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The fact that cloud-based ERP systems are the way forward is no news, even though there are still vendors who bury their heads in the sand and believe they can resist this trend for a few more years. The statistics on procured ERP systems during 2018 and 2019 show that 99% of all small organisations (up to about 100 employees) choose cloud-based ERP systems. In the group of medium-sized organisations (about 100-2000 employees), the frequency today is about 70% choosing a cloud-based ERP system. For the largest organisations, the level today is about 50%. That the figures are lower for medium-sized and large organisations is natural as these organisations often have a complex infrastructure with hundreds of applications and where it adds limited value to simply place the ERP system in the cloud. But even in this target group the trend is upwards regarding interest in cloud-based systems.
There are many reasons why organisations switch to or choose to refrain from a cloud-based solution, and that subject is not the focus of this blog. Instead, this blog is about the change we now clearly see among the vendors who offer cloud-based ERP systems. The first wave was primarily about giving the customer the possibility to move to a cloud-based platform where the vendor manages ongoing maintenance with frequent upgrades. And where the customer could more easily keep up with the development of the system. Many vendors also tried to attract customers by claiming it became a lower cost, but this is an argument that has been disproven. At best, the cost remains roughly the same but there is also statistics showing that the cost actually increases with a cloud-based solution. At the same time, one should weigh in the benefit that arises over time which often justifies a somewhat higher ongoing cost.
The challenge with the early cloud-based ERP systems was that they were very limited in their flexibility, and the customer had no or very limited opportunities to deviate from the configuration the vendor offered. And even though "standard" sounds tasteful in many contexts, we can conclude that a large proportion of all companies still have needs that must be met for the customer to differentiate themselves from their competitors. What counts as flexibility? Below are some examples:
The above are just examples and the list can be made much longer. The majority of the early cloud-based ERP systems lacked support for all or most of the points above.
What we now see in the second wave is that the established cloud-based ERP systems have begun to supplement their systems with tools/support that allows the customer to make all these changes and improvements to better fit the customer. The result is that the customer or the customer’s partner can change the system as new needs arise at the customer. And also that the customer can have a configuration that differs between various subsidiaries or business areas within the group.
The negatively inclined then claim that we are back to the time when the customer customises the system to breaking point. The positive instead say that the customer actually gets a changeable system that opens opportunities going forward. Whatever the case, the trend is clear: the leading vendors of cloud-based ERP systems have realised that the systems have been too rigid and have now begun to offer more open and changeable systems. And when this becomes a little more mature, it will be the last obstacle before even the large organisations will fully switch to cloud-based ERP systems.
