Cutting Costs with Cloud-Based ERP: 6 Cost Factors
(5 min read)
Analyzing ROI is crucial for achieving your business goals, and forecasting ROI accurately means considering a wide range of costs when you’re using traditional ERP. However, these costs can reduced or avoided by moving to a Cloud ERP solution. Different companies have different needs and costs and will also benefit differently from switching to Cloud ERP. Significant benefits of a Cloud ERP system include higher profits achieved by managing resources in order to move products most effectively. You’ll be able to better visualize schedules and chart demand, better manage materials, staff, equipment, and employee scheduling, and better follow market fluctuation for marketing.
Here is our list of the six most important costs that you can reduce or avoid by using Cloud ERP:
Cost Factor #1: Staff Time
A key factor in calculating ROI is spotting the more hidden costs—and the benefits that balance them. Modern Cloud ERP reduces your overhead, since data centers are based with the software provider. This also allows for remote work and the possibility of shifting IT resources to the provider.
You’ve already considered obvious expenses like IT staff, hardware, and training costs. However, keep in mind other costs of your current system like employee work time:
- Staff will continuously need to adjust your system. Beyond training, a certain amount of work time will have to be spent acclimating to the software and procedures that come with it. This is time not being spent on regular tasks.
- Upper-level managers and executives, who are key players in presenting the current system and driving its incorporation into your business, will also devote their valuable time to these activities.
Cost Factor #2: Training and Tailoring
To get your team and the system working their best together, you’ll need to expand your original view of training and implementation. Cloud ERP systems can outweigh training and customization costs by allowing you to outsource bug reporting and problem solving. They also allow for standardization that saves over time. Whereas
- Training goes beyond the first introduction of an ERP system, and planning for costs should include a consideration of more advanced training, retraining, and training for new employees.
- Individualization of the system for your enterprise will need renewal over time, and the costs of customization and added training is on your side.
- Expanded usage of system features over time, as your needs change, will require even more training and perhaps outside help from consultants.
Cost Factor #3: Doing Nothing
The concept of ROI also comes into play when considering the value of keeping your current system–is it delivering enough to balance the cost of keeping it running? It may seem reasonable to stick with it, since you’ve invested so much time and money into your legacy system, and it may very well be a manageable enough solution.
However, failing to upgrade to a Cloud ERP System could have serious negative consequences for ROI, especially when you consider the benefits and savings of a new, more technologically advanced cloud-based solution.
Cost Factor #4: Disconnected Data
Today’s businesses are gathering more and more data from a variety of sources. Older systems don’t do well with combining data in various formats without a lot of hands-on help from programmers and admins. This is more time-consuming and expensive than necessary.
A newer, cloud-based ERP solution is both cheaper and more effective, linking data sources across your company in one system that can gather, manage, and present data and insights coherently. All of your teams will have user-friendly access to a single source of company truth, leading to greater efficiency and higher quality work across the board.
Cost Factor #5: Tying Up IT’s Time
Your existing software may not just represent a time and energy drain on your IT team–it could also open your company’s data and systems to instability or risk. When you need to add department-specific functions, this can require either costly and time-consuming coding projects or clunky manual workarounds. Either way, your staff’s time can be much better spent.
Cloud ERP is a modern route to a more agile, affordable IT strategy for your enterprise. It plays nicely with your hardware, and takes much of the maintenance and support cost away from your company and back to the software provider.
Cost Factor #6: Expansion and Coordination
Your ERP system needs to be able to accommodate changes to your organization. Time and technological advancements will be hard to manage with traditional software. Rather than building onto your current system awkwardly and affecting the overall integrity of company data, a cloud-based ERP solution stays flexible, is easy to expand, and can be adapted with add-ons beyond the main platform.
Rather than creating multiple data sources that have to be coordinated or relying on workarounds that just keep things going, Cloud ERP systems can help your company expand gracefully, take advantage of opportunities, and automatically coordinate data collected across your company’s teams with speed and accuracy.
Cloud ERP is scalable, flexible, and offers better security.
Faster ROI by Implementing Cloud ERP from the Trusted Market Leader
A Cloud ERP system can give you the agility to keep up in the fast-changing world of digitally-powered business.
Still hesitating? Then consider these six cost factors when sticking to your old system and think about ROI:
- Staff work time across your organization
- Training staff and coordinating the system with your company’s processes
- Staying too loyal to a dysfunctional legacy system
- Coordinating data from disparate sources
- Monopolizing IT’s time and energy
- The cost of adapting and expanding
For more on prioritizing for the future of your business, read the Economist paper “CFOs driving new priorities for the future”: