5 Reasons Why Cloud ERP Growth Is Exploding
PricewaterhouseCoopers (PwC), the world’s second largest professional services network, is forecasting super-sized growth for cloud-based enterprise resource planning (ERP) systems in 2015. In a new study entitled Beyond ERP: New Technology, New Options, PwC predicts that investment in Software as a Service (SaaS) solutions will increase by over 50% to $78-billion by 2016. At the same time, spending on traditional ERP systems will shrink more than 30% to $15-billion.
In an analysis of the PwC study for Forbes magazine, Louis Columbus identifies five factors behind the explosive growth of cloud ERPs. First, enterprises are creating hybrid ERP systems that integrate cloud-based and legacy systems, and that can scale to meet customer demand. Second, net licenses revenues for traditional ERP systems have been declining anyway. In fact, they’ve already been surpassed by total revenues from cloud-based SaaS solutions.
These two factors are important, but they still beg the question of why cloud ERP growth is exploding in the first place. As Forbes’ Columbus explains, PwC’s study shows that “hybrid ERP systems save up to six times the amount of capital invested cumulatively over traditional ERP systems”. This third factor is critical, but cost savings alone are just part of the story. Hybrid ERPs are also “catalysts of strategic change”, Columbus writes, and that leads to the fourth and fifth factors behind their rapid growth.
Traditional ERPs were designed to support volume-driven, production-scale business models. In other words, these legacy systems weren’t built to accommodate new sales channels and enhance customer experiences. Today, supply chains are more complex and businesses such as manufacturers need new channels for distribution, sales, and service. Cloud ERPs support these new models. The also support the use of mobile devices both by a company’s own personnel, and by its customers.
Finally, Louis Columbus notes that cloud ERPs offer customers an individualized experience instead of a “one-size-fits-all” approach. Traditionally, IT organizations were concerned about scale and speed from an internal perspective. Today, forward-thinking enterprises are using cloud-based ERPs to account for the needs of customers, too. Are you ready to move your ERP to the cloud in 2015?
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