Buyer’s Guide: Is Cloud ERP Right for You?
Updated · Apr 05, 2012
A growing number of vendors offer cloud ERP products. While major players like SAP are introducing cloud computing into their previously on-premise product lines, the trail has been blazed by a series of pioneers, whether under a cloud or a software-as-a-service (SaaS) banner.
Among them are Acumatica, Plex Online, RootStock, Kenandy, NetSuite and Consona (Compiere). But there are many more to choose from, and to be fair, the established ERP giants are catching up fast in terms of making their software function over the Web.
This guide, therefore, won’t showcase products so much as provide buying tips in an effort to help users zero in on the right cloud ERP solution to suit their specific needs. It will answer such questions as how to go about the selection process for cloud ERP, what are the key areas to avoid in purchasing, and what you should ask your incumbent vendor if you are looking to upgrade an aging system.
Derek Singleton, an ERP analyst at Software Advice, laid out what he considered to be the logical first step: Analyze your business needs and understand whether a cloud solution can support the entire organization, or if it’s better to go with a departmental rollout.
“While the cloud is advancing at a rapid pace, it has yet to reach functional parity with on-premise solutions,” said Singleton. “If you’re a large organization with complex needs, it may be best to go with a point solution — such as a CRM or HR suite — rather than trying to adopt full-suite cloud ERP.”
A point solution approach to cloud ERP allows for the realization of cost savings while creating a starting point for cloud technologies to enter the organization. On the other hand, small- to medium-sized organizations may be able to adopt a full-suite option that can support the complete needs of the company — from accounting to inventory management. That’s why it’s so important to understand the functional depth that is required of the software.
In general, the process for selecting the right cloud vendor is similar to the selection process for on-premise software:
- Narrow the choices down to a few vendors after conducting upfront research.
- When meeting with vendors on the short list, be prepared with a list of questions to make sure the software meets organizational needs.
- Many cloud vendors offer a demo version that can be used as a trial run. Use that opportunity to test the software.
Douglas Johnson, vice president of Marketing and Business Development for Acumatica, recommends listing the top 10 processes you want to automate. Can the proposed system handle them or not? That will simplify your selection process by helping you zero in on your most pressing needs.
There are many different ways to deploy cloud software, and this exerts a big influence on purchasing. Johnson laid out three options: Deploy an internal cloud. (You own the license.) Deploy your software on a hosted service. (You own the license.) Deploy as a service (You rent the license and outsource operations.)
Some vendors allow you to own a license, while others require ongoing annual software payments. If you are not comfortable handing your operations over to a third party, then select a vendor that offers its software for use on an internal cloud.
“Make sure you understand if vendors charge extra for storage, bandwidth and additional users,” Johnson said. “In addition, determine how you can get access to your data and the format you will get your data in.”