The Benefits of Cloud ERP Are Many—Here Are Just a Few
Teenagers can still function despite their rooms being cluttered messes. Their possessions are fewer and their lives simpler than those of grownups. But at some point, most come to realize that the costs of chaos exceed those of the time and effort to get and stay organized.
The same can apply in the data context to ambitious technology companies. In the interests of growth, they often cobble together ad hoc systems as needs arise, customizing on the fly. The data those systems run on can become a clutter of disorganization and inconsistency—the digital equivalent of a teenager’s bedroom.
For decades, this could be justified. The costs of on-premise data centers, hordes of IT consultants, and big, dedicated teams to customize, maintain, enhance, and upgrade leading enterprise resource planning (ERP) systems made them the domain of big players. That put the benefits of disciplined processes and superb data hygiene out of reach for small and midsize technology companies.
But as high-tech companies grew and stretched their systems, they amassed what’s known as technical debt. They had to spend fortunes trying to clean up their master-data messes, generally without great success by the time they transitioned to industrial-strength ERP.
From Office Buildings to Business Sites With Cloud ERP
Cloud ERP has changed that. Rather than having to buy the IT equivalent of office buildings, ambitious software-as-a-service (SaaS) developers, fabless chip makers, component specialists, hardware makers, and other high-tech companies can now rent cloud ERP business suites to fit their needs. And these business suites are capable of growing to campus size. Small, ambitious companies can ride cloud ERP to greater efficiency and competitiveness while laying down solid data foundations that support expansion and diversification.
It’s about more than avoiding the hassle of having to create a master data governance board to clean up the mess you’ve made. As you scale, process becomes increasingly important in squeezing out costs and achieving efficiencies across more complex and varied operations and operating environments. Cloud ERP embeds battle-tested process with enough flexibility accommodate proprietary approaches key to competitive advantage. Cloud ERP also affords extensibility to integrate other tools to enhance the overall solution without compromising core code and data. An added benefit here is lower-cost, faster upgrades.
Cloud ERP Bakes in Best Practices for Pennies on the Dollar
For growing high-tech firms, cloud ERP does more than codify disciplined processes and rational, structured, centralized, and secure data architectures. It avails a trove of embedded, industry-tailored best practices across all aspects of a high-tech business —one that took decades to systematize—for pennies on the dollar.
Examples include details such as continually updated regulatory compliance functionality, the management of multiple simultaneous revenue models (subscription-based, consumption-based, unit-based), and the smooth handling of complex revenue recognition and entitlements.
Getting your figurative room cleaned up is of more than operational interest. Venture and private-equity investors now often stipulate that companies they’re considering have robust cloud ERP in place before they sign on because it demonstrates management is seriousness about growth, and is wise enough to not risk improvising around standard business processes that ERP can handle in ways proven to drive optimization and efficiency.
Cloud ERP Embeds AI
Artificial intelligence is the big story in IT these days, and it’s especially relevant with cloud ERP. High-tech firms are fielding AI offers from all directions, and often they involve some clever algorithm or large language model that works based on data exported from an ERP. That’s a recipe for latency, added complexity, and upgradability issues. It may work out, but the potential pitfalls shouldn’t be glossed over.
Embedded AI and analytics are a big part of the cloud ERP value proposition. They start with access to your diverse business data—customer, human resources, supply chain, project management, order management, financial, and beyond. AI—generative AI in particular—thrives in these sorts of diverse, fresh data sets. That opens doors to insights from AI that can yield real competitive advantage. Also, the SaaS nature of cloud ERP provides automatic access to the latest technology, including AI algorithms and capabilities.
Just as importantly, with AI embedded into cloud ERP core processes, high-tech companies get easy, low-cost access to innovations in areas that build a competitive advantage and are seamlessly integrated into workflows, reducing barriers to adoption and cost. Another advantage of cloud ERP embedded AI: It’s thoroughly tested, it’s reliable, and, because it’s based on your data, it’s relevant to your business.
Cloud ERP Allows Small Businesses to Focus on Growth
Growing up is hard. However, ambitious small and midsize high-tech companies can make it a lot easier on themselves. Cloud ERPs let you avoid the pitfalls of technical debt while exploiting out-of-the-box industry best practices, embedded AI, and extensibility to other tools and data. All that comes as a business suite rather than a mortgaged office tower.
With rock-solid processes and data hygiene practices in place early in a company’s growth curve, you’ll have already "grown up"—and you can focus on growth.
FAQs on Cloud ERP and Small Businesses
What are the benefits of moving to cloud ERP?
Small companies benefit from cloud ERP by creating greater efficiency and competitiveness while laying a solid data foundation for expansion. As companies grow, process becomes important to avoid cost overruns and to be efficient in complex and varied environments.
Is cloud ERP the future?
Yes, cloud ERP is the future of business software. It unlocks a trove of embedded, industry-tailored best practices across all aspects of a high-tech business—one that took decades to systematize—for pennies on the dollar.
About the Author
Post by: Jeff Howell
As a global strategist with over two decades of experience shaping the development of innovative integrated technology solutions to meet the demands of growth high-tech industries, Jeff Howell has captured market share with bullish approaches to drive revenue growth. In his work he has driven strategic business decisions, leveraging customer/partner relationships, acted as a change agent, successfully brought products and services to market, and has led global teams. Jeff is engaged in developing top talent through recruiting, mentoring, and coaching across three continents for leadership positions within SAP.
Company: SAP
Website: www.sap.com
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