Is Cloud ERP The Next Big Thing?

Editor’s note: This post was originally published in July 2013 and has been completely revamped and updated in October 2022 for accuracy and comprehensiveness.

Reading the news I picked up this interesting post on cloud ERP expectations held by businesses and professionals interested in an ERP implementation, written by ERP consultant Brett Beaubouef. Most professionals in the ERP industry – and that includes us! Have been evangelizing cloud ERP as the next big thing. Which has come to address any and all issues of the previous generation ERP. Rescue business processes, cut costs, drive efficiency upwards – the list grows longer and longer with every post on the subject. It would seem cloud ERP inventory management software is the genie in the lamp!

While cloud ERP inventory management software is a definite technological advancement that is here to stay, it is also a helpful exercise to take one step back. And be open about where cloud ERP cannot actually deliver miracles. As Brett says it is much better to have an informed customer who knows what to expect rather than a customer with unrealistic expectations.

So for all the benefits of cloud ERP, what are the points you shouldn’t expect wonders in?

Some training is necessary

One of the basic advantages touted by most modern online ERP solutions (well, at least Megaventory) is. That it is actually easy to pick up and its users are able to understand how it works fast with little time spent in training. Although that’s true, it is also important to stress that the word ‘little’ in the previous sentence is not ‘no’ for a reason. While the time needed to familiarize oneself with a cloud ERP is much less than with traditional platforms. A business has to actually allocate some time for its employees to learn the ropes.

Depending on the company size and the features to be covered by the ERP it can range from a single day to a few days (but rarely more than a week). Before employees are completely comfortable with it. But still, a maximum of a week is a short training period, especially in today’s fast-moving market.

Prepare for some change

One of the benefits of adopting an ERP solution for your business – especially if you’re switching from a spreadsheet or (worse a pen and paper) method – is that your business will also ‘inherit’ a number of new best practices. The reason why this happens is simple: the creators of such applications know the subject in depth. Either by having studied it or due to real-life working experience or both. They have ‘encoded’ this knowledge in the way the application was developed.

As a result, chances are that things your business has been doing in a specific way will now be done in a slightly different way. It may look strange and counter-intuitive at first but it is necessary to adopt the new way in order to benefit from the ERP. After all, improving the efficiency of your business is why you installed a cloud ERP in the first place. You should allow it to work its magic on your processes and let it modernize them.

*Terms & Conditions apply

Only so much customization

Taking the above point one step further it may seem odd that you will not be able to do some things you could do with your previous model. The reason is that although there is significant room for customization in a cloud ERP solution. Its business model does not allow for every single customization possible. That’s what would happen in a hosted model and it would not usually end well.

The point of a cloud ERP – and the mentality behind it – is to adopt a lean methodology for your business processes and run your company in a flexible and efficient way without all the bells and whistles. That maybe after all was slowing your operations down.

Other types of costs

No, we’re not talking about hidden costs. Although online ERP (and online software in general) purchased on a subscription basis is much cheaper than buying hosted licenses. The business must still account for some other costs.

To begin with, set up your cloud ERP inventory management software in exactly the manner you prefer. Even though not as time-consuming and costly as previous-generation solutions, it will require some experimentation (or hired consulting) until you get it just right. Once there, the data you already have from your previous method has to be imported. Whether that means manually entering them into a spreadsheet or adapting an existing spreadsheet. It can still take some time depending on the complexity of your business. Also, as mentioned some training, even if for a short period of time, will be necessary during which the business will operate sub-optimally.

All In All

Accepting the above is bound to result in a more conscientious change of business process based on solid understanding. And although this may all mean that cloud ERP is not a silver bullet it also puts things in the right perspective and makes what to expect clearer. Needless to say though, even considering the above, the cloud ERP approach will still mean a huge improvement in business operations.