Advantages and Disadvantages of Cloud-Based ERP Systems

10/11/21 7:24 AM

Selecting the right ERP system for a manufacturing operation can be challenging. Precision, flexibility, and being technologically advanced are becoming the main factors to consider. In addition, supply chains are changing - fast, with production facilities gravitating more toward becoming technologically oriented as each new day brings us a new tool. As these technological advancements are implemented throughout manufacturing and production industries, new facets must be considered, such as whether or not to embrace or avoid cloud-based ERP systems.

Cloud-Based ERP Advantages and Disadvantages
Advantages of Cloud-Based ERP Systems

Cloud-based systems are becoming more common within the manufacturing industry. Cloud ERP systems utilize a web browser or web service to communicate data to points of production and production workers from the Cloud. This differs from an on-premise ERP system through being configured, updated, and remotely installed instead of a physical on-site central installation. In addition, the cost of these two ERP delivery models can differ, with cloud-based ERP systems having a monthly subscription and on-premise ERP systems usually having a one-time licensing fee. Some of the other various advantages of this ERP system include:

  • Implement Quickly - Investment of new hardware and slower updating is not needed for cloud-based systems that utilize the web because updates are implemented without human interaction.
  • Accessibility of Features - Since updates are faster, more features are implemented with every update, enhancing the system frequently and increasing the ERP systems functionality.
  • Data and Integration Enhancement - With cloud-based ERP systems being web-oriented, integration and data accuracy improves significantly. As a result, advanced technology can blow past older on-premise ERP systems that lack data accuracy and overall system integration.
  • Non-Physical Servers - Hardware maintenance is not essential simply because there is no physical hardware on-site. This is a big plus for operations that constantly maintain hardware and can instead focus on other areas within the production facility.

On-premise ERP systems can seem like an attribute of the past, with production facilities leaving the manual installation of updates and hardware behind and utilizing cloud-based systems that update as needed all on their own. So yes, cloud-based ERP systems are becoming an important aspect to consider for the future, but there are also various disadvantages of cloud-based systems.Cloud Based ERP Advantages and Disadvantages

Disadvantages of Cloud-Based ERP Systems

Along with the perks of a cloud-based ERP system, some disadvantages make the system unfavorable and could even sway production facilities away from utilizing the system. Various disadvantages of cloud-based ERP systems include the following:

  • Data-Security - This is one of the most significant issues concerning the supply chain and the cloud. With information being strictly web-accessible, data-breaching becomes a legitimate concern for production facilities. The ERP system's breach can lead to system failure and prevent or completely halt production until a solution is implemented.
  • Customization Limitation - As cloud-based systems become configurable, older customizations are beginning to be expressed as standard. However, customization can only go so far; this is why specific manufacturing operations are still utilizing on-premise ERP systems best suited for that particular operation.
  • Price Contemplation - The cost of a cloud-based ERP system may greatly outweigh the cost of an on-premise ERP system. Since the system is technologically advanced, it is considered superior and therefore can cost more.

The pros and cons of a cloud-based system are difficult to weigh, and looking at the attributes can aid in the decision-making process of choosing the correct ERP system. In addition, finding the best-suited ERP system for a production facility will help in efficiency, flexibility, and higher output.

Related IT Video

 APS Resources

Topics: ERP, enterprise resource planning, cloud, on-premise

0 Comments

No video selected

Select a video type in the sidebar.

Download the APS Shootout Results

LEAVE A COMMENT

PlanetTogether APS: A GPS System for your Supply Chain - See Video



Recent Posts

Posts by Topic

see all
Download Free eBook
Download Free APS Implementation Guide
Download Free ERP Performance Review