These days, Cloud ERP is turning out to be a significant game changer for manufacturers. More and more companies have discovered the advantages of moving their Enterprise Resource Planning (ERP) functions to cloud-based solutions and platforms. These solutions endow with manufacturing firms and their employee’s real-time access to critical business information anywhere in the world. Cloud-based manufacturing ERP solutions provide businesses with new levels of innovation and integration, making it the perfect choice for both manufacturers looking to leverage their legacy ERP systems with hybrid cloud solutions and small- to medium-sized firms looking to expand their businesses.
ERP systems became popular with large manufacturing firms in the 1990s as a way to automate their processes and connect the departments together. Employees in the warehouse, on the production floor and involved with delivery still could not connect to each other in real time and certainly not from anywhere in the world. These ERP were installed locally on hardware and managed by the company’s IT department. These systems at last proved expensive to implement, expensive to maintain, and dependent upon constant customizations to remain valuable to the business. Over time, this on-premise, legacy systems were turning out to be more of a burden than a help.
Then cloud computing came along. The cloud provides centralized data storage, the sharing of data-processing tasks and internet-based access to services and resources. The features and flexibility inherent in cloud computing, including supply chain and finance functions, make manufacturing systems predominantly well suited to cloud-based ERP solutions, especially in industries such as aerospace, defense and telecommunications. In fact, Allied Market Research expects finance to drive the ERP systems market significantly by the year 2020, contributing nearly 30% of the total cloud software revenue.
In a 2014 Gartner survey of companies in North America, EMEA, APAC and Latin America ranging in size from $10 million to $10 billion, 45% said that they planned to move their core ERP systems to the cloud within five years. In the same study, 30% of organizations said that they would keep their on-premise ERP systems for the foreseeable future. Manufacturing firms dominated this survey segment. The Gartner study results can be seen in the following graph.
However, these results don’t tell the whole story. Cloud ERP adoption is accelerating faster than Gartner’s study predicts, largely because of the availability of two-tier, or hybrid, ERP systems. Hybrid ERP systems combine Cloud ERP with existing on-premise systems, making it an easier for some firms to retain their current ERP system while also taking advantage of cloud-based functionality. In Gartner’s study, they predict that most of the growth in Cloud ERP adoption will be driven by hybrid ERP systems. Supply chain, finance, and others.
Another research firm, Allied Market Research, expects cloud-based system to register a CAGR of about 10% during the period of 2014 – 2020. The adoption rate of ERP software has been great in North America and Europe, but today Asia–Pacific is becoming the most lucrative market, with nearly $9.77 billion in sales expected by 2020.
The cloud provides on-demand real-time access to data, applications and critical business information so that every department in an enterprise can react instantly to the needs of the business. Employees don’t have to visit the office to retrieve relevant information about a customer or inquiry; they simply access the information from any Internet connection. This real-time access lets manufacturers fill orders faster, respond more quickly to changing customer habits and manage inventory more competently.
The cloud is ideal for storing, organization and accessing large amounts of data, often referred to as “big data.” Manufacturing firms can access all of their big data, including plans, simulations, documents and other manufacturing resources, from the cloud, eliminating the need to maintain expensive, on-premise hardware.
Cloud computing offers the ability to deliver only as much storage and power as needed. Manufacturing firms of all sizes can conclude when they need more or less power based on changing project workloads, making cloud-based ERP solutions completely scalable.
Cloud ERP reduces IT expenditures, including spending on infrastructure, maintenance, and lifecycle costs, by as much 54 percent according to industry analysts. Cloud ERP solutions also save both money and time by increasing real-time collaboration and reducing the time it takes to bring products to market.
Driven by the explosion in mobile technologies, businesses are quickly moving from desktop and laptop computers to smart phones and tablets. Mobile integration of cloud ERP systems allow firms to access data and apps on a variety of devices, letting employees across the globe access critical data from anywhere and become empowered to react quickly to any problems that may occur. According to Allied Market Research, cloud ERP adoption rates are expected to increase due to functionality that enables customer access to enterprise applications from smart phones or other mobile devices.
With Cloud ERP on a stable, secure enterprise cloud platform, manufacturers are realizing dramatic, game-changing benefits:
With on-premise legacy ERP systems, the entire implementation process was lengthy and expensive, taking a lot of valuable time getting everything up and running. Because cloud ERP software and data are managed in the cloud by the software vendor, implementation can take a few weeks compared to months or even years for on-premise solutions.
Cloud-based ERP solutions connect all core business systems together via an Internet connection. This lets all types of manufacturers, both made-to-stock or made-to-order, efficiently access critical business information and make important decisions at that moment, including identifying bottlenecks in the process and managing inventory in real-time.
Cloud ERP solutions improves communication between manufacturers and their customers. Cloud ERP allows many manufacturing processes to be automated, including reporting and replacement of defective products, which increases customer satisfaction without time or location limitations.
Most cloud ERP solutions can be integrated quickly, which means manufacturers get a faster return on its IT investment. When hosted on a stable enterprise cloud platform, cloud ERP integration leads to reduced total cost of ownership (TCO) over the entire life of the investment.
Cloud-based ERP requires fewer technical resources than on-premise systems, because the software vendor takes care of all software, hardware, and network administration. Cloud ERP lets companies use their IT departments for other, more business-related tasks.
Cloud ERP lets companies integrate their business processes seamlessly and improves employee productivity through ease of use. Workers in every department enter data more quickly and more easily, resulting in more accurate data in real time and faster decisions to help drive growth.
Manufacturing cloud ERP modules serve every step in the manufacturing process, increasing efficiencies all along the supply chain.
There is an increasing amount of innovation occurring in cloud computing. As more companies move to the cloud, they are able to adopt these innovations faster than before.