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By Sean Barbera • April 19, 2019

Why Cloud ERP Favors Businesses  below Large Enterprise

There are many advantages of running a small to medium-sized business (SMB).

I know what you are thinking, What do you mean, SMALL...  In the grand landscape of Enterprise Resource Planning where multi-billion dollar enterprises are considered Large, a Small and Medium-sized Business is something under  $550 million in revenue. 

Agility and more personalized service are among them. Larger firms have long had the advantage of resources and best practices, however.

These advantages of big business are slowly fading, though, due in large part to the rise of cloud services. Smaller firms can quickly bring aboard specialists per project, reducing the advantage of deep staffing resources. Equipment and IT services can be rented on a fractional basis and purchased monthly. This is a great equalizer, and a prime reason that starting and running an SMB is perhaps easier than at any other time in history.

One area where the cloud has made a significant difference is enterprise resource planning software (ERP). Long a secret weapon of larger firms, ERP now is accessible to businesses of all sizes that want an integrated system for handling operations, accounting, financials, inventory, distribution, sales and customer service, as well as perks such as automation, real-time reporting and end-to-end visibility.

Large enterprises are adopting cloud ERP as fast as they can, but SMBs are the biggest winners of this systems evolution.

Here’s why.

  1. Affordable Pricing

Systems that run all aspects of a business have not historically come cheap. Large enterprises typically invested millions of dollars into their ERP systems, both in terms of software licensing and hardware required. ERP was great when you had it, but many businesses couldn’t afford it.

Cloud ERP changes all that, because now businesses can get ERP for one affordable monthly fee and don’t need to make a large capital investment. This favors SMBs, the businesses that typically struggled the most with the cost before.

Further, businesses are able to get everything they need with cloud ERP, not just the functionality they can afford.

“The SMB clients now are getting what the enterprise used to get, basically,” Grant Fraser noted during a recent interview, ERP industry pioneer and CEO of Navigator Business Solutions. “It truly is the enterprise system now, not just accounting or material resource planning like we started off with 30 years ago.”

  1. Easy Rollout

Large enterprises can afford big IT projects that take months or years. They have the resources for such projects. SMBs do not.

Previously, ERP was the definition of a large IT project. It still is, because it interfaces with business processes across a company. But cloud ERP has greatly reduced implementation times because all the hardware and software are now handled by the cloud vendor, not the business.

Configuration and training times are reduced with cloud ERP, too, because cloud systems are built for easy adoption.

Whereas rollout of an ERP system once typically took more than a year, it now can take as little as a few weeks. This ease or rollout unquestionably benefits SMBs the most.

  1. Less IT Required

When ERP is hosted in the cloud, there’s a lot less maintenance and IT administration required. There’s no servers to run, no software upgrades or patches to apply, no system failures that require service. Cloud ERP just works, and this means that a business can focus more IT resources on strategic projects and less on routine system maintenance.

Larger businesses benefit from a simplified IT footprint, which is one reason cloud ERP adoption is appealing for businesses of all sizes. For smaller firms, however, this is a huge advantage. Any business that needs the software can run it, not just firms with the resources to support the complexity of an ERP system.

  1. Emphasis on Standard Processes

If there’s one thing the cloud has done for software, it has been the institutionalization of best practices. There’s a lot less scope for customizing cloud software, so instead businesses adopt the standard processes built into the cloud solutions and generally benefit from these standard processes as a result.

Cloud ERP works the same way. But because ERP touches every corner of a business, it brings standard processes across all areas of a company in one go.

“Historically, ERP was very customized for specific industries and businesses,” notes Ralph Hess, vice president of sales for Navigator Business Solutions and a 30-year ERP industry veteran. “But the cloud model doesn’t encourage that. So we’ve developed prepackaged industry solutions that are configured for meeting the needs of specific industry verticals with a common digital core built around overall best practices.”

This favors smaller firms, because they inherit many of the best practices that larger firms have been using for years just by using cloud ERP.

  1. Faster Integration with Other Software

Business is more integrated and dynamic than ever, with more channels and more need for real-time interaction among systems.

“Businesses are all struggling in some way with how to service multiple channels,” says Hess. “How do I have inventory availability for Amazon, for Ebay, for Target, for Wal-Mart at the same time? Those are the types of things that they have to do in today's marketplace because it's so competitive, and ecommerce has really changed the rules.”

Cloud-based ERP does a much better job at handling this need for connectivity than on-premise ERP solutions because easy connectivity is at the core of cloud ERP. Businesses can integrate with ecommerce channels and cloud-based services with just a few clicks.

This easier integration benefits all firms that use it, but if benefits SMBs the most because smaller firms have less time and resources for integration. With cloud-based ERP, there’s no difference between a Fortune 500 company and a 10-person business connecting to an online supplier network. This ease of integration levels up smaller firms, making them more competitive.

So while cloud ERP is a boon for all businesses, it favors SMBs. Smaller firms are the ones that gain the most, because cloud ERP lowers the barrier to entry for the systems and processes that large firms have been using for years.

As with other areas, the cloud is an equalizer. This is no less true for ERP and the cloud.