In 2020, organizations have become much more aware that applications can run in the cloud. It is no longer taken for granted that all your business software has to run on a server in your offices. The argument against cloud software that goes “if it’s not on-premise then I don’t have control over it” has been invalidated by the emergence of huge companies that run all their applications in the cloud (think Amazon, General Electric, United Airlines). If the ERP system you use as the backbone of your business can be migrated to the cloud, what do you need to justify making that move?
How the cloud is growing in 2020
Just look at numbers in the cloud computing market:
- The public cloud computing market could exceed $266 billion by the end of 2020, up 17% from 2019. (Source: Gartner)
- By the end of 2020, it is estimated that 67% of enterprise software infrastructure will be cloud-based. (Source: Sys Group)
- 85% of businesses worldwide are already making use of cloud technology to store information. (Source: Sys Group)
What does a move to the cloud mean?
With cloud software, the user doesn’t buy the software; it’s more like a rental. The idea of paying a monthly subscription fee may seem costly at first, but it’s a model with significant savings in terms of time and money.
Low Up-front Cost
Unlike traditional on-premise solutions, cloud solutions have a very low up-front cost. There’s no big software license fee, only a monthly subscription, and time and money spent on customization and implementation is drastically reduced,
Pay as You Go
Cloud software gives you the benefit of predictable costs both for the subscription and to some extent, the administration. Even as you scale, you can have a clear idea of what your costs will be. This allows for much more accurate budgeting, especially as compared to the costs of internal IT to manage upgrades and address issues for an owned instance.
Quicker Time to Benefit
Using the cloud, your ERP application is installed as soon as you sign up. There’s little time spent installing software on your systems, which means very little downtime from purchase to use. You and your ERP implementer can start getting the system ready from the start, no waiting. Thus, the time and cost associated with ERP software deployment are greatly reduced, as time once spent installing and configuring your new software can now be used putting that software to work.
One of the biggest recurring costs of on-premise solutions is the need to manage upgrades and license new versions of their ERP software to access new features and services. Cloud users don’t need to worry about that – the vendor is responsible for fixes, patches, and upgrades, and the cost of those services should be included in the monthly subscription fee. In most cases, those subscription fees add up to far less cost than frequent full-package upgrades. With built-in upgrades and maintenance, you benefit from reduced downtime and IT costs, as the vendor, not your IT, is responsible for maintaining reliability and keeping to the agreed-upon service level.
When it comes to manufacturing, companies are constantly challenged with the need to manage diverse locations and complex supply chains. Distributors have to contend with keeping track of inventory in different locations. Cloud applications allow businesses to connect anywhere and lets them operate in many locations. The cloud can help eliminate enormous capital expenses while slashing the operating costs that accompany maintaining various locations.
With a cloud ERP application, product redesigns and upgrades are accessible the moment they are released. This allows your organization to leverage the most recent technology and upgrades without the effort.
Businesses using the cloud don’t have to stress over the upkeep of equipment or worry about which operating system and database is supported. Cloud vendors will deal with infrastructure, so the business can focus on more pressing issues.
Because the software is accessible through a single delivery model: the internet, it’s available at any time, in any place, and on any platform. Most importantly, it’s available through a tool that’s familiar to any user: their web browser. That means no learning curve for users on different platforms.
Cloud storage offers a level of security that rivals the best enterprise security, far exceeding the existing security levels inside most Global 2000 enterprises.
Public cloud storage systems also provide built-in disaster recovery capabilities. These include built-in redundancy, with redundant system services enterprises can deploy that are controlled by the applications.
Cloud solutions eradicate the painstaking task of managing regular backups, providing automatic backups without user intervention, and thus ensuring the integrity of your data.
Industries with strenuous regulatory requirements have been slower to move over to the cloud. However, those organizations must also be sufficiently responsive and adaptive to cope with shifting industry regulations, and agility is one of the cloud’s main selling points.
Most technical innovations are focused on the public cloud. The acceleration of technological innovation and the need to keep modernizing infrastructure is pushing enterprises into spending on other critical resources and leaving the infrastructure decisions to a cloud provider.
Manufacturers and distributors are coming under the disruptive changes introduced by the Fourth Industrial Revolution (4IR) or Industry 4.0. It’s not just the disruptiveness of new technology but also the speed of technological breakthroughs compared with previous industrial revolutions. These changes are disrupting almost every industry, and the pervasiveness of the changes is going to transform industries across the board.
Both manufacturers and distributors face the challenge of digital transformation. Manufacturers are looking for ways to use 4IR technologies to help their factory floors become smarter and more efficient. For example, having information available about the manufacturing process, when it is needed, where it is needed, and in the form, it is needed, across the entire manufacturing value-chain. Distributors need greater agility in connecting with suppliers and customers. They are now looking for solutions that enable predictive models that use real-time data from suppliers and customers to anticipate shifts in demand and allow for more informed decisions.
Why ERP in the cloud?
The pressure for manufacturers and distributors to grow and transform their business processes and systems is mounting. For enterprises that want to go digital, implementing new and often complex enterprise systems raises concerns about cost, implementation time, employee learning curve, and how quickly ROI can be achieved.
The cloud provides the platform to achieve these new goals and objectives. It gives organizations greater agility and flexibility to adjust operations while maintaining continuity. A cloud ERP solution can increase business productivity and efficiency, which results in decreased operational costs, resources, and quicker time-to-market.