5 Reasons Why Cloud ERP Is Perfect For Your Start-Up
Investing in inventory and accounting ERP software can be a daunting process – especially for small and start-up businesses as they struggle to set up processes and invest in company growth while working to minimize spending and expenses. However, systems previously only affordable by large, established companies are now available for small and start-up businesses at less cost, thanks to the cloud. Cloud based ERP software (sometimes referred to as hosted or SaaS) provides all the same benefits of on-premises ERP with the added benefit of predictable monthly fees, remote access and reduced IT and hardware costs. Investing in ERP software is important as it is a decision that will help save costs down the road and improve efficiencies for faster company growth.
Below are 5 reasons why cloud ERP is perfect for your start-up.
1. Minimal Implementation Costs
Implementation costs tend to make up a significant portion of the software purchase, resulting in a large initial investment. Although each implementation will vary, most consist of 4 components: the installation, system configuration, employee training and data migration. Within these components, data migration costs are among the highest due to complex data formatting and the transfer of many years’ worth of data from one system to another. However as a start-up business, there is often minimal, if any, historic data that needs to be transferred which significantly reduces the overall cost of implementation.
2. Infrastructure Costs are Pushed to the Provider
With cloud ERP software, the vendor installs and hosts the software on their own servers and takes responsibility for purchasing and maintaining all hardware needs. The customer does not have to worry about having up-to-date equipment or the physical storage space necessary to house it all. This helps to further reduce the costs for start-ups in terms of both initial investment and on-going hardware maintenance.
3. No IT Department Necessary
A key factor in choosing hosted ERP software, is that an adept IT department is not necessary as almost all IT issues are passed over to the cloud vendor. As mentioned above, the cloud vendor is responsible for dealing with and maintaining all necessary hardware and server requirements. This includes handling all regular back-ups as well. Customers don’t have to worry about hiring IT staff as they have access to a knowledgeable team of IT support representatives supplied by the vendor.
4. Predictable, Monthly Costs
One of the biggest differences between a SaaS and on-premises software system is the cost structure. With an on-premises solution, you’re paying a larger upfront investment as you’re purchasing the software licenses and paying for the implementation all at once. For SaaS applications, you pay the same implementation costs but the software licenses are paid for on an on-going monthly basis – you’re essentially leasing the software from the vendor as opposed to buying the licenses outright. This means that you’re responsible for paying on-going, predictable, monthly fees which makes it easier to budget costs and works to help improve cash flow.
5. Ability to Quickly Add New Individual Users
Start-up businesses need a software system in place that will help them grow quickly. With cloud ERP applications, businesses can slowly add individual users onto the system very easily one user at a time. A set “cost per user” will get added to the monthly fees each time someone new is added. This set cost makes it easier to budget for new hires.
Although there is no right answer when it comes to choosing between an on-premises and cloud-based ERP system, there are many benefits to choosing the cloud as a start-up. Aside from lower costs, the cloud requires less resources and personnel to manage. Make sure you spend time reviewing both options to find the one that is best for your business.
Posted on Thursday, March 31, 2016