Advantages and Disadvantages of Cloud-Based Manufacturing Software

21 Jan Advantages and Disadvantages of Cloud-Based Manufacturing Software

Manufacturers are gradually looking at technology to improve their processes. As implementing

these advancements, they face aspects that must be considered.

Small manufacturers are constantly learning the value of manufacturing software, which includes

both Enterprise Resource Planning (ERP) and Manufacturing Resource Planning (MRP). These

solutions provide truthfulness, flexibility, and the latest technological advancements for their

operations, and businesses are also becoming aware of how important the cloud can be in

conjunction with these systems.

Manufacturing facilities are looking to adopt more technology nowadays. As manufacturers

implement these technological advancements, they encounter other aspects that they must

consider. One of those is whether or not they should embrace a cloud-based ERP or MRP

system.

Many companies believe that on-premise ERP systems are antiquated and a thing of the past.

They are avoiding manual installation of updates and hardware. They prefer cloud-based systems

that update on their own as required. But while cloud-based ERP systems are well on their way

to becoming the most important aspect to mull over moving forward, there are a few potential

disadvantages to them that businesses should consider as well.

 

What distinguishes a cloud-based system from the “on-premise” system?

Cloud-based ERP systems are becoming familiar within the manufacturing industry. They use a

web browser/web service to communicate data to various points of production and their workers

using the Cloud. On-premise systems, conversely, are installed on-site and cannot be configured

and updated remotely.

Cost of the two models can also differ: cloud-based systems usually have a monthly subscription,

and on-premise systems normally have heavy upfront costs.

 

The advantages of cloud-based manufacturing software systems

Companies are always looking for ways to make their operations run more fluently, perform

more efficiently, and require less ongoing management. Cloud-based manufacturing software

solutions provide these options and much more. Here are some of them:

 

Quicker Implementation: Investing in new hardware and waiting for slow updates are not a

part of cloud-based systems. Instead, they utilize the web and updates are implemented without

the interaction (and labor costs).

Cost-Effectiveness: Cost is one of the foremost factors when manufacturers opt cloud-based

solutions for enhancements to their ERP software. It gives them a big advantage since traditional

systems have a variety of expenses that go beyond the initial software purchase price. These can

include:

 Costs for updates

 Licensing fees

 Data storage

 Expenses for support and training

 Miscellaneous additional fees per device

 Annual maintenance fees

 Management fees

 Upgrade fees for upgrades.

When the company finds that the model is not suitable, the upfront costs and fees are generally

non-refundable.

With the cloud-based point solution, however, there are no licensing, registration, or

maintenance fees. Also, you pay a monthly fee, which allows you to cancel anytime.

Security: Another advantage of cloud-based software is security. In the past, security was

frequently a concern for prospective ERP buyers. It’s not surprising since lots of critical

information is being stored in an ERP system, including financials, employee information, client

lists, and trade secrets.

But while buyers were once guarded about the security of cloud-based software, most have

become less wary today, evidenced by the rising adoption rates for cloud-based systems.

Information and data that are stored in the cloud are placed in several offsite servers, protected

by 24/7 security, and with several layers of redundancy.

Today, cloud-based solutions essentially eliminate the risks from theft, disasters, accidents, and

weather-related incidents to your information. Reputable cloud vendors have rigorous

standards in place to keep data safe. Prospective buyers can also opt for a third-party security

audit of a vendor they’re considering. The audit can be especially helpful when the vendor is not

well-known.

Any worries of running out of storage space are also mitigated with a cloud based system.

Accessibility of Features: Because of constant updates, more features are implemented with

each update. The system is improved frequently, and its functionality is increased. Many cloud

systems now enable easy mobile accessibility.

Data and Integration Enhancement: Since cloud-based ERP systems are web-oriented,

integration, and data accuracy improve greatly. Newer technology can race past the older and

less accurate on-premise software systems that lack overall system integration.

No Physical Servers: Maintenance of hardware is not required since there are no in-house

servers. This feature is a big advantage for operations that have had to maintain hardware

previously. They can now increase their focus on other areas within the manufacturing facility.

 

Disadvantages of using the cloud

Although cloud-based software solutions come with a long list of benefits, they might not be

ideal for everyone.

Continuing Costs: Although the cost of a cloud-based system is an advantage in most cases, it

might not be, depending on your business needs, budget, and monthly expenses. Traditional

systems usually have a one-time, upfront investment, which includes the costs associated with

ensuring various regulations are met and followed. Updates and patches might also be included.

A cloud-based solution has no upfront investment. However, there is an ongoing monthly fee to

use the service.

Data Security: Just like costs, security is generally an advantage when using cloud-based

manufacturing software, but it does require you to put a large amount of trust in your vendor.

Also, control over the security and privacy of your data is no longer 100 percent with you.

Cloud-based solutions are not invulnerable. And as unlikely as it may be, a breach can

compromise the entire company.

 

Examine the pros and cons

Cloud-based manufacturing software might not be the answer for every company, but for SMEs

looking to hold down upfront costs, seeking a stable system, and hoping for easy access, it’s

overwhelmingly the right fit!

Contact our friendly consultants now to know how to implement your MRP with XERO

(Accounting system) with ease!

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