet connection for secure access.  The major players in the space currently include Amazon Web Services, Rackspace and CenturyLink, and like their competitors, they have varying degrees of customization available to meet your specific needs.  When comparing different vendors, have a set list of criteria you weigh for each, insuring you are ascertaining a balanced analysis.

Before you take the plunge, make sure you have a clear understanding regarding exactly what your company needs from a cloud based system.  Vendors and products vary greatly, and choosing one not perfectly tailored for your business will be a costly mistake.

The Power of Productivity

If you’re not doing business in the cloud, chances are your IT department is very busy.  A traditional office matrix requires businesses to be responsible for managing things like inter-office communications, file sharing, storage of data, information logging and collaboration efforts.  This results in a very hands-on approach, and requires a high level of accountability for all your data and communications.  Cloud ERP solutions, however, allow your business to hand over the reins for many of these duties, vastly simplifying the IT process, and letting you concentrate on more core aspects of your business.

Working in the cloud also allows you to stay on the cutting edge of emerging technologies without having to do the research yourself.  While traditional IT departments must keep their fingers on the digital pulse and spend significant amounts of time updating hardware and software systems, cloud users need only rely on their providers to keep them current and handle tricky installs.  Flexibility and scalability are completely customized to each business’s needs, allowing employees to focus more on creative strengths, rather than worry about technical details.

Communication Simplification 

Internal and external communications are integral to running any business efficiently, which highlights another strongpoint for cloud ERP systems.  The cloud allows for instant online collaboration for your team, whether they’re all packed in the same office space or scattered throughout the globe.  Employees will automatically have access to the latest versions of used software solutions, without needing an IT professional to install them on each personal computer.  Even more critical, all versions of shared specs, documentation and project plans are the same for everyone in the cloud.  No more relying on emails and local folders to keep correspondence in order – the cloud solutions handle all aspects of version control.

The Case Against Implementation

If cloud ERP systems vastly improve productivity, communication efficiencies, technology timeliness and version control, why isn’t everyone making the switch?  Because as the technology stands now, the cloud is not the perfect solution for all online businesses.  Switching requires a significant expense and even more retraining for staff, and you’ll likely need to reallocate IT employees to different focuses.  You’ll need to have a plan for changes in your business process analysis, as well as workplace etiquette and procedures.  Furthermore, you must factor in your legacy system.  There’s no such thing as a seamless integration, and depending on the age and complexity of your current system, switching to the cloud could cause more harm than good.

To Cloud or not to Cloud?

The most appealing aspect of cloud computing is how it provides an opportunity for businesses to completely transform how they use and pay for information technology.  Companies with a long history of existing IT infrastructure must consider all the pros and cons listed here, but startups are absolutely the perfect playground to implement cloud ERP to everyone’s advantage.  Doing so will eliminate the need for the business to purchase server and storage hardware, and the related maintenance costs.  Startups can therefore only hire IT staff with cloud expertise, and not worry about changing systems down the road themselves.  Operational expenditures should therefore by vastly reduced, and the office culture can have their heads in the cloud out of the gate.

If you’re not about to launch a brand new company, however, there’s no easy answer as to whether or not it’s time for cloud ERP.  Keep in mind the same efficiencies are available for new divisions of your existing company, but switching the whole kit and caboodle should not be a decision you make lightly.  It really comes down to the core strengths of your business.  If your team is highly technical by nature, and there are few data, communication or server hiccups on a regular basis, the old adage holds true – if it ain’t broke, don’t fix it.  But if yours is a company that thrives on creativity and you’ve found your team excessively distracted by day-to-day IT challenges, a new way of operating might be just the ticket to added success and job satisfaction. Additionally, if your legacy system provides you nothing but headaches, remember that the stress of a huge system change is always temporary. Cloud ERP could actually provide solutions to the issues that might otherwise drive your business into the ethers.


Producer, game designer and freelance writer, Tina Courtney-Brown has been a bona fide web fiend since she discovered Poetry.com in 1994.  Tina’s fortes include all aspects of online business, social media, marketing trends, alternative health, digital production and many more.  She’s a passionate truth-teller, a sincere advocate for the environment, and an obsessive dessert creator.  Learn more at her personal website, or find her on Facebook.

5 Responses to “Is a Cloud ERP Solution Right for Your Business?

    avatar Shilpi Roy says:

    Cloud solution is a must because in traditional disaster recovery scenarios, organizations would typically have a large capital expenditure to acquire redundant hardware and redundant facilities that would only be used in the event of a disaster. With the cloud-based approach, organizations can eliminate this large capital expenditure. Thanks for the share.

    avatar Jayashree says:

    Good post. ERP selection and implementation is the most critical factor faced by companies,came across a whitepaper “Beyond Quick Books Choosing the right ERP solution for your organization” @ bit.ly/zSEOXf

    Good article Tina, but you are also mixing up two major things here; the technical application management and function application management required for your ERP system.

    Traditionally within an organization you will have infrastructure management, technical application management and functional application management. For the first one and maybe first two you will require IT-staff with cloud experience, but for functional application management you don’t.

    From a functional application management point of view there is no difference between an application installed on the cloud compared that is installed on the premises. Especially when the they are both web-based.

    Therefor I disagree with your statement that ‘Startups can therefore only hire IT staff with cloud expertise’. In my opinion start-ups do not need IT staff at all any more. Just search your application on-line, sign-up and use it. The only support you may require might be functional, which the Software as a Service provider will be happy to provide too.

    Arnaud Kleinveld

    Arnaud, EXCELLENT clarification, thank you so much for the input. Yes, I certainly see your point about the defunct need of an IT staff. I still see value in at least a part time hire to assist on the functional AND application side, as it isn’t a cloud-only world, but your view is certainly the wave of the future.

    Enterprise resource planning is a business management system that integrates all facets of the business, including planning, manufacturing, sales, and marketing

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