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Advantages and Disadvantages of Cloud-Based Manufacturing Software

Advantages and Disadvantages of Cloud-Based Manufacturing Software

Manufacturers are inclining more toward becoming positioned technologically. As implementing these advancements, they face aspects that must be considered

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Small manufacturers are continually learning 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 crucial the cloud can be in conjunction with these systems.

Manufacturing facilities are inclining more and more toward becoming positioned technologically. As manufacturers implement these technological advancements, they face other aspects that they must consider. One of those is whether or not they should embrace a cloud-based ERP or MRP system.

Many businesses believe that on-premise ERP systems are antiquated and a thing of the past. They want no part of the manual installation of updates and hardware. They prefer cloud-based systems that update on their own as needed. But while cloud-based ERP systems are well on their way to becoming the most important aspect to consider 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 common within the manufacturing industry. They use a web browser or web service to communicate data to various points of production and their workers using the Cloud. On-premise systems, on the other hand, are installed on-site and cannot be configured and updated remotely.

The cost of the two models can also differ: cloud-based systems have a monthly subscription, and on-premise systems typically have heavy upfront costs.

Let’s take a look at the primary pros and cons of cloud-based manufacturing software. You can then decide if it’s the better choice for your operation:

The advantages of cloud-based manufacturing software systems

Businesses 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: Investing in new hardware and waiting for slow updates are not a part of cloud-based systems. Instead, they utilize the web and updates are implemented without the interaction (and labor costs).

Cost-Effectiveness: Cost is one of the leading factors when manufacturers choose 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:

  • Licensing fees
  • Costs for updates
  • Data storage
  • Management fees
  • Expenses for support and training
  • Miscellaneous additional fees per device
  • Annual maintenance fees
  • Upgrade fees for upgrades.

If the company finds that the model is not suitable, the upfront costs and fees are generally nonrefundable.

With the cloud-based point solution, however, there are no licensing, registration, or maintenance fees. Also, you pay a monthly fee, which allows you to cancel anytime. 

Security: Another advantage of cloud-based software is security. In the past, security was often 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, accidents, and weather-related 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 fears of running out of storage space are also mitigated with the cloud. 

Accessibility of Features: Because of faster updates, more features are implemented with each update. The system is enhanced frequently, and its functionality is increased. Many cloud systems now enable easy mobile accessibility. Some even offer native mobile apps. But there is a word of caution required here: the ease of access may come with additional security concerns, most notably if employees are accessing the company’s files on a personal mobile device.

Data and Integration Enhancement: Since cloud-based ERP systems are web-oriented, integration, and data accuracy improve immensely. 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 needed since there are no in-house servers. This feature is a big advantage for operations that have had to maintain hardware in the past. They can now increase their focus on other areas within the manufacturing facility.

Some disadvantages of using the cloud

Although cloud-based software solutions come with a long list of benefits, they might not be perfect for everyone. It’s best to touch upon some of the disadvantages before making a final decision for your company.

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. Updates and patches might also be included.

A cloud-based solution has no upfront investment. However, there is an ongoing monthly fee to use the service. Updates, patches, and upgrades could bring on additional costs.

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

After weighing the advantages and disadvantages, there is much more clarity. Cloud-based manufacturing software might not be the answer for every company, but for small and mid-size businesses looking to hold down upfront costs, seeking a stable system, and hoping for easy access, it’s overwhelmingly the right fit!

Karl H Lauri
Karl H Lauri

For more than 4 years, Karl has been working at MRPeasy with the main goal of getting useful information out to small manufacturers and distributors. He enjoys working with other industry specialists to add real-life insights into his articles, with a special focus on using the feedback from manufacturers implementing MRP software. Karl has also collaborated with respected publications in the manufacturing field, including IndustryWeek and FoodLogistics.

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