The espousal of cloud ERP systems in manufacturing continues to grow. It may seem surprising then that there are still many misconceptions about cloud ERP for manufacturing. Let’s dispel these myths once and for all.
This is one of the most continuing myths about cloud ERP for developed. Contrary to this erroneous belief, especially among small manufacturers, cloud ERP provides cost savings and is actually less luxurious than traditional on-premise ERP systems.
First let’s look at IT spending. Cloud-based ERP allows industrialized firms to spend less on IT. A study by Computer Economics found that companies that implemented cloud ERP systems spent an average of 16.3% less as a percentage of revenue on IT operations and 18.5% less per user, compared to spending on traditional on-premise IT operations.
Small manufacturers have been among the loudest to complain about the perceived high costs of cloud ERP systems. A recent survey conducted by the SMB Group found that seven out of ten small manufacturers still believe that all ERP software is too expensive for them to implement. Consider this: with cloud ERP there is no expensive hardware to buy and maintain, all of your big data is accessible in real time via an Internet connection from anywhere in the world and new functions are added when they become available. Your investment in cloud ERP yields on-demand business intelligence, timely information about every step in your operation, increased efficiencies that save money and more opportunities for growth.
Still not convinced? Compare the costs associated with cloud ERP with those of traditional on-premise ERP. Over a three- to five-year period, you must consider hardware, software, implementation, customization, training, support and maintenance costs over the life of the system. Many of these items simply do not exist or are much simpler to implement with cloud ERP. Cloud ERP doesn’t need large computers onsite or the IT to support and maintain them, which eliminates all of those hardware and hardware-related costs such as acquisition and maintenance. Your IT department can be smaller and can focus on other tasks that are directly related to your business.
Cloud ERP takes less time to implement than on-premise ERP systems and updates and customizations are faster. With cloud ERP, manufacturing firms can scale up or down based on demand, access their critical business data from anywhere via the Internet, and get more up-to-date features and support. There is no need for those expenses usually associated with networking.
Cloud-based manufacturing solutions have been found to reduce infrastructure, maintenance and lifecycle costs by as much 54 percent according to industry analysts. Cloud solutions save both money and time by increasing real-time collaboration and reducing the time it takes to bring products to market.
Without a doubt, different companies have different, unique needs and their cloud ERP system must support those unique characteristics of their business. For example, discrete manufacturers need a very different cloud ERP solution than a process manufacturer. Many firms manufacture completely customized products in small batches and need a fluid, profitable experience for their operation and their clients.
However, some businesses still believe that all cloud ERP solutions are the same, that none of them are unique enough to suit their specific needs. This misconception is easy to understand; manufacturers and distributors with little exposure to modern cloud platforms and apps may have difficulty seeing past the buzzwords and perceived complexity. But the cloud is more than just a buzzword and is more than just a platform that delivers a one-size-fits-all solution. The best cloud ERP vendors provide flexibility, a wide variety of cloud-based functionality, are designed by manufacturing experts and are not filled to capacity with features that you don’t need.
For example, the cloud ERP manufacturing solution from Rootstock Software offers modules for every step in the manufacturing process, increasing efficiencies, controlling costs and ultimately increasing revenue. Rootstock’s cloud ERP for manufacturing covers sales order management, purchase order management, production engineering, inventory management, material requirements planning, lot and serial control, scheduling and capacity planning, shop floor control, manufacturing cost control and project control. Rootstock is also a 100% native Salesforce solution, which means that you can integrate it out of the box with other Salesforce apps. Cloud ERP manufacturing software from Rootstock is in fact designed specifically to be adapted to the unique needs of your business.
Legacy ERP vendors like SAP and Oracle have invested heavily in their on-premise ERP systems. They built their businesses on such legacy systems. But legacy on-premise ERP systems are not the same as native cloud ERP systems. Native cloud ERP systems are cloud-based solutions with unique capabilities and functions developed exclusively for cloud delivery. Native cloud ERP takes advantage of the cloud environment, including superior manufacturing system connectivity, integration (especially on popular and mature enterprise cloud platforms like Salesforce), and built-in security.
As cloud ERP has grown in popularity and adoption, some of the ERP industry’s largest players, again including SAP and Oracle, have belatedly entered the cloud ERP space, but they remain behind such native cloud ERP software vendors such as Rootstock. For example, SAP bought existing SaaS (Software-as-a-Service) applications for human resources, sales and other business functions. Oracle claims that its cloud ERP can run on-premises or as a SaaS, marketing it as an incremental move to the cloud to its customers’ PeopleSoft, E-Business Suite and J.D. Edwards ERP implementations. Legacy vendors late to the cloud have been buying their way into cloud ERP by acquiring cloud vendors with existing subscription revenues. These so-called “cloud ERP solutions” from legacy vendors are often a smorgasbord of different applications and architectures, and are not true native cloud ERP solutions.
Only a native cloud ERP solution designed specifically for manufacturing and distribution can deliver the advantages of the cloud.
In the early days of cloud solutions, security was a major concern. Cloud services were thought to be more vulnerable to attack because it could be accessed from anywhere in the world. Those days are behind us. Today’s cloud-based ERP systems offer increased encryption standards, two-factor authentication, strictly enforced security protocols and continuous security logging. Modern cloud solutions are no less secure than any other kind of enterprise resource. Recent studies have found that 87% of senior management may already be exposing their company to security vulnerabilities through their personal cloud accounts. A strictly managed enterprise cloud system reduces the need for managers and employees to transfer and store data on personal solutions that are less secure.
Yet the perception that the cloud is not secure persists. In the UK for example, the Cloud Industry Forum found that only two percent of businesses had breaches in their cloud data, a number that’s nearly identical to on-site or software hosting. With cloud ERP, your company and your cloud provider share the responsibility for data storage and security, and that means your cloud data is actually more secure than it would be on your own server. In a separate survey of IT leaders, Insight Enterprises, Inc. found that cloud security misconceptions are removed when companies are provided with up-to-date information about physical security, backup and recovery, compliance, incident handling, security logs and non-disclosure agreements.
Again, we can compare the security of cloud ERP to legacy ERP systems. In the article “Web Security in the Cloud: More Secure! Compliant! Less Expensive!” the Aberdeen Group points out that security for on-premise systems have historically had more data loss and exposure when compared to cloud-based systems. Data loss in an on-premise system can be permanent when a system fails. SaaS backup procedures ensure that downtime is not only rare but also temporary.