Cloud ERP (enterprise resource planning) is software hosted off-site by a vendor and helps organisations manage core business processes through a centralised platform accessible over the internet. Unlike traditional ERP systems, it offers lower upfront costs and scalability since it doesn't require heavy investment on IT infrastructure. While each provider may offer different modules or interfaces, the underlying features of cloud ERP remain largely consistent among vendors.
What is cloud ERP?
Cloud ERP software integrates core business processes such as accounting, inventory, sales, and supply chain into a single unified platform, delivered through a Software-as-a-Service (SaaS) distribution model and accessed via the internet. This means the business pays a subscription fee to use the software, without worrying about handling the maintenance, updates, data storage, or security.
Video: What is cloud ERP?
What are the key features of cloud ERP?
Cloud ERP comes with a range of built-in features that help you run your business more efficiently.
- Unified core systems: A cloud ERP system provides a holistic view of various key business processes such as finance, supply chain, HR, and customer service, without the need to switch between business systems.
- Accessibility and mobility: Cloud ERP can be accessed anywhere as long as you have an internet connection. This means your employees can work remotely and stay connected to the same data in real time. Mobile applications and responsive web interfaces are also available ith most cloud ERP solutions, making it easier to use ERP on portable electronic devices, such as laptops, smartphones, or tablets.
- Real-time data and analytics: Real-time data visibility is one of the biggest advantages of adopting cloud ERP. Since it can be accessed over the internet, it provides live dashboards and other analytic tools to help your leaders make informed decisions based on real-time data.
- Integration: Integrations help connect businesses build a connected tech stack since cloud systems can integrate with third-party cloud-based products through APIs or pre-built connectors.
- Automatic updates and maintenance: Updates can occur in the background to minimise disruption of daily operations. A cloud ERP platform stays up to date with the latest features, security enhancements, and performance improvements without requiring downtime or manual intervention from IT teams.
- Security and compliance: Your data is protected with end-to-end encryption, multi-factor authentication, and strict user access protocols, reducing the burden of maintaining compliance and security certifications. Cloud ERP vendors invest heavily on making sure their platforms meet industry regulations such as General Data Protection Regulation (GDPR), Singapore’s Personal Data Protection Act (PDPA), and Australia’s Privacy Act.
- Disaster recovery: Cloud ERP platforms include built-in disaster recovery protocols to ensure data integrity and system availability during natural disasters, outages, or geopolitical disruptions. In contrast, on-premises ERP systems typically require significant IT resources to implement and maintain recovery plans, including physical backup infrastructure, manual failover processes, and offsite data replication.
- AI embedded capabilities: Leading cloud ERP vendors have artificial intelligence built into their software. AI analyses data in real time, automates repetitive tasks, and highlights trends or risks as they emerge to help your team make faster decisions and spot issues early.
Cloud ERP vs. on-premises ERP
It’s important to understand the key differences between on-premises and cloud-based ERP systems, as each offers distinct advantages depending on your business needs.
With an on-premises ERP system, you run everything on company-owned servers, which means you shoulder the costs of buying hardware, software licenses, and managing updates and security yourself.
However, if you’re looking for faster implementation, lower upfront costs, and less IT overhead, a cloud-based ERP offers a more flexible and scalable option. With this delivery model, you’ll only need to pay a subscription fee, and the vendor handles everything behind the scenes, including the infrastructure, updates, and security.
| Feature | Cloud-based ERP | On-premises ERP |
|---|---|---|
| Deployment | Hosted on vendor’s servers | Hosted on company-owned servers |
| Total cost of ownership (TCO) | Subscription based pricing; treated as operational expense (OPEX) | Large capital investment and maintenance; treated as capital expense (CAPEX). |
| Implementation timeframe | Faster to deploy due to lack of hardware setup and simpler configurations. | Longer implementation cycle due to significant planning, hardware, and resources required. |
| Maintenance | Automatic updates and patches managed by the vendor. | Updates managed by the internal IT team. |
| Scalability | Modular | Complex |
| Accessibility | Accessible anywhere via the internet | Limited to company network and may require VPN |
| Security, compliance, and disaster recovery | Vendor-managed | Company-managed |
Deployment models of cloud ERP
Cloud ERP systems can be deployed in several ways depending on your business needs, resources, compliance requirements, and scalability preferences.
- Multi-Tenant SaaS is a single instance of cloud ERP software that supports multiple customers. However, despite all the customers sharing the same application, codebase, and database, they do not have access to other customers’ data.
- Single-Tenant SaaS is a single instance of cloud ERP dedicated to only one organisation – no two organisations are hosted on the same server, which eliminates the so-called noisy neighbour issue.
- Public Cloud is hosted by a third-party vendor and is shared by multiple businesses. In theory, a multi-tenant and single-tenant SaaS can be deployed on a public cloud. However, it is more popular to deploy a multi-tenant SaaS on a public cloud environment since it offers greater efficiency and cost savings. This is achieved through economies of scale since vendors can deliver updates and new features to all tenants simultaneously, reducing operational overhead.
- Private Cloud: Unlike public cloud, a private cloud is owned by the organisation and isn’t shared. Single-tenant SaaS is more common in private cloud environments.
- Hybrid Cloud: This deployment model combines both on-premises and cloud-based systems. An example of this is a two-tier ERP, in which two systems are to address the needs of large businesses, multiple locations, or subsidiaries — for instance, one ERP for HQ and another for a subsidiary organisation.
Benefits and challenges of cloud ERP systems
Adopting a cloud ERP system can be a game-changer for businesses looking to modernise their operations. However, like any major shift, it also comes with its own set of challenges. Understanding both the benefits and challenges is key to making an informed strategic decision.
Benefits of cloud ERP
- Faster time-to-value: Cloud ERP accelerates time-to-value since it can be deployed without the need for setting up on-site infrastructure. This allows your business to go live faster, start seeing returns sooner, and avoid disruptive implementation cycles.
- Increased productivity: Automation frees employees from repetitive tasks such as data entry, approvals, and reporting. Your employees can start focusing on higher-value work like analysis, problem-solving, and serving customers—leading to faster turnaround times, better outcomes, and a more engaged workforce.
- Cost savings: Cloud helps avoid unpredictable capital expenditures during implementation, and costly upgrade fees with cloud ERP’s subscription-based pricing. Your business can save on costs, since cloud ERP doesn’t require large capital investments on hardware, licenses, and maintenance.
- Better collaboration: Cloud ERP helps eliminate data silos and reduces the need for manual coordination across departments, as ERP acts as a data aggregator. This leads to fewer errors, improved consistency, and better coordination on cross-functional projects.
- More flexibility and accessibility: Since it can be accessed over the internet, users can access the ERP system anytime, anywhere, on any device. This supports remote work and enables fast-moving operations without sacrificing security or performance.
- Continuous innovation: Cloud ERP vendors regularly roll out updates to deliver new features, improvements, and maintain compliance to ensure that all its customers run on the latest version. This means that your business can stay on top of technology trends such as AI and predictive analytics without costly system overhauls.
- Stronger security: With constant monitoring and regular security updates handled by the vendor, there’s less risk of breaches or downtime. Cloud ERP vendors provide a level of protection that’s hard to match in-house—giving your business peace of mind, without adding pressure to your IT team.
- Standardised processes: When everyone follows the same workflows, dashboards, and reporting structures, the organisation achieves greater consistency. This standardisation is important for businesses operating across multiple subsidiaries or countries since it eliminates the need for data reconciliation, simplifies compliance, and improves inter-departmental coordination.
- Scalability: Most cloud ERP vendors offer a modular approach to implementation, making it easier to scale as your business grows. This approach enables your business to start with the functionalities you need, and expand later by adding users, modules, or storage instead of adopting a full suite all at once.
Challenges of cloud ERP
- Data security and compliance: Storing sensitive business data off-site remains one of the most cited concerns when adopting cloud ERP. However, through the years, cloud ERP providers have made significant strides in offering strong data security measures like enterprise-grade encryption, role-based access controls, and multi-factor authentication. Most providers are also compliant with international standards such as GDPR and HIPAA and host data on regional centres that meet local law requirements. On top of that, regular third-party audits help ensure compliance and give customers added peace of mind.
- Customisation limits. In the past, cloud ERP didn’t leave much room for customisation, particularly in multi-tenant cloud environments where all customers share the same version of the software. However, some cloud ERP vendors now feature modular architectures that allow companies to enable only the features they need and add more as they scale. Low-code and no-code configuration tools also let users tailor workflows, dashboards, and approval rules without developer support.
- Integration complexity. Connecting cloud ERP platforms with legacy or third-party systems can be complicated due to compatibility issues. The good news is that modern ERP platforms now come with built-in connectors for commonly used applications, which makes syncing data between systems much easier. And if you need something more tailored, most vendors offer solid APIs, so your team can build custom integrations without starting from scratch.
Selecting the right ERP system
At the end of the day, choosing the right ERP system will ultimately depend on your business needs. An on-premises ERP system makes sense if you want to have full control and if you have the resources to manage it. But if you’re looking for speed, flexibility, and less IT hassle, a cloud ERP is the smarter and popular choice today.
NetSuite ERP
Often recognised as the first cloud company, NetSuite is an AI-powered, cloud-based ERP software used by more than organisations worldwide. It unifies core business processes into a single platform to help organisations manage and automate core processes across finance, inventory, procurement, order management, supply chain, and manufacturing.
It is a multi-tenant SaaS solution built natively for the cloud, which means customers pay for a subscription fee to access the software without the need for an on-premises infrastructure. Because it's cloud-native, updates are automatically done twice a year, scalability is seamless, and customers benefit from continuous improvements.
Cloud ERP FAQs
What is the cloud ERP system?
A cloud ERP system is business software accessed online to manage processes such as finance, inventory, and HR. Unlike on-premises ERP systems, the vendor handles the updates, security, and maintenance.
What is an ERP in simple terms?
An ERP is software that helps you run your business by connecting your core processes in one place—like accounting, sales, and operations.
What is the difference between ERP and cloud ERP?
Cloud ERP runs online and is managed by the provider. Traditional ERP usually runs on your own servers and is managed in-house.
What is the difference between cloud ERP and ERP on-premises?
Cloud ERP is faster to set up, easier to scale, and doesn’t need your own servers. On-premises ERP gives you more control but requires more IT resources and upfront costs.
