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Benefits and Risks of Cloud ERP Software

Posted on 17 December 2012 by CRadmin2

The cloud has finally emerged as a viable option for businesses when it comes to data, webhosting and enterprise server solutions, but many business owners are hesitant when it comes to adopting this technology. One of the types of software that is now becoming popular in business cloud hosting is enterprise resource planning (ERP) software.

ERP systems integrate internal and external management information across an entire organization, integrating accounting, manufacturing, sales and service, customer relationship management, etc. The purpose of ERP is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.

Cloud-based ERP software systems offer several potential benefits, but some risk may also be involved.

Benefits of Cloud ERP Software
An important benefit of cloud ERP software is that it can greatly reduce capital expenditures, especially for startups that do not have a server infrastructure in place. With cloud ERP software, a business only has to purchase one or more standard desktop or laptop computers with Internet connections. Installing traditional ERP software would require a server, a network infrastructure and IT technicians to keep it all running smoothly, which could cost tens of thousands of dollars.

When choosing cloud ERP software, all of the hardware required to run it is owned and operated by the cloud host. The business only has to pay a monthly subscription fee, which includes use of the hardware and software. Subscription fees also include regular updates of both the ERP software and general software required to run the server, such as security applications and operating systems. This means that a business with cloud ERP software receives timely upgrades without having to pay the cost of the updated software or any hardware upgrades that must accompany the software updates.

Risks of Cloud ERP Software
Implementing cloud-based ERP software is not without its risks, but most of them can be avoided by carefully selecting a cloud host. Many business owners are especially concerned about the security of their data in a cloud-based system.

Security breaches are a risk for any business running network-connected software whether the data is in the cloud or stored locally. However, prominent cloud hosting companies are aware of this concern and have implemented the strongest security systems available. In many cases, the security system of the cloud host is much more sophisticated than any computer security system that the business could afford.

Another concern of business owners contemplating a move to the cloud is what happens to the company’s data should a decision be made to change software or cloud hosts. This should be spelled out in detail in the terms of service or the subscription contract. If this situation is not addressed, then the business faces a real risk of losing data or facing delays in the retrieval of data. However, most cloud hosts archive the data and make it retrievable by the business while disabling the functionality of the software.

Another factor that should be considered is federal and state regulations. In some instances, particular types of businesses, such as financial institutions and healthcare providers, must comply with regulations or laws covering how sensitive data is accessed or stored. If the cloud host does not meet these standards, then the business may face fines or other stiff penalties. This may not be applicable to fabrication businesses, but a thorough understanding of what regulations are applicable to a business is key before implementation.

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