The cloud is the "in" platform for ERP software, and it is rapidly taking market share from traditional on-premises applications. Despite the growing acceptance of cloud-based ERP as a successful strategy, confusion and doubt remain as to what it is and where it fits within the vast array of available ERP options.
To begin removing that doubt and confusion, let's start with some definitions:
- Cloud computing refers to the hosting of software, data and IT resources by an outside supplier (as opposed to providing in-house or on-premises resources).
- Software as a service (SaaS) is a licensing strategy, often associated with cloud-based products and services, wherein the user pays for services that include software license, hosting, maintenance and support all in one monthly fee.
- Midsize manufacturer is a categorization established by the ERP software community and usually defined as companies with annual sales in the range of $100 million to $1 billion. Those limits are somewhat arbitrary and can vary between suppliers, analysts and pundits.
- Cloud-based ERP is perceived to be less costly (no up-front software licensing fees, no need to buy, install and support hardware), quicker to implement, and simpler to operate because IT support is outsourced. These points are all arguably true, making cloud-based ERP attractive for smaller companies with limited cash and technology resources. But there is still concern, largely unfounded, about access, security and control (trusting a vendor with full custody and responsibility for all of a company's applications and data).
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