Cloud ERP: Should small and medium businesses embrace it?

When a Small and Medium Business (SMB) starts operating, it works on tools such as spreadsheets and collaborates over readily available free tools. While this is a prudent approach to save costs initially, it often impacts the growth prospects and progress of the business.

As sales and revenues begin to grow and receivables and payables correspondingly become difficult to manage, it is sensible to leverage ERP tools and solutions. As they grow, the finance department cannot operate as an independent or siloed function. It must collaborate, interact, and give guidance to other departments to ensure that the business stays in good health – always.

When SMBs experience such growth, it is wise to consider a Cloud ERP Solution. A cloud-based ERP solution can not only ensure that you pay as a service but also makes sure that the ERP can be integrated with the other functions and that reporting and decision insights can be seamlessly delivered. It can enable the organization to get relief from the ad-hoc customizations, upgradations and migration that are required to keep the ERP consistently updated.

Let us look at the advantages of a Cloud-based ERP for SMEs

Critical insights for strategic decision making: With traditional on-premises ERP, the latest features are often dependent on upgrades. The book closures could take longer than expected and reports must be conceptualized and created with manual effort. As a result, reports and insights take time and are often erroneous due to the human effort involved. Every time a new rule or tax component is introduced, it requires customization and accordingly, the process consumes time. For any predictive financial analysis, the reports are pulled and then analysed manually.

Instant availability of Data: It is no surprise today that we live in a data-driven economy. The power of timely data and reports cannot be over-emphasized. The instant availability of data and insights empowers decision makers who can often leverage the Cloud ERP and its capabilities to make well-informed strategic decisions which benefit the organization in terms of enhancing revenues and growth.

Infrastructure Costs and Manpower related Benefits: When SMBs run their ERP on the cloud, they free-up the bandwidth of their IT that is otherwise utilized in setting up and managing the IT infrastructure for the ERP. The IT teams can instead deploy internal resources and IT infrastructure for enhancing customer experiences, analysing information and data and empowering the organization.

Agile development of IT teams: The IT teams can enable agile development and tighter integration of technology, operations, and business. Also, the ERP on the cloud offers flexibility with respect to upscaling and down-provisioning of compute, network, and storage.

Security and disaster management: By ensuring that the ERP is on the cloud, the data is better secured and backed-up. The Cloud ERP also enables you to seamlessly integrate with other systems in a secure manner.

Relief from migrations and upgradation: The IT Team is under tremendous pressure to keep the ERP current. It must ensure that the ERP system is the latest version by undertaking timely migrations and upgradations whenever required. However, with Cloud ERP, the IT team can ensure that it would be their last migration post which the OEMs offering the Cloud ERP will manage to keep the ERP current.

Will Cloud ERP cost too much? Will it help SMBs to scale their business?

A cloud ERP cost can be figured out based on the existing ERP and its version and the modernization efforts required. Even if an SMB were to directly implement a new cloud ERP, the benefits that it will realize with respect to business and revenue is tremendous. A Cloud ERP not only enables the finance function but also empowers functions such as Sales and Marketing to derive rich data about their customers and end-users and accordingly optimize their engagement with the customers.

Cloud ERP can also seamlessly integrate with digital transformation technologies such as IoT and ensure that the ERP can keep pace with the corresponding digital transformation initiatives that the organization undertakes.

Hence, it is wise to consider moving to a Cloud ERP. While there could be the initial modernization effort and cost, or an investment to implement a Cloud native ERP, the benefits in the long run are significant and worth the investment.

By Preethi Menon, VP & Head – Practices, Clover Infotech