ERP stands for enterprise resource planning, which is a type of software used by companies to manage information across the organization. Cloud ERP refers to ERP software and tools that are offered and managed in the cloud, as opposed to the business hosting their system on-premises.
The Benefits of Cloud Computing
Companies that make or distribute physical goods need additional ERP modules, typically for inventory management and supply chain management, a broad function that includes complex processes for distribution, warehousing, transportation, and logistics, as well as planning functions, such as demand management and forecasting. Manufacturers also typically use a material requirements planning module to plan, schedule, and procure the raw materials and components needed for production.
Cloud ERP, because it's accessed remotely over the internet, may seem more vulnerable to public network outages, and some companies might be uncomfortable trusting software maintenance to an outsider.
Types of cloud ERP software
- Multi-tenant SaaS ERP runs on the purest form of cloud and is usually the simplest, with the fewest modules and little to no customizability. It is often the easiest to deploy and least expensive.
- Single-tenant SaaS ERP allows each customer to have its own slice of the ERP software running on the cloud provider's platform. The customer still gets the flexible compute power and subscription pricing of the cloud, but the data and ERP system is cordoned off from those of other customers. It usually costs more than multi-tenant SaaS because there are no economies from sharing the application. Some companies choose single-tenant SaaS for their own privacy and security reasons or the legal requirements of countries where they do business.
- Private cloud ERP is a single instance of ERP software that runs on cloud infrastructure hosted by the ERP vendor or a third-party provider. Though the underlying infrastructure isn't typically shared like in single-tenant SaaS, the private cloud still provides some key benefits of the cloud, including subscription pricing and the ability to scale resources depending on the need. In some cases, the ERP owner has some control over the IT decisions instead of delegating all of them to the cloud service provider. A private ERP cloud can even run entirely on-premises in an organization that has its own cloud infrastructure. However, this is stretching the meaning of cloud, which historically has been defined as on-demand delivery over the internet from an external provider.