As the prevalence of cloud solutions in areas like customer relationship management (CRM), human resources (HR) and accounting has increased, so too has interest in cloud enterprise resource planning (ERP) software. ERP software has been slower to adapt to the cloud trend due the sophistication and computing requirements typical of an ERP system.
That is starting to change, however, as a small but increasing number of ERP vendors begin to offer their system in the software-as-a-service (SaaS), or cloud, model. Although there are relatively few cloud ERP options on the market today, every major ERP vendor offers some form of Web access to their software. We wrote this buyer’s guide to sort through the myriad of Web-based ERP solutions on the market.
Here’s what we’ll cover:
What Is Cloud ERP Software?
An enterprise resource planning (ERP) system automates and tracks a variety of business functions across various departments in an organization—from tracking revenue to monitoring supply chain activities.
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Generally speaking, ERP software is an umbrella term describing a system that captures and shares information across all departments and business functions. Whereas a traditional ERP system is installed and maintained on location, cloud ERP software is delivered purely through a Web browser via an Internet connection. Note that:
- In the cloud model, the software vendor houses and manages the software and buyers pay a subscription price for the software—typically on a monthly or annual basis. This removes the need for businesses to host and maintain the software and data on their own servers.
- This model is not to be confused with “Web-enabled” software, which means that the software is still installed on-site but the data is accessible online.
- In both cases, system data can be accessed through an Internet connection, enabling employees to remotely access their business data through any device with online capabilities.
Common Features of Cloud ERP Software
Cloud ERP software includes the same features as on-premise ERP solutions, including:
|ERP accounting||Includes general ledger, accounts receivable, accounts payable and payroll.|
|Business intelligence||Used to analyze and report business data to help companies make better decisions. Funtionality includes analytics, data mining, reporting and more.|
|Customer relationship management||Used to manage interactions with prospects, customers and clients across all departments, including marketing and sales.|
|Human resources||Manages HR activities such as personnel tracking and benefits administration, as well as new strategic initiatives like talent management and learning management.|
|Inventory management||Helps companies track up-to-date information about their product supply, maintain stock levels and avoid inventory depreciation and overspending.|
|Manufacturing||Includes manufacturing resource planning software, manufacturing execution systems (MES), bill of materials (BOM), product life cycle management and more.|
|Supply chain management||Tracks goods as they move from manufacturing facilities to distribution centers to retail stores. Includes functionality to adjust inventory with demand changes monitor performance of suppliers and warehouse management.|
What Type of Web-Based ERP Buyer Are You?
Prior to beginning your software selection process, it’s important to know what type of buyer you are. This will help narrow your options and provide a good launching point for deciding which system is best for you. Generally speaking, there are three types of buyers:
Full-suite buyers. These buyers want a single, integrated system to run their entire business. The goal in relying on a single system is to mitigate integration issues and facilitate a smoother flow of information between departments and business functions. These buyers favor cloud ERP suites, such as SAP Business ByDesign, NetSuite Manufacturing Edition and Infor Syteline.
Best-of-breed buyers. These buyers favor purchasing specialize applications that perform a single function, such as an HR system or CRM system. Typically, they’re looking for an application that has more robust functionality than what’s offered in an full-suite package. These buyers favor best-of-breed applications such as Taleo, Salesforce and ADP.
Small business buyer. Historically, there have been few options for small businesses to choose from when it comes to ERP software. That’s changing, however, as the software-as-a-service (SaaS) trend strengthens in the ERP software market. Of course, there are still several on-premise software systems available for small business buyers. Examples include MISys, Exact and Made 2 Manage by Consona.
Benefits and Potential Issues
Web-based ERPs have a number of key benefits over locally installed systems but also have their drawbacks:
Ease-of-use. Since Web-based ERP is delivered via a Web browser, the interface will have the familiar look and feel of a Web page. This means that it will be fairly intuitive to use and should reduce the need to invest in employee training.
Reduced IT costs. Because the software vendor hosts and maintains the software—performing maintenance, upgrades and back-ups—there is less need to invest in an in-house IT team.
Connectivity requirements. The biggest concern with a Web-based system is that it relies on a strong, consistent Internet connection. If you have an unreliable Internet connection, then you may want to resolve connectivity issues before pursuing a Web-based system.
Customization difficulties. Since every business receives the same version of the software, it is typically more difficult to customize a cloud ERP solution. However, this is starting to change as technology advances.