(This post was originally published on April 20, 2016. It has been updated for accuracy and completeness).
A growing retail business often needs to upgrade their technology to keep up with operations. One of the bigger technology investments you’ll make is in an Enterprise Resource Planning (ERP) system. This technology often becomes the lifeline of your business. It’s where you handle your financials, order processing, product information, reporting, and more. It’s been a technology that retailers and wholesalers have turned to for many years to manage all different aspects of their business.
Just like other technology systems, ERPs are also making the move to cloud services allowing them to be more affordable and flexible. This article will define what an ERP is, the benefits of cloud-based ERP systems, and list out today’s top ERP systems. We hope this helps you decide whether you’re ready for an ERP and how to evaluate the best one for your business.
What is an ERP?
If you’re not currently using an ERP, let’s first understand what these systems are capable of.
Enterprise Resource Planning (ERP) software handles the financial side of your business, along with other important areas such as inventory, customers, suppliers, project management, and more that help manage our business. This software has been around since the 1990s and automates most back office functions. The main benefit is that an ERP is a single place to manage your entire Enterprise. The modular software allows users to integrate different apps so you can pick and choose which capabilities your business needs.
Retailers and wholesalers use an ERP system as the “foundation system” to run their business. It’s the single place you can manage payroll, HR, create and manage items you sell, determine customer-specific pricing, manage inventory availability, pick, pack, and ship items, and more.
Why Use a Cloud ERP?
Today, ERP vendors are deploying software in the cloud versus on-premise. In the past, merchants bought on-premise ERP systems and installed them locally on their company’s own hardware and servers. With on-premise software, it’s your responsibility to customize, maintain, and manage the software yourself. These projects are usually very expensive in both upfront costs and maintenance over time. This often meant that only Enterprise merchants were willing to take on the investment to handle complex or custom business requirements.
The rise in cloud-based ERP systems, however, gives SMB to Enterprise level merchants access this important business management software, unlocking new processes and tools that weren’t readily available before. Cloud-based software allows merchants to access their ERP systems through any web browser. ERP providers deliver their ERP software as a service (SaaS), meaning you don’t have to maintain any software on your own servers. Instead, the ERP vendor gives you access to their servers that they own and maintain.
That’s why cloud-based ERP systems have many benefits such as:
Total Cost of Ownership
Cloud ERPs usually have a lower total cost of ownership than on-premise options. Since you’re licensing access to the software, you can avoid steep upfront costs to purchase the software and hardware necessary to run your ERP instance. For cloud-based systems, you just need access to the internet to work in your ERP system. In the long run, you also don’t need to train and maintain an IT team that’s responsible for the software.
Instead, merchants pay a monthly fee to continually use and access the software. Most merchants also work with an ERP consultant or service provider to help set up and maintain their system over time.
Lastly, it’s important to note the scalability of cloud servers. Merchants can save costs over time by being able to increase and decrease server space, based on demand. For example, you can increase server space for the holidays, then bring it back down when you don’t need it anymore. This allows you to pay only for what you need.
For most growing businesses, the appeal of cloud-based software is that you don’t have to be an expert in it. You don’t personally need an IT team to maintain the software’s infrastructure and constantly watch for performance issues to fix.
Instead, the ERP provider or your implementor is responsible for monitoring your data. For a growing business, this can mean a big difference in costs, resources, and peace of mind.
Unlike on-premise, merchants can access a cloud-based ERP system anywhere at any time, as long as there’s an internet connection. This allows your ERP to be wherever you are. You can take orders, check inventory, and more while you’re out in the field or on the warehouse floor.
Another notable advantage of cloud-based ERP systems is how quickly they can make software updates or bug fixes. These are usually done frequently and automatically, without affecting your business.
On-premise updates can require shutting down your systems entirely or re-implementing software. They can be such a big hassle that merchants opt not to upgrade and risk performance issues with outdated software.
While an ERP handles many different aspects of your business, it doesn’t handle it all. On top of an ERP, merchants might use an eCommerce platform, POS system in-store, 3PL, CRM or PIM to handle fulfillment. Just like you want your modules integrated in your ERP, you’ll also want these systems integrated to your ERP.
ERP integration to your other business systems allows for the automatic transfer of important data between them. Otherwise, you’ll be stuck manually entering data from one system to the next, like taking online orders and entering them into your ERP for order processing.
Cloud-based systems with a strong API (Application Program Interfaces) are often easier and more predictable integration projects. You’re more likely to find an integration provider like nChannel that offers pre-built and configurable solutions for a popular cloud-based eCommerce, ERP, POS and 3PL systems.
While it’s possible to integrate on-premise software, projects are often more time-consuming and expensive to account for customizations. In most cases, your systems will need to be tied directly together, which can create problems down the road. Read more about different system integration approaches.
Top Cloud ERP Systems
Many SMB and Enterprise merchants are turning to cloud-based ERP systems. The challenge now is evaluating and choosing the best option for your business among a crowded field. Be prepared to do your due diligence and research. Deploying an ERP is an investment and you want to make the best choice the first time around.
As you evaluate different cloud-based ERPs, consider the following:
- Cost – What do you have budget for? What are you willing to spend for the return on investment?
- Implementation – What are your options for implementation? Will you need to work with a third-party? How long do projects take?
- Support – Who can you call when something breaks? When can you call them?
- Functionality – What’s your must-have and nice-to-have capabilities?
- Scalability – How will this ERP evolve with your business over time? Will you quickly outgrow the software?
- User Interface – How easy is it for your employees to use? Is the workspace intuitive?
To start your research, here are some popular cloud-based ERP systems that retailers and wholesalers are using today:
- Oracle NetSuite – When you think cloud-based ERP systems, this name comes up first. NetSuite is known for its broad range of features and modules.
- Acumatica – Known for its navigation and flexible pricing model (non-user based pricing).
- Microsoft Dynamics 365 – Microsoft’s new cloud-based ERP that tightly integrated with other Microsoft cloud applications
- ParagonERP by Jonar – Newer cloud-based ERP on the block with slick user interface and robust feature set.
- Odoo – An open-source ERP and CRM to handle many different parts of your business
- Brightpearl – A more robust, order management system that can be a good fit for growing SMBs.
Have a favorite cloud-based ERP or experience with any of the above? Let us know in the comments below!
Thank you for this insightful post. I agree there are many benefits that come with moving to the cloud. It is important for any company to have immediate economic benefits as well as improving innovation and scalability. There are many companies who are choosing cloud based options because they get a lot more for what they are paying for. This offers increased mobility and security to your ERP applications, whether it be on a private, public, or hybrid cloud system. Velocity Technology Solutions helps companies move their ERP to any type of cloud the customer prefers along with expertise of managing the application. Here is a great resource for those of you who are considering the migration to the cloud.
[…] Hufford, J. (2016). What is a Cloud ERP? The IT Channel Official. Retrieved from https://www.nchannel.com/blog/what-is-cloud-erp/ […]
[…] cloud and mobile options, ERPs are becoming more accessible for small to mid-market size merchants. Cloud-based or SaaS ERP systems are affordable options. They provide reduced IT infrastructure costs, lower upfront […]
Thank you so much for providing all of this great information. It will help Businesses to understand CLoud ERP in better way.