Why Is the Cloud the Future for ERP Implementations?
The rapid shift to the cloud
In 2009, 80% of midmarket companies preferred an Enterprise Resource Planning (ERP) solution installed on premises, but that has changed drastically.
Mint Jutras’ 2014 report “The Pros and Cons of SaaS ERP” wrote about the decline in the willingness of companies to consider traditional on-premises deployments. That decline began in 2011 and between 2011 and 2013 that percentage “literally dropped off a cliff”. Most SMB’s are now considering Cloud ERP applications.
Market research firm Aberdeen found that the Best-in-Class midmarket organizations representing the top 20% of companies surveyed were over twice as likely to have a cloud ERP solution. The top midmarket performers have made the move to the cloud.
SMB Group, an analyst firm that specializes in small and medium-size businesses, issued a 2016 Report on “The Business-Technology Performance Connection for SMBs .
Since 2010, adoption of cloud computing has been on the rise in the SMB space, with more and more businesses seeing it as the most cost-effective, flexible and fastest way to deploy and support their IT infrastructure and business applications without the need for significant capital investments and staffing increases.
Listen to the recording of a recent webinar as the SMB industry analyst presents the finding of their The Business-Technology Performance Connection report.
Business reasons to make the move to cloud computing
For many small and medium-size businesses, the move to the cloud is done for very obvious business reasons—the he first one being speed to implementation. A 2014 survey by the industry analyst firm Mint Jutras reported that respondents with SaaS implementations reached their first go-live milestone 19% faster than those with on-premise solutions . This is possible because cloud computing eliminates the need for purchasing and installing hardware and software.
Other business benefits include:
- Anywhere, anytime access to information by staff, customers and partners, since all applications are designed to run on mobile devices
- No staff time required to maintain or upgrade hardware as the company grows
- Most current functionality is always available since the cloud vendor maintains and updates to the software
- The SaaS cloud vendor has the best security available which has been verified by the news on the data security breaches at on-premise systems in big and medium size companies
- Data is safely backed up with a disaster recovery plan
- True cloud applications are designed with an intuitive user interface to speed time to productivity
But remember, not every ERP Cloud provider is True Cloud and can offer all these benefits.
To help in differentiating the choices, read the SMB group eBook called Clearing the ERP Clouds . Use this eBook to help guide you .
Success with the cloud
Because cloud solutions have been used to run ERP for some time now, the industry has access to documented results of the benefits.
One example is from the report Improve your Midmarket Business Operations with Cloud Applications by the Aberdeen Group:
The benefits of the Cloud provide tangible business benefits in operating costs, schedule compliance and on-time delivery”. Aberdeen reported that the average improvement of profitability over the past two years for midmarket companies that are not in the Cloud was 9% profitability improvement. However, midmarket companies who were Cloud-enabled reported a 17% improvement in profitability over the past two years. This is a staggering 8 point difference. By providing the technology tools their people needed, these market leaders saw an ROI that improved their overall bottom line.
Also in that report they wrote about integration with other technologies:
For midmarket organizations, the flexibility that cloud environments provide actually enables these organizations to implement more technology that can improve processes across the organization. Results include
- 13% more likely to have Customer Relationship Management
- 43% more likely to have Business Analytics
Finally, they touched on one of the most important areas for a small or mid-size business, keeping track of business activities and visibility across the organization:
Since a cloud solution is accessible to employees no matter where they are, it is easier to share the functionality included in the solutions. Ultimately, this improves visibility, impacts collaboration, and enables efficiency and agility. In fact, midmarket organization with cloud solutions are
- 41% more likely to have real-time visibility in to the status of all projects
- 47% more likely to have automated notifications empowering business leaders to react immediately
Improvement are made in a company whether they have cloud ERP or traditional systems; however, cloud implementations result in significant improvements over on-premise ERP systems. A few examples include:
- 8% improvement in operational costs as a result of cloud ERP
- 8% improvement in profitability as a result of cloud ERP
Read how others have realized significant results with Cloud Computing.
The timeline of ERP implementations is fluid, but the life cycle of the implementation is more structured. Businesses who desire growth are recognizing more and more that choosing a cloud-based ERP system – along with knowing the life cycle phases of implementing the ERP system software – is the way to achieve this goal. The investment of time and money into finding the best ERP technology and then successfully implementing it produces a great return.
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About Acumatica ERP system
Acumatica ERP (Enterprise Resource Planning) system delivers adaptable cloud and mobile technology with a unique all inclusive user licensing model, enabling a complete, real time view of your business anytime, anywhere. Through our worldwide network of partners, Acumatica ERP provides the full suite of integrated business management applications, including Financials, Distribution, Manufacturing, Project Accounting, eCommerce, Field Service, and CRM. There is only one true Cloud ERP platform designed for mid-sized customers Acumatica.