Understanding Cloud ERP and How It Works



Thanks to significant technological developments, businesses today have access to several tools that can help them run daily operations smoothly. In particular, the introduction of the enterprise resource planning system (ERP) in the 1960s was a game-changer. Even today, Cloud ERP systems are integral to the growth and function of all companies, no matter what industry.

However, ERP itself has gone through many changes over the years. Today, more business owners are looking into cloud technology and how cloud ERP could help their companies. If you are one of them, then you are on the right track. Read on below for a quick rundown on cloud ERP.

Cloud ERP


What is Cloud ERP?

Before learning about what cloud ERP is, you need to have a good grasp of ERP first.

ERP refers to the integration of various processes through automation and a centralized database. The technology used to accomplish this is called an ERP system or ERP software. The main goal of ERP is to make business operations more efficient, which will later translate to fewer losses and better use of company resources. Traditionally, ERP systems are installed on-site, which means that the company invests in the infrastructure and team to manage the system independently. 

Moving forward,  ERP is a well-designed fusion between ERP software and cloud-based technology. In cloud ERP, you access the ERP software online rather than install it on your computer. The ERP software is hosted by a third-party vendor, who would be responsible for maintaining and upgrading the program. 

Cloud ERP offers all of the functionality that a traditional ERP system has. It has centralized data storage, automated functions, and integrated business management. Developers simply brought the traditional ERP up to speed with more modern technology, giving way to exciting new features that could help the business thrive in a highly competitive market.

Benefits of Using Cloud ERP

The inner workings of  ERP are complex. It may seem simple, but several things are happening in the background. To have a clearer view of how it works, take a look at some features of cloud-based ERP systems.


Cloud-based ERP systems transformed the meaning of accessibility in the industry. Before, you could only access the company’s ERP system within the office building where the data servers are. With  ERP, authorized personnel can access the system anywhere at any time. All they need to have is a mobile device and internet connection. This feature is especially useful in an age where the work-from-home setup and outsourced labor have become more common.


Cloud ERP comprises various modules and features, which you can scale up or down depending on the needs of the company. Some of the available modules include customer service, human resources, inventory management, and product procurement.

With  ERP, you have a significant amount of control over the ERP services you will avail yourself of, whether in terms of modules or storage space. In this manner, companies can quickly adapt to mergers, acquisitions, or downscales in any event. This feature is especially helpful for developing small and medium-sized businesses (SMBs) that are experiencing growing pains.

Maintenance and Updates

Aside from online access, the other defining feature of cloud ERP is how the system is hosted by a third-party vendor. This means that the vendor will be in charge of maintaining the software and working on its updates.

For business owners, this comes with its own pros and cons. On one hand, you can save more because there is no need to form a specialized team or train your IT staff on managing the ERP. However, this also means less control on ERP management, which is why it is crucial to transact with a trustworthy solutions provider.

Security, Compliance, and Back-ups

Wherever data is, security is always a primary concern. Fortunately, reliable cloud ERP vendors will have enterprise-grade measures in place to protect company information. Additionally, having company data hosted in another location is a helpful way of ensuring its protection in case the office is hit by a natural disaster, fire, or break-in.

Another thing that cloud ERP hosts take account of is its compliance with regulations, especially with data privacy. There is even end-to-end encryption between you and the third-party server host. In this manner, you can feel assured that company data is safe and only stays within authorized hands.

All in all, it becomes clear that  ERP has much to offer to companies today, especially SMBs. However, it is important to remember that not all  ERP systems are made equal. Some sellers market “faux”  ERP software that only aims to mimic all the functionality cloud ERP offers. Thus, you need to look for a reliable software vendor who can give you authentic options and guide you to finding the best-fitting cloud ERP software. 

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