Enterprise Resource Planning or ERP is a set of activities that are used by enterprises to manage their business smoothly. Cloud Computing or SaaS allows accessing software applications that operate on shared computing resource like a memory or disk via the internet. Cloud-based ERP is a new age approach that makes the use of cloud computing platforms and services for an easy business process transformation.
Usage of cloud-based ERP has its numbers of benefits. Apart from cost reduction on utilizing cloud-based ERP, a number of other benefits can be noted down as well.
- Payment of monthly fees is not required for software application upgradation.
- Payments are made only for those resources that are required.
- Since the applications are managed by a cloud vendor, there is reduced cost of its maintenance.
- There is no change is monthly rates for its services.
- Since there is a central support system, there is less requirement for IT support.
- The installation time for hardware and software in a user’s device is reduced.
- There is an availability of recovery of data, in case of any mishappenings.
- There is no risk of loss of data.
Apart from a number of cost-saving benefits like pay-on-go and easy access to hardware and software, one may ask that, why has this technology not being readily implemented, when there are so many benefits to it.
But cloud ERP is not only about these benefits, as it can cost a company in a number of ways. One can find loopholes in security concerns when using ERP, which at times can put this technology at disadvantage.
- There is sometimes, a risk of data loss, when a disk stops functioning or expires and there has not been any backup created by its owner. This issue can occur when the owner of the encrypted data loses the key to unlock it. This easy availability of cloud services has increased security risks for data.
- Since cloud-based ERP is mostly used by clients that are based on different geographical locations. They are only connected via the internet connection, and sometimes, network failure and connection problems can affect the performance of cloud ERP.
- Sometimes, there arise compliance issues, wherein it gets difficult for the cloud ERP to comply with the data, environmental and energy standards. Due to the lack of enough regulations, there arises a handling issue due to such compliances. These troubles can often cause security breach and put the data at risk.
- The cloud ERP that is being used, has still not developed into an advanced, stable and reliable ERP. Additionally, it is not always possible to incorporate latest developments and advancements into the system. This also increases the security threat to the data, its breach and loss, owing to an outdated system.
- Most of the time, the servers that contain data from various companies are not kept on the premises of the companies, but in different locations. Lack of reliability of data security of remotely located servers can impose another risk on Cloud ERP.
Irrespective of the challenges of Cloud ERP listed above, its benefits has had a number of positive impacts, that has only increased its demand in the industry.