Cloud-based ERP Implementation can Reduce Costs for SMBs

January 24, 2013

Small and medium-sized businesses (SMBs) are adopting enterprise resource planning (ERP) software at increasing rates, according to a recent survey by the Aberdeen Group, and cutting costs was found to be the top-cited motive.

The study revealed that 43 percent of SMBs implemented ERP systems to save money, outranking benefits like growth management (cited by 38 percent of respondents), better decision-making (30 percent) and improved customer service (29 percent).

“While there is functionality contained within these tools that can help a small business, growing organizations may find that they quickly grow out of these tools,” said Nick Castellina, author of the report, according to Apps Tech News. “Organizations that use a set of multiple disparate applications, however, lack this unique advantage of ERP.”

Castellina identified four areas – standardization, collaboration, visibility and efficiency – in which ERP systems can provide benefits to SMBs.In particular, improved efficiency can help an organization cut costs in both the short and long term.

When it comes to ERP implementation, cloud-based software typically offers the most cost-efficient strategy for SMBs. In a recent blog for Business 2 Community, Tom Caper, sales manager at Rand Group, highlighted some of the top financial benefits that come with moving ERP systems to the cloud, including:

– Low, and sometimes, no, initial costs. Because SMBs can purchase the products they specifically need, capital costs tend to be substantially lower than on-premise systems, which require that companies purchase entire packages.

– Cloud-based ERP implementation usually requires fewer resources and personnel than legacy systems. Combined with lower initial costs,it is typically easier to achieve a faster return on investment with cloud-based ERP systems.

– As with most cloud computing technology, cloud-based ERP offers improved scalability. This makes it easier to upgrade these systems in the future, and downtime during those updates tends to be reduced as well.