ERP (Enterprise Resource Planning) enables companies to plan and manage all their business processes centrally. In contrast to traditional ERP systems, cloud-based ERP software does not require local installation and is significantly more flexible. This enables companies to better adapt to changing market conditions and become more agile.
At its core, a cloud ERP is ERP software that bundles all of a company’s business processes in a single user interface.
company in one user interface, from purchasing and human resources to production and warehouse management.
production and warehouse management. The special feature is that the software is not installed locally on the company’s
servers, but is operated by a service provider on high-performance servers in large data centres.
servers in large data centres.
Companies only need internet-enabled end devices to use their cloud ERP in order to access the software easily. All data from the business applications is stored in the data centre and synchronised in real time.
On-premise ERP software solutions used to be widespread in companies. The software was installed locally in the company’s own IT infrastructure and maintained in-house. However, efficient cloud software solutions have also been available since the 2000s.
Feature | Cloud-ERP | On-Premise-ERP |
|---|---|---|
IT infrastructure | No in-house IT infrastructure required in the company | Own servers and IT infrastructure required |
Installation | Access via any end device with an Internet connection | Installation on own servers and the computers of all employees |
Interfaces to other software systems | Often already a large selection of preconfigured interfaces, otherwise simple configuration | Complex IT projects are often required to develop non-existent interfaces |
Scalability | Expansion of the range of functions at any time by booking additional modules | High expenditure for the subsequent installation of additional functions |
Maintenance and operation | Through the cloud ERP provider, no effort on your part | Maintenance and operation by our own specialised personnel |
Updates and troubleshooting | Automatic import of updates, troubleshooting by cloud ERP provider | Responsibility for updates and troubleshooting in your own IT department |
Ownership structure | Software owned by the cloud ERP provider | Software owned by the company |
Eigentumsverhältnisse | Software owned by the cloud ERP provider | Software owned by the company |
Storage of the data | Storage on external servers in data centres, responsibility of the cloud ERP provider for data security and backup | Data storage on own servers and computers, own responsibility for data security and backup |
Costs | Ongoing costs based on a subscription model, high transparency | High initial investment in IT hardware and software plus ongoing licence fees, high IT personnel costs |
At their core, on-premise solutions and cloud ERPs have the same functionality. In recent years, however, the possibilities of cloud ERPs and therefore their market share have expanded considerably. Software developers are working flat out on new, modern technologies. Thanks to the cloud-based approach, these do not have to be rolled out in complex update installations, but are available with virtually no time delay, can be tested in advance in beta tests and allow companies to react flexibly.
Cloud ERPs have a number of advantages for companies:
Cloud ERP solutions such as S/4HANA offer companies the opportunity to become more efficient in their core business and increase their productivity. Powerful tools that drive automation in administration and production play a significant role in this
Cloud ERPs can be customised to the specific needs of any industry. They can therefore be used in almost any industry, e.g:
One of the biggest reservations companies have about cloud solutions is the fact that they have to relinquish control over their company data. In order to enable real-time analyses, these must be hosted by the cloud ERP service provider. As a result, many companies fear security gaps that they can neither oversee nor influence.
However, it is important to choose the right service provider. A German data centre must meet the strict requirements of the German Federal Data Protection Act (BDSG) and the General Data Protection Regulation (GDPR). Companies’ data is generally more secure here than in their own company, as IT security experts specialise in this area. Cloud ERP providers thus prevent data theft and loss and guarantee the security of their customers’ data.
Unlike traditional on-premise ERP systems, however, a cloud ERP is not installed locally, but hosted in a data centre and made available via the internet. It can be accessed from any internet-enabled device at any time and from any location.
A cloud ERP is more cost-effective than expensive on-premise solutions, as no investment in hardware and maintenance is required. Thanks to its modular structure, the range of functions can be easily expanded and adapted to industry-specific requirements.
Modern cloud ERPs, such as SAP S/4HANA, integrate comprehensive security features such as encryption, multi-factor authentication and regular backups. The data centres used are operated in certified high-security environments that significantly reduce the risk of data leaks thanks to compliance with specific data protection regulations.
Cloud ERPs are based on a subscription model (Software-as-a-Service, SaaS). For the companies that use them, this means transparent monthly or annual fees depending on the number of users or the range of functions. However, additional costs may be incurred for employee training, customisation or integration.
Cloud ERPs such as SAP S/4HANA enable companies to customise the range of functions and computing power to their individual needs. The software therefore grows with the company and can be customised for any industry.
