Cloud-based computing (also called Software as a Service, or SaaS) allows users access to software applications that run on shared computing resources (for example, processing power, memory, and disk storage) via the Internet. These computing resources are maintained in remote data centers dedicated to hosting various applications on multiple platforms.
Cloud ERP is Software as a Service that allows users to access Enterprise Resource Planning (ERP) software over the Internet. Cloud ERP generally has much lower upfront costs, because computing resources are leased by the month rather than purchased outright and maintained on premises. Cloud ERP also gives companies access to their business-critical applications at any time from any location.
While technically the only difference between Cloud ERP and on-premises ERP is where the software is physically located, there are other significant differences. Here we explain some of the key characteristics and advantages of Cloud ERP software.
The Cloud is particularly valuable to small and medium-size businesses (SMB’s) because it provides access to full-function applications at a reasonable price without a substantial upfront expenditure for hardware and software. Using the right cloud provider, a company can rapidly scale their business productivity software as their business grows or a new company is added.
Cloud ERP has been proven to reduce costs in many ways because it:
-Avoids upfront costs for all computing infrastructure such as hardware and data servers
-Reduces IT support services because IT support is provided by the data center
-Eliminates paying upfront for application software licenses in favor of a monthly fee
-Shrinks the cost of maintaining and supporting those applications since the cloud vendor handles the updates and upgrades
At its most basic, cloud computing is all about renting processing resources and storage rather than buying and maintaining them in-house (on premises). It may come as a surprise to some, but this is not a new concept. In the 1970’s, service firms used large mainframes to run applications and provide data storage for other companies that would rent those computer resources and storage space. This was called “time-sharing”.
Time-sharing was expensive and fell out of favor once the price of computers dropped and companies could afford to buy and maintain their own systems. For the last few decades, companies have been buying, installing and maintaining their hardware and software in their own facilities.
Fortunately, new technologies have been introduced, such as widespread Internet availability, low cost of mobile devices, expansion of computing power, and massive storage availability. Technology has improved to the point that very high functioning applications can safely and securely run remotely on computer hardware hosted remotely. This eliminates the need for individual companies to deal with hardware issues and allows their employees to work anywhere at any time.