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