Cloud computing is one of the most disruptive technologies to hit the manufacturing industry in years, which opens the door to misconceptions or myths. Anything new is a big unknown. Ignoring the transformation that cloud has delivered to manufacturing, however, could be a bigger risk.
It’s worth your time to dig deeper into the biggest questions and myths about cloud ERP because it represents a huge opportunity to your business—unprecedented scalability, affordability, and flexibility to grow. The advantages of cloud ERP don’t come from the hosting platform, the licensing scheme, or the marketing label. They come from a development model that capitalizes on a shared code base: real, native cloud.
Myth #1: Cloud isn’t secure or reliable.
Cloud vendors specialize in security and reliability as core competencies—with an intentional focus to do it right because it is core to their business. Legacy ERP vendors appeal to security fears by telling manufacturers that managing the software themselves provides greater levels of security. The reality is you are in the business of manufacturing, not IT management. To do a credible job of supporting a secure ERP system, you must dedicate the resources it requires. For manufacturing companies, that kind of investment is not viable.
A few highly publicized cloud interruptions (though not cloud ERP) have escalated the myth that all cloud is not reliable. The average business experiences more than an hour of unplanned IT downtime per month. In contrast, best-of-breed cloud ERP systems built for manufacturing average downtime of less than 2.5 minutes—reliability supported by a contractually guaranteed 99.9 percent SLA.
Myth #2: Cloud is more expensive in the long run.
Legacy ERP purchases involve large upfront capital costs with incremental increases as companies add users and modules. There is also an annual maintenance cost, typically 20-30 percent of the total value of the software which increases as the number of user licenses and modules increase. This means that you will pay double for the software in four years or so—once up front and again in annual maintenance costs. And this doesn’t even include the time and costs of service-impacting, periodic upgrades.
The often-neglected consideration with ERP is opportunity costs—the lost value when choosing legacy ERP over cloud ERP. Software loses value if it’s not routinely upgraded, and most manufacturers don’t upgrade with every new release, falling behind a few revisions. They miss out on any new features until that next upgrade, which could be years down the road.
Cloud ERP delivers a new model, eliminating the headaches of the past. Versionless(always current), subscription-based cloud ERP software includes all hardware and software maintenance, scale, data, and system redundancy. This adds constant value with real-time enhancements which manufacturers use immediately. Cloud ERP frees technical resources for use in more strategic data and business analyst roles, creating new processes and driving efficiencies.
All cloud solutions are the same.
Old software, even when hosted “in the cloud,” requires the same upgrades and maintenance it always did. Heavy customizations make each instance unique, so every upgrade and integration to your version of the software then requires some kind of new coding project. Over time, your unique instance becomes more complicated and more brittle.
In contrast, a modern cloud ERP solution is designed to run a single code line—every customer is on the same version, with their individual instances configured to fit their business. The software is updated constantly, like a consumer website. Upgrades are eliminated and new features are opt-in; managing new capabilities and the retirement of old software is the responsibility of the vendor. All that, and it runs on a reliable cloud infrastructure as well.