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How Cloud ERP Can Help SMBs Leverage the Managed Service Model to their Advantage

Posted by Ben Redfield

Sep 1, 2011

It has been widely identified that ERP software aligns operations, inventory and production with finance so business owners can better understand risk and be in a position to proactively respond. But having your ERP online is a step above as small and medium businesses can now benefit from the managed service model and influence the bottom line in a positive way not seen with on-premise ERP. Or achieve the longer term benefit of greater ROI that has newly been associated with Cloud technologies.
If you’re a small or medium business with initiatives in place to move to an ERP solution, you might want to consider Cloud ERP and the advantages of integrating an online ERP solution. In addition to improved operational efficiency across the entire business, you will be able to alter your financial model in a positive way, grow your business and benefit from the Managed Service model. And best of all, achieve greater ROI that has been newly associated with Cloud technologies. Here’s how:

No Upfront Investment
Having your ERP online and on-demand will allow your company to eliminate software purchase, hardware and infrastructure expense, the costs associated with deployment, and the hidden costs it takes to operate and maintain on-premise software. With your ERP in the cloud, there is no upfront investment which is an instant lift to your bottom line.
Cloud technologies always map expenditure to usage and allow you to budget for a predictable monthly expense that aligns with your needs. Along the way, you’re improving ROI and paving the road to better business agility.

Slash IT Budget
In today’s competitive business landscape, having the ability to slash your IT budget is key in planning for future growth and prosperity. With Cloud technologies, companies are able to not only cut budgets but reallocate funds to more strategic areas of the business. And when an organization maps software purchase to need, they begin to benefit from the Cloud or Managed Service model.
Cloud technologies allow you to better utilize smart technology, extend your IT budget and make purchase decisions based on usage.

Eliminate Integration, Deployment and Infrastructure Expense
It’s the hidden costs associated with on-premise business applications that make it tricky to budget for and forecast. Business owners need to consider that the most significant cost of owning and managing software is tied to operating and maintaining it. And that doesn’t include the infrastructure or hardware to support it – an additional cost that adds to the overall TCO. Because cloud vendors have perfected the art of hosting and can perform many of these tasks at scale, the cost per user dramatically reduces which makes Cloud applications more cost efficient than on-premise software.
Cloud technologies allow a company to shift their budget away from hardware and staff leaving more dollars to be allocated elsewhere. The result – lower overall costs and improved ROI across the organization.

Lock in the Right Pricing Structure
One of the top advantages of hosting your ERP in the Cloud is the ability to have a convenient and predictable monthly fee – that is, locking in the right pricing structure that meets the needs of your budget. Since TCO is based on usage, you have the power to better control the monthly expense and to expand ERP functionality and use when needed. Today, many small and medium businesses are leveraging Cloud to move their technology expenses from CAPEX to OPEX.
Cloud technologies continue to provide flexibility where on-premise applications fall short. And being able to lock in the right price is important for organizations wanting to better manage cash flow and remain competitive.

If you’re a small or medium business with an existing on-premise ERP solution, consider migrating to the cloud. Having your ERP on-demand will allow you to lower your total cost of ownership per user; eliminate integration, deployment and infrastructure expense; and benefit from the Managed Service model. Your ability to slash IT expense will greatly improve ROI and influence your financial model in a positive way.

For more information on Cloud ERP, visit

Topics: ERP in the Cloud