Manufacturers are gradually looking at technology to improve their processes. Small manufacturers are realizing the value of manufacturing software, which includes both Enterprise Resource Planning (ERP) and Manufacturing Resource Planning (MRP). These solutions provide accuracy, 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.
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 the 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 with 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: You will not need to invest in new hardware or wait for slow updates. Cloud-based systems 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
Expenses for support and training
Miscellaneous additional fees per device
Annual maintenance 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. You will 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, and accidents 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.
A cloud-based solution has no upfront investment. However, there is an ongoing monthly fee to use the service, which includes updates and patches.
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! Its disadvantages can be easily mitigated with careful budget planning and you will not need to worry about data security if you engage a trustworthy and reputable service provider to help you set up and maintain the software.