Why move to cloud ERP?
- Last Updated: 04 March 2017 04 March 2017
Common questions about cloud ERP
Cloud ERP (Dear Inventory, Unleashed, CIN-7, Trade Gecko, Stitch...) has huge advantages: fast to deploy, easy to learn and with much better reporting and insights that traditional ERP software. Above all, these packages integrate so easily with CRMs, accounting, online stores, third-party fulfilment, shippers. The business model is different: you pay per month, you no longer host the data. Here we quickly cover the main questions, advantages and disadvantages of cloud ERP for SMEs.
We have a much more in-depth review of common cloud ERP solutions here: A review of cloud ERP for Australian SMEs
Q1: How much does Cloud ERP cost each month?
Cloud ERP packages assume you have an accounting package. In Australia, this is usually Xero. Xero handles accounting, payroll, BAS and financial reporting. Expect to pay $70 a month; competitors broadly cost the same. Xero costs go up slightly depending on how big your payroll is. Xero allows unlimited users. There is no charge from Xero to integrate other apps or to use bank feeds. Supply chain software will be in the range of $150 to $400 a month depending on how many users and which package you choose. You no longer need servers or maintenance fees.
Q2: Is it safe to move to the cloud?
Data safety has a few facets. The most obvious concern is: if my data is accessible via an internet connection, how do I keep people out? But data security also includes backups, disaster recovery and even the actions of a malicious employee. Overall, cloud systems fare very well, and many SMEs will actually see a security increase if they move to the cloud, particularly if it removes the need for remote access to your own server. Please read more here.
Q3: How long does it take to migrate to cloud ERP?
Migration typically about two months. A new system should be selected, and then tested. Then the final implementation happens. Cloud systems are easy to learn as they have a user-interface which most people are familiar with.
Q4: What are the most important advantages of cloud ERP?
A system which is much simpler to own. Remote access. Very easy to deploy to new sites. A modern system with mobile device support and much more interactive reporting. An entire universe of cheap add-ons which deliver incredible functionality, as CRMs, service schedulers, online sales,job tracking, rostering... If you are leaving a legacy server-based ERP, you will see cost savings too. Larger businesses get huge benefits by bringing together all kinds of manual solutions and double entry of data. Cloud systems tend to be much, much stronger than legacy IT the closer your processes get to your customers, and they are likely to be superior at reporting: faster, and much more interactive (drill downs, filters). New staff tend to get up to speed faster with cloud software.
Q5: What are the downsides of cloud ERP?
Legacy ERP systems have very mature financial modules, which support multiple costing methods and multiple legal entities. Cloud ERPs do not yet match the complexity of legacy ERPs, and for some businesses this requires work arounds. They tend not so support the type of business controls needed for large F&A teams. They can struggle with high volume data entry. However, cloud ERP systems are moving fast, and cope with many complex and large businesses.
Q6: Does cloud ERP mean I am locked-in?
Financially: no. The fees are monthly. Changing systems is never a click of the fingers, and exiting a cloud system to move to another system is not very different from any other change; neither better nor worse. That's why you always need to make careful choices when selecting a new system.
If you stop paying your monthly fees, you will lose access to some extent. Some systems give you read access, and some give no access. In this case, data should be exported into reports and transactional data (CSV files, for example). Dropping down to the cheapest plans will maintain detailed reporting without the cost of the full system, and this is a good choice to keep access to your system during a transition. You should not proceed with any system if you are not 90% confident it will see you through the next three years, and 70% confident about the next five years. That rule of thumb is still true for cloud migrations.
Q7: Is my business too small or too big for cloud ERP & Accounting?
Cloud ERP solutions are a good solution for many SMEs leaving legacy ERP systems, such as Prism, Sybase, Accpac. They deal with quite complex supply chains and some of them provide good manufacturing and job costing support. They are a big step up for businesses still on MYOB or other entry-level systems. As a very rough rule of thumb, businesses up to $50m turnover are potential candidates. GrowthPath has clients with turnover as low as $2m. A fuller answer depends on growth plans, complexity of your legal structure and transaction volumes.
Q8: Can I find support for my cloud ERP solution?
Xero has a large user base and there are many accountants and bookkeepers who know how to use it. Xero has a certification program and "Xero University" is free. The other main cloud accounting apps are also well supported, but don't have the market share of Xero. Cloud ERPs already have user bases approaching that of many legacy ERPs, which are very fragmented across many different products, found in many different versions. Remote support for cloud apps is much easier than for legacy software.
Q9: How do I get started on a cloud ERP migration?
You can contact GrowthPath (call or contact us).
We do fixed price evaluations of your best cloud ERP solution, and we do migrations. All fixed price. We are strictly vendor neutral.
You may also be interested in these popular articles:
- Review of Cloud Accounting (Xero, Saasu, MYOB Essentials, QuickBooks Online)
- Cloud ERP for Wholesalers, Retailers and Manufacturers
- Choosing a new IT system