Cloud ERP Software – An Easy Guide in 7 Points


Enterprise Resource Planning (ERP) helps integrate and organize data to automate the business processes from various departments of an organization. Traditional ERP systems are in-housed within the organization’s server infrastructure. It requires constant updating and personnel for maintenance works to stay up to date. But, in order for organizations to stay relevant, one had to effectively compete in today’s business environment. It needed advanced, updated software tools and infrastructure to focus more on growth initiatives rather than on managing the IT infrastructure on a daily basis. This made organizations migrate to cloud ERP in order for their businesses to innovate, scale-up, and to stay on par with the new digital era.

  1. Definition of Cloud ERP
  2. Components of Cloud ERP
  3. Concepts of Cloud ERP
  4. Cloud ERP Vs on Premises ERP
  5. Types of Cloud ERP
  6. Benefits of Cloud ERP
  7. Challenges of Cloud ERP

1) Definition of Cloud ERP

Cloud-based ERP as the name suggests operates on the cloud platform rather than on proprietary IT server infrastructures. Cloud-based ERP is a robust set of system architecture to enable real-time single-source data processing and business information. It is hosted and managed outside the premises of the organization on the vendor’s cloud platform. Cloud Erp Software integrates all the business functions of an organization including supply chain, order procurement, operations, HR, finance, accounts, etc. into a single data source. It allows the various departments to gain access to real-time, cross-functional information for their specific needs. It provides unified and up to date information and shared resources of the several processes to all the business units.

2) Components of Cloud ERP

Cloud-Based ERP Software is a single software platform to access all the shared resources of the various departments and business units of an organization in real-time. It includes core financial and accounting data to sales and operations data based on the specific requirements. This gives greater flexibility among the departments in collaborating their work to increase interoperability between the business units. Some of the components or modules that are widely popular in the implementation of a cloud ERP are listed below:

  • Customer Relationship Management (CRM) 
  • Sales Management
  • Supply Chain Management (SCM)
  • Human Capital Management (HCM)
  • Financials and Accounting Management
  • Procurement and Inventory Management
  • Project Management

3) Concepts of Cloud ERP

Cloud ERP functions is a Software as a Service (SaaS) that allows users from different business units of an organization to access shared resources over the internet. The operational cost is much lower and gives companies critical business information at any point in time from any location. It is necessary to understand some key concepts related to Cloud ERP in order to understand the processes involved in its deployment. Some of them are listed below:

  • Software Deployment Type – Software services can be delivered either on the premises of the organization basically on their server infrastructure or it can be subscribed periodically as a service.
  • SaaS ERP– It is a software service model offered by the hosts via the internet where it grants access to its subscribers or users based on their demand for a service.
  • Cloud-based ERP – This type of software services are offered by the service provider offside and can be accessed via the internet.
  • Premises based ERP – This type of software services are deployed on the premises of the company’s server infrastructure and are managed and managed in-house.
  • Licensing of Software Subscription – Every business house buys software from the service provider and pays a subscription fee in specific intervals e.g. – monthly, annual subscription fees, etc. This fee may include software upgrade charges and maintenance fees as well depending upon the services rendered.

4) Cloud ERP Vs on Premises ERP

The basic difference between on-premises ERP and Cloud ERP lies in the location of the data storage and who manages it. On-premises ERP software is maintained by the organization as they are installed locally in their IT server infrastructure. They buy the core software product and hardware once and pay for their upgrade and maintenance at an additional cost. It also requires additional support staff to ensure its effective functioning which only adds more to the high cost of deployment.

On the other hand, Cloud ERP is Software as a Service model offered via the internet by the service provider or the host to its client. The data server is located offsite and managed by the vendor and is responsible for the data storage, it’s processing and the physical infrastructure including the security of the system. 

5) Types of Cloud ERP

There are several types of Cloud ERP and some of the popular ones are listed below:

  • Public Cloud – A single service provider gives the client organizations physical infrastructure and servers to host shared cloud ERP services, although the data are not inaccessible to the organizations.
  • Private Cloud – Here, cloud services are provided for a single organization and are not shared with another organization.
  • Multi-Tenant SaaS – This type of Cloud ERP uses the same version of the ERP software while it is deployed in multiple organizations based on their specific requirements. Although the client organization uses a similar software version and is hosted on the same servers, their data are secured.
  • Single-Tenant SaaS – This type of Cloud ERP uses a single version of the ERP software for a unique organization although the servers of such an organization are hosted by the same vendor. 

6) Benefits of Cloud ERP

Some of the advantages of cloud-based ERP are as follows:

  • Low Operational Cost – With Cloud ERP, organizations end up paying less as the vendor takes care of the software, hardware requirements, and security upgrades.
  • Improved Security and Scalability – Any potential cyber-attack or vulnerabilities are being taken by the vendor and as such the organization can focus on its scale of operation.
  • Performance and Flexibility of Operation – Software implementation is time-dependent and cloud ERP prepares the operations to run smoothly and faster as other constraints in hiring and training IT staff are reduced.

7) Challenges of Cloud ERP

There are certain cloud ERP disadvantages when it comes to their deployment. Most organizations may lose control of several business processes due to automation and the vendor’s control of the software maintenance and its security concerns. Data Migration might become a challenge for organizations running on legacy infrastructure models and employees may resist changing.


Besides the several advantages that Cloud ERP provides a growing business, any software update and functionality are incorporated in the system in real-time along with state of the art security functions. This can help potential companies to scale up their operations and boost efficiency.

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