Through our work with manufacturing organizations in a variety of sectors, we often team with companies that wish to move away from traditionally purchased ERP licenses deployed in their own data centers.
That’s why we read with interest a recent Cloud ERP case study about the willingness of manufacturers to adopt Cloud ERP.
Sponsored by the ERP vendor Acumatica, the analysis finds that medium-size businesses expect cloud ERP to be accessible, to support mobility, and to provide flexibility in data location and moving between deployment options.
As they consider an ERP implementation, medium-size businesses are eager to take advantage of robust and embedded customizable reporting and workflow.
The report shows that a main concern medium-size businesses have about cloud ERP is how per-user licensing costs rise as firms’ headcount increases.
Common Concerns With Cloud ERP
In our experience in ERP consulting, many manufacturers share a set of common circumstances that lead them to consider cloud ERP:
- They seek a flexible solution to scale systems on demand
- They hope to avoid tying up cash in heavy, up-front investments
- They seek ease of deploying new functionality and updates
- They hope to ease the burden on existing IT resources
In some cases, these manufacturers share a set of specific conditions: they are going through a merger or acquisition (M&A). When this situation exists, there is very often a strong business case for Cloud ERP.
A case in point is seen with multi-site operations. We often team with a multi-site, multi-facility manufacturing or distribution company operating in one geographic region, or an organization that operates with multiple locations and countries. We’ve addressed the specific challenges multi-site organizations face when it comes to ERP in a previous post. In terms of the Cloud model, it’s worth evaluating the advantages a Cloud deployment makes to international, multisite companies considering a two-tier ERP strategy. In these cases, the Cloud can be a good option for fast implementations at the subsidiary level. On the flip-side, global subsidiaries in particular must be concerned with data mandates, security and access which might make the Cloud a less than desirable option.
Change as a Tipping Point
While the cloud is a viable option for many organizations, each situation comes with a unique set of requirements. Management is wise to analyze the situation carefully, especially in terms of total cost of ownership, along with the monthly fees that might add up to be substantially more than a traditional “on-premise” solution.
The possession of data is another area that requires additional scrutiny and which should be clearly detailed in the Service Level Agreement (SLA).
There are additional points to consider with the cloud, as every organization has key business drivers and decision points. The key is to work through ERP selection and implementation carefully for the best business outcome.
Heading into a tipping point? Contact the ERP consulting team for more information