Cloud-based enterprise resource planning (ERP) solutions offer many advantages. They offer flexibility, fast upgrades, accessibility, and scalability … all valuable considerations for manufacturers looking for integrated data management and reporting tools.
However, as with most things, there are also disadvantages to moving your ERP to the cloud. These include some security worries, performance questions, and compliance issues. In Your definitive guide to Cloud ERP, part 4 – The underside of Cloud ERP: Addressing legitimate concerns, we look at the downside of moving ERP to the cloud.
When considering cloud ERP solutions, companies should factor in the following main concerns.
1. Security issues
Handling security issues, both physical and digital, require a leap of faith. In most cases, companies are outsourcing their security management to the cloud provider. This consideration means that your business would be reliant on a third party for physical protection of servers and other hardware along with digital security, including patching, authentication, access and authorization for all your applications and data.
Other security concerns with cloud ERP include:
- Regulatory constraints. Some industries face strict regulatory controls from federal and state authorities that restrict posting data in the cloud. Others require stringent guidelines on the part of the cloud vendor. Failure on the part of the vendor to adhere to these guidelines can result in stringent and extensive fines for noncompliance.
- Redundancy issues. Up-time can create a considerable security risk for companies that use the cloud. When managed in-house, companies often have built-in redundancy and recovery plans. However, what happens if the vendor loses power or data?
- Confidence. You need to be secure about the vendor’s security, both physical and digital.
2. Customization and integration
The whole purpose of ERP is to integrate multiple operational and back-office systems into one integrated platform. In the cloud, some ERP applications may be limited in terms of the availability for integration with on-premises or virtual applications. In addition, if the company needs extensive customization, it can be more difficult when using a cloud-based ERP.
When clients and cloud vendors are geographically distant, there is a risk that network connections and internet speeds can cause lag and slow performance. If this type of responsiveness is frequent, it can have a negative effect on outcomes and employee morale.
4. Dependent on others
When you opt for cloud solutions, you inevitably will lose the advantage of having on-staff IT expertise in the shifted systems, platforms and applications. In some cases, this may not be a significant issue. In others, it could affect strategy and responsiveness. Without on-site IT knowledge, your company becomes dependent on cloud vendors for troubleshooting, deep product knowledge, and unbiased perspective.
5. Selection disconnect
When looking at cloud ERP solutions, there are multiple vendors, multiple solutions, and multiple options. Sorting through these choices can be challenging and resource-intensive.
At NexTec, we help companies navigate the cloud ERP market and alleviate any concerns about negatives. We work closely with leading ERP providers and products, including Sage X3 Cloud, Microsoft Dynamics 365, and Acumatica Cloud. To learn more about how NexTec can help you sort through the advantages and disadvantages of cloud ERP offerings, download the NexTec Corporate Brochure.