Cloud-based ERPs are becoming increasingly relevant in the marketplace, driven by the success of cloud services in more general terms, from which they borrow key benefits.
Among these, a cloud ERP stands out because of its short adoption time, which is particularly agile if the company is willing to adhere to best practices and industry standards, and the ability to manage the required investments according to a more sustainable model. But what advantages do cloud ERPs bring? More importantly, why are they attractive to companies that want to start or improve an innovation process?
The Cloud ERP Market
Typical advantages of the cloud, some of which we will return to, are driving increasing adoption of these types of solutions.
Research and analysis are numerous and agree that this is a steadily growing market. For example, there are those who predict¹ a 17.0 percent annual growth to 2030 in the industry, those who claim² that globally today it is a $49 billion market, set to grow to $181 billion by 2032.
This success is due, in part, to manufacturers’ marketing strategies, but not only that: as we know, particularly in business and industry, the propositional drive alone is not enough to decree the success of a product or technology.
Why, then, do companies choose cloud ERPs? Let us list some reasons, explaining why these can be an advantage.
Benefits of the cloud in ERPs
As we have mentioned, cloud ERPs are also and above all convincing because of the reasons that daily decree the success of the cloud over other modes. Recall that one of the prerogatives of the cloud, whether public or private, is to prevent excessive sedimentation of systems and applications, a risk that is instead concrete with on premise solutions in which updates, patches and upgrades often have to be managed manually by technicians before going into production, with all the risks this entails in terms of timeliness and agility.
Automatic updates and patches
The cloud has radically changed the way systems are managed, particularly in terms of routine maintenance. In a cloud ERP, especially a public cloud-based one, updates are made directly to the platform by the vendor. This results in more timely application of enhancement updates and timely application of security-related patches and changes, such as to counter zero-day attacks. As a result, the system will be more up-to-date, secure, and efficient. Recall also that an up-to-date system is the foundational prerequisite for innovation, which will be facilitated by better compatibility and a more receptive ecosystem.
Reduced maintenance
In the traditional on-premise setting, the company’s internal departments or external maintainers must take care of the proper functioning of the system, both at the software and hardware level. This involves, for example, providing a redundant system to compensate for any failures and performing periodic integrity checks. In contrast, in ERP clouds, all routine system maintenance is the responsibility of the vendor, thus freeing up internal resources that can devote more time to researching innovative solutions and developing useful tools for improving processes, products and services.
Independence from enterprise infrastructure
Cloud ERPs, by definition, are based on infrastructure outside the company, either wholly owned by the vendor in the case of public clouds, or under a shared arrangement in various capacities in the case of private clouds. This ensures that, in most cases, the system works independently of the corporate IT infrastructure, a useful feature, for example, for companies that offer functionality to external customers or suppliers through ERP. The second implication is that the ERP becomes, with appropriate attention to security, universally accessible by staff, e.g., even for those who are off-site, away or in outlying locations, including from mobile devices.
Adoption of best practices
One of the main facilitators of innovation is the adoption of best practices, which allow the company to move into a more agile and shared environment. Cloud systems, including ERP, allow the enterprise to adhere more fluidly to these best practices, even setting tighter limits if necessary, in favor of an ecosystem that can evolve more nimbly and respond to threats more resiliently. In practice, with a system that is always “aligned” with the current version, it is easier to use new tools and services, adopt new practices, and generally exploit the full, even experimental, potential of one’s ERP.
Shifting the cost paradigm
We mentioned in the opening how the cloud also allows investments to be managed differently. Adopting or changing a legacy ERP system, in fact, also implies equipping it with appropriate hardware and infrastructure, with a considerable implantation cost. With the cloud, these costs are eliminated or very limited, in favor of a monthly fee model.
Move to Cloud: challenges to be aware of
To make the move to the cloud truly beneficial, there are some special attentions that need to be practiced. For example, it is important to make sure that networking and connectivity, both internal and external, are capable of supporting a system that relies on the use of remote services. Also, if there are many customizations in the current solution, a well-structured preliminary phase will be needed to understand how to handle them.
Similar reasoning should be made regarding data storage and management, which in the case of the cloud almost always responds to a consumption-related paradigm. Optimizing enterprise storage for the benefit of greater efficiency and lower costs, perhaps reusing decommissioned enterprise hardware for local disaster recovery, may be an advisable strategy, subject to a consistent preliminary analysis.
SAP Cloud: an established strategy
The many benefits of the cloud, especially with regard to security, updating and system compatibility, are well known to SAP, which has consolidated its strategy on this technology over the years. In its latest incarnation, SAP HANA Cloud offers a universal, scalable, high-performance solution for any business need, from simple archiving to advanced analytics through machine learning and other data science tools.
Gaining benefit from innovation consistently
The adoption of cloud-based ERP solutions is a key lever for companies aiming to make innovation a constant and effective strategy. Transitioning to the cloud is not just a matter of upgrading technology, but a real transformation to a more agile, resilient and future-oriented business model.
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¹Source: Grand View Research
²Source: Future Market Inside
