What is Cloud ERP and How does it Work?

cloud erp 09 July

Today businesses can enjoy software services without actually buying them. Cloud-based software is one such example in which the software solutions are offered by vendors' cloud platforms to the organisation. The organisations can pay the vendor for its server either monthly or annually. The cloud-based ERP has replaced on-premises software due to its excellent benefits and flexibility.

What is cloud ERP? Why are businesses switching to it? Is it worth investing in? If you are stuck in an endless cycle of these questions, then this article is for you. Here we will discuss everything you should know about cloud ERP software development and how your business can benefit from it.

What is Cloud ERP Software?

Cloud ERP or Enterprise resource planning system is software that is managed by an offsite vendor which significantly reduces the burden of the business. The vendor is responsible for security updates, data storage, feature upgrades, underlying operating systems, and much more.

Cloud-based ERP solutions don’t require much investment and time, unlike on-premises ERP systems. This system efficiently helps small to medium-sized companies in improving data accuracy, automation, streamlining everyday business activities, and enhancing efficiency.

How does Cloud ERP Work?

Cloud ERP is designed to maximise efficiency and connectivity across the organisation. It is a flexible system that can be accessed from a laptop, phone, or tablet. It is basically a combination of technologies that are connected by high-speed Internet networks. This is an online system where security and upgrades are managed by an ERP provider.

You can add customised features to your software, that way to ensure the smooth functioning of your business, provide a positive customer experience, and increase the profitability of your business. ERP software gives ease to managers to manage their office activities remotely. It also empowers employees by allowing them to access the information whenever they want.

Components of Cloud ERP Software

Cloud ERP software automates financial and accounting functions across the organisation. The remaining modules and features present in the system depend upon the need of the organisation. Here are the available ERP components:

Cloud ERP Concepts

When we talk about cloud ERP, there are certain concerns that you should be aware of:

Cloud-based ERP

Cloud-based ERP or enterprise resource planning software is hosted by an offsite vendor on their server and is provided as a service.

Deployment Strategy

ERP software can either be on-premises or purchased as a service model. In both cases, its functionality is remarkable and quick but companies should set aside some time for planning, training, customisation, and configuration.

On-premises ERP

This is the type of ERP in which the software is installed on a company’s computer and is managed by the internal IT staff. The software maintenance, modification, security, and data storage are managed in-house.

End-to-end Security

It is a secured and encrypted connection between vendor and company.

Subscription Licensing

For this ERP system, the company pays a fixed subscription fee at specific time intervals either annually or monthly. The subscription fee includes all the maintenance and upgrades regarding the software.

Hosted ERP

The company or vendor manages the deployment of this software as well as its infrastructure. It is preferred by businesses that outsource IT operations.

Cloud ERP Versus on-Premises ERP

Are you wondering if on-premises and cloud ERP have the same functions then why you should go for cloud ERP?

On-premises ERP

On-premises software is a server that is managed in-house by IT staff. The company licenses the software platform up front and buys enterprise-grade servers to run the software and manage associated data.

Businesses that use this type of software incur additional costs for upgrading, maintenance, troubleshooting, customisations, antivirus, storage, backup, and security.

Cloud-based ERP

On the other hand, cloud-based software is managed by a vendor that provides software as a service model through a cloud. The vendor is responsible for upgrading, maintenance, operating system, servers, customisations, and installing security features. When all these functions are managed by the vendor, it reduces the burden on the company so that it can focus more on its growth.

Types of Cloud ERP Software

The types of ERP software are as follows:

Multi-tenant SaaS

The best type of cloud ERP system is multi-tenant SaaS. Generally, a single version of ERP software is being used by multiple organisations at a time and is being hosted on the same servers but still, the company’s data remains inaccessible to others.

Single-Tenant SaaS

A single-tenant ERP software is designed to function for one organisations at a time. In this case, the organisation's data is being hosted on a private server.

Public Cloud

In this type, different organisations are sharing a single cloud software. However, the data of each organisation is inaccessible to others.

Private Cloud

In a private cloud, the service is not shared with any other organisation.

Hybrid ERP

A hybrid system is a combination of on-premises software along with a private cloud for storage and services.

Cloud ERP Challenges

Cloud ERP Is preferred by most businesses but certain potential challenges come along with it. The challenges faced by businesses include:

Resistance to Change

Large organisations that plan to switch to off-site cloud ERP software will lose control over many operational procedures as they become automated. That’s why the administrative and IT teams may experience pushback from stakeholders.

Regulatory Compliance

Companies that are strict with their security policies may not be able to enjoy the complete benefits of cloud-based ERP solutions.

Legacy Systems

If an organisation is using on-premises ERP software for some time, and they wish to switch to a cloud-based ERP, then it is a challenging job that requires expertise and significant time.

What are the Benefits of using a Cloud ERP Solution?

Today businesses no longer have to make an investment in a system or hire valuable IT staff for software maintenance and upgrade, all thanks to the ERP cloud system. Here are the benefits of using a cloud-based ERP system:


Accessibility is among the top benefits of ERP software. It gives you the freedom to access this software from any device, all you need is a good internet connection.

All your approved suppliers, customers, employers, and partners can access real-time information from their devices, no matter where they are. This ensures efficient communication, better collaboration, and improved decision-making.


On-premises software comes with limited features which couldn’t be modified or changed. On the other hand, cloud ERP software is flexible and easier to grow. Depending upon your business needs, you can add more features with time.


A cloud-based ERP system doesn’t require much time to upgrade and typically occurs off hours which saves the precious time of your company. The vendors completely take care of the upgrades so that there is no interruption in your business activities. They make sure that your system is always equipped with the latest and up to date technology.

Security, Compliance, and Disaster Recovery

The biggest drawback of relying on an on-premises system is that your data is always at risk. Some people also fear the same in the case of cloud ERP.

You might be thinking about how you trust an off-site vendor with your company’s confidential data. Right? But if you engage with reputable cloud-based ERP service providers in Malaysia, they will ensure a higher level of security. They even have disaster recovery procedures and backup plans in case of an emergency.

Customisations and Agility

In an on-premises ERP system customisations were only limited to the current software versions whereas, in a cloud ERP System, you can efficiently add new modules to your existing system without downtime or acquiring new hardware. This software has the flexibility to cope with your business needs that’s why it has become the choice of many businesses today.

Business Productivity

The biggest advantage of switching to cloud ERP is that it enhances the overall efficiency across the organisation which improves business productivity and business growth.


Cloud-based ERP systems can be easily integrated with their existing erp software solutions. For instance, if you connect ERP with CRM software, You can get better visibility into your supply chain, provide a better customer experience, and gain better insights.

Are you looking for cloud ERP software with uncompromised security at affordable rates? Bttech soft offers cloud servers for small to mid-sized businesses.  We have a professional team of software experts, who will design customised and glitch-free software for your company. Message us now to avail of our services.

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