Top 7 reasons to switch to cloud-based ERP application in 2022

Summary: Cloud-based applications have risen significantly in the past few years because they enable companies across industries to create, edit, access, and share crucial business data with relevant stakeholders from anywhere, anytime, and any device. Also, recent upgrades in the security protocols have deepened the trust of companies as they secure data from being stolen or manipulated. Start-ups and SMEs have gained the most significant benefit from cloud-based ERP solutions as implementation costs and time have dropped down immensely. Let’s delve deep to understand the reasons to switch to cloud-based ERP applications in 2022.

2022 is only a month away and companies across industries have begun brainstorming next year’s business strategy. The primary agenda of high-level meetings involve:

• Saving taxes.
• Ensuring compliances.
• Increasing production efficiency.
• Monitoring employee performance.
• Building robust relationships with third parties and customers. 

So, you would be glad to know that cloud-based ERP applications are a one-stop solution for all your business problems. They have various modules that will enable you to monitor each business department and take immediate action whenever required. 

Here are the top 7 reasons to switch to cloud-based ERP application in 2022:

1. Cloud-based ERP applications are less capital-intensive. 

One of the biggest disadvantages of On-premise ERP systems is the amount of capital and time required for implementation. 

Do you remember Nestle’s ERP disaster in the early 2000’s? It took around USD 200 million over 6 years to implement an ERP system that ultimately failed due to multiple factors. 

Fortunately, companies have learned lessons from that massive failure and are shifting towards implementing cloud-based ERP software to sidestep several financial pitfalls. The following reasons explain why:

• The third-party vendor maintains and upgrades the cloud-based ERP software.
• You don’t need to keep a full-fledged IT team at your end. The vendor will take care of software and server-related issues.
• You don’t need a separate room for deploying servers and maintaining other hardware infrastructure. 
• Employee-training costs are close to zero.
• SaaS-based ERP systems work on monthly subscription models that are a boon for start-ups and SMEs as they lack large-scale capital upfront.

2. Cloud-based ERP applications improve inter-departmental information exchange.

Data silos stop the flow of critical business information from one department to another, which restricts them from creating a unified strategy. Cloud-based ERP systems provide a common platform where different departments, including manufacturing, sales & marketing, finance & accounting, customer relationship management, and vendor relation departments, can share crucial data anywhere, anytime, and on any device.

Accountability and cooperation are some of the reasons to switch to cloud-based ERP application. Other reasons include: 

• Real-time sharing of financial, manufacturing and logistical data creates situational awareness for decision-makers across different departments. 
• Allows monitoring inventory stored across multiple warehouses.
• Provides access to only relevant stakeholders, such as executives, CXOs, vendors, distributors, and suppliers.
• Resource management enables companies to identify opportunities and minimize waste, from procuring and accounting for raw materials to managing the factory floor.

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3. Cloud systems are safe and secure.

One of the most significant reasons why companies implement On-premise ERP systems are that they provide top-notch security features. But cloud systems are gradually catching up and new research in the SaaS ecosystem offers the following additional advantages:

• Cloud systems have various backup and failsafe layers that provide 360-degree data protection.
• Cloud vendors have a big team of IT specialists with multiple years of experience protecting data from being stolen or manipulated.
• Cloud vendors also maintain and upgrade the company’s infrastructure, reducing the latter’s reliance on a big IT team.

System security also depends on keeping pace with the recent technology updates. As a result, On-premise ERP solutions will gradually become obsolete as they are static software systems that take a lot of time to upgrade.

But there’s a catch. The responsibility to safeguard vital business data from falling into the wrong hands is upon the companies’ employees as far as cloud-based systems are concerned. For example, if an employee unknowingly shares data through unsecured public Wi-Fi networks, there’s a very high chance that the data will be hacked or stolen. The good part is that employee training sessions can mitigate this danger.  

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4. Cloud-based ERP systems update quickly.

ERP software, both cloud-based and On-premise, requires improvements, upgrades, and the need to fix security vulnerabilities from time to time. Unfortunately, this process is quite long, cumbersome, and arduous for On-premise ERP software. Also, production interruptions and the requirement of large-scale IT resources can significantly increase the implementation time. Moreover, incompletely-applied updates and different software versions further complicate the situation. 

The most significant advantage of implementing the SaaS model is that it removes the burden of upgrading the ERP system from the shoulders of the in-house IT team. The ERP vendor automatically installs software updates, security patches, and new modules, saving crucial time and resources. Moreover, version inconsistencies happen less frequently and the service provider can access any user’s account remotely to eliminate issues. 

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5. Cloud-based ERP systems allow businesses to expand smoothly and quickly.

Scalability is the biggest issue with On-premise ERP systems as they are tethered with the business’ existing hardware capabilities. So, it becomes increasingly challenging to integrate industry 4.0 solutions, such as Internet of Things (IoT) devices, AI, and machine learning. 

On the other hand, cloud-based ERP systems offer scalability options, such as adding new licenses and more users when a company hires new employees. In addition, they provide additional storage space and add capabilities to accommodate new manufacturing processes and plants. 

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6. Cloud-based ERP software unlocks the hidden potential of mobile devices.

Mobile devices have become an essential tool in the digital age because they provide the following benefits:

• For the sales team: Earlier, sales representatives visited the client’s location to collect crucial documents. But with the advent of mobile devices, they can do so while working from their office. 
• For the customer support team: Support executives can answer the queries posted by customers on a discussion portal. Moreover, they can also send emails, alerts, and notifications automatically to keep customers abreast of any new products.
• For the marketing team: The marketing team can collect vital data across geographic, demographic, psychographic, and behavioral parameters that help brainstorm effective strategies.
• For the finance & accounting team: Earlier, accountants had to store accounts payable & receivable records using pen and paper and update profit reports manually. But cloud-enabled mobile devices generate financial statements instantly without any human intervention.

Mobile devices provide minute-to-minute data that plays a vital role in making the best deals. 

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7. Cloud-enabled ERP systems significantly reduce a company’s carbon footprint.

Countries across the globe are partnering with environmental scientists and ecological activists to find ways to minimize greenhouse gas release. And unfortunately, energy consumed by data centers is gradually becoming a primary source for the emission of CO2 gases. 

Do you know how much energy do On-premise ERP systems consume?

The International Energy Agency estimates that by 2025, data centers will consume 20% of global electricity. It’s because big servers require a significant amount of energy to run that produces a lot of heat. This excessive heat is then released into the surrounding environment that deteriorates it. 

Cloud-enabled ERP software can play a massive role in reducing a company’s carbon footprint by hosting multiple ERP systems on multitenant servers designed to manage bandwidth and storage space for numerous clients.