Best-in-class manufacturers are moving to the cloud as a standard for enterprise resource planning (ERP) implementation. The accessibility and scalability of cloud applications drives lower costs and faster ERP implementations.
In manufacturing, cloud enterprise resource planning (ERP) offers many cost and efficiency benefits. (See last weeks’ blog, “For Manufacturing, Cloud ERP is More Effective.”) If this is the case, why isn’t every company moving its ERP to the cloud?
The Aberdeen Group discovered that organizations that were not willing to consider a SaaS ERP deployment had two major concerns—security and stability. Sixty-six percent (66%) identified security as the key factor. Other factors that concerned these companies included control of the upgrade process (38%), downtime risk (30%), and lack of ERP customization (35%).
While these concerns are understandable and should be addressed when choosing an ERP deployment, another Aberdeen Group study should alleviate the worries over cloud applications. A robust cloud ERP solution can mitigate and even eliminate these issues. Let’s look at them in detail.
Alleviating the Concerns Over Cloud Software
The main concern many manufacturers cite as their reason for not moving to a cloud ERP is security. These companies are concerned with the safety of their sensitive data. This is a valid concern that should be addressed with your ERP vendor and hosting site. The key question to ask is whether your data will be more or less secure at the cloud application hosting location.
The Aberdeen study found that, on average, companies with on-premises solutions had more security downtime than those with cloud ERP. Perhaps on-premises solutions are not as secure as a company would prefer to believe, or perhaps, a cloud hosting organization, whose existence depends on the ability to provide a safe and secure location, is more capable.
Lack of Control
Another reason companies may choose an on-premises model is that they wish to control their software and the upgrade process. This is often due to concerns about the need to highly customize their software to address unique process requirements. This is a concern that you should address with your vendor as cloud software, even in a SaaS deployment, can be customized to meet specific needs.
Included in this category is the concern over giving up control of a system that runs a company’s entire business. This may be due to strategic reasons (security) as well as the need for customization. While the perception may be that only “simple” ERP solutions can run in the cloud, this is not true. There are many full-featured cloud ERP systems available today. In addition, traditional ERP software systems are now available with cloud deployment options.
Finally, companies are concerned about being reliant on a high-speed Internet and an external hosting site for cloud software uptime. However, the Aberdeen Group data shows that companies who have a cloud ERP have less data loss and lower downtime than companies that have on-premises ERP.
While full cloud ERP deployment may not be for everyone, every company should consider how web capabilities in their ERP can be used to increase productivity and flexibility. Manufacturers who deploy cloud-based ERP are gaining a competitive advantage. Remaining stagnant in your ERP implementation may put you at risk of falling behind in competitiveness and profitability.
PositiveVision specializes in pairing manufacturers with the best ERP solutions to meet their needs and helping them to become more efficient, competitive and profitable. Contact us if you would like to discuss your ERP selection and how cloud-based capabilities can enhance your operations.
To learn more about the Aberdeen Group’s assessment of the risk of cloud applications, download our free whitepaper, “SaaS and Cloud ERP Observations: Is Cloud ERP Right for You?”