The 5 Hidden Economic Benefits of Cloud ERP
The cloud has been a major topic of conversation among manufacturers over the past few years. With good reason too: it has definitively proven its financial value. Obviously, the cloud offers compelling ways for manufacturers of all sizes to reap cost savings, especially when it comes to capital spend. But cloud ERP promises even more economic win falls that aren’t quite as obvious. Just consider the following:
1. Less Capital Output
With traditional, legacy on-premise ERP, there is a large upfront capital investment in hardware, servers, and infrastructure. Cloud ERP on the other hand is managed and maintained by software and hardware experts in large, secure datacenters. Manufacturers simply pay for the service they need. Subscription-based pricing is “pay as you go,” providing the option to choose how much—or how little—functionality to buy. This involves very little upfront costs.
2. Faster Expansion
Once cloud ERP is active, manufacturers merely need an Internet connection to add new users and locations. Because there is only one instance of ERP software shared across the enterprise, they can both add and fully integrate new production locations quickly. There is no software installation—new locations are simply added to the database and connect to it via the Internet.
3. Infrastructure Cost Savings
As mentioned previously, cloud ERP offers a massive opportunity for infrastructure savings. From servers to database systems to middleware, the costs to replace, upgrade, and maintain a traditional ERP system can be a massive hit to IT budgets and resources—dollars that can even be funneled back into the budget to fuel innovation. Cloud eliminates the need to manage infrastructure, maintenance, or software versions and fixes.
4. Quicker Return on Investment
Too many missed requirements exert pressure on project schedules and may cause some requirements to be skipped to save time. When the software goes into production this functional mismatch can seriously disrupt the business. An example of this happened at athletic shoe and apparel retailer Finish Line’s botched supply chain software implementation which resulted in a $32 million decrease in sales and cost the CEO and Chief Supply Chain Officer their jobs.
5. Improved Opportunity Costs
Software loses value if it’s not routinely upgraded. Unfortunately, most manufacturers don’t upgrade with every new release, falling behind by a few revisions. They could be missing out on new features until that next upgrade, which could be years down the road. Cloud ERP is versionless, adding constant value with real-time enhancements that can be used immediately. With no upgrades and no ERP software or hardware maintenance to manage, manufacturers can get out of the IT business and focus more resources on production and driving results.
Posted on Thursday, December 29, 2016