The ROI of Cloud ERP for SMBs

Small and medium-sized businesses (SMBs) often face significant challenges in managing their operations and staying competitive in their markets. One of the key challenges they face is managing complex business processes efficiently while keeping costs under control. Enterprise Resource Planning (ERP) systems can help businesses achieve this, but traditional ERP systems can be expensive and complex to implement and maintain. Fortunately, cloud-based ERP systems are now available to provide SMBs with the functionality they need at a more affordable price point.

This article will focus on the ROI (Return on Investment) of cloud ERP systems for SMBs. We will examine the potential cost savings, productivity gains, and other benefits these systems can provide and how these benefits can contribute to a positive ROI. We will also provide examples of specific ROI benefits that SMBs have achieved by adopting cloud ERP systems.

Cost savings

One of the primary advantages of cloud-based ERP systems for SMBs is the potential cost savings. Traditional ERP systems require a significant upfront investment in hardware, software, and implementation costs. However, cloud-based ERP systems are designed to be more affordable and cost-effective for SMBs. Here are some of the ways that cloud-based ERP systems can help SMBs save money −

Lower Upfront Costs

Cloud-based ERP systems do not require the purchase of expensive hardware or software licenses. Cloud ERP solutions remove the need for costly hardware and IT infrastructure by providing access to the system through a mobile app or web browser. This can significantly reduce upfront costs and allow businesses to get started with their ERP system more quickly.

Reduced IT Costs

These systems require less ongoing IT maintenance and support than traditional systems. The vendor maintains the servers and infrastructure, freeing IT staff to focus on other important tasks. Additionally, the vendor handles upgrades and patches automatically, reducing the need for manual intervention and minimizing the risk of downtime.

Improved Cost Control

Cloud-based ERP systems typically have more flexible pricing models that allow businesses to pay only for their needed services. This can help businesses better control costs and avoid overpaying for unnecessary features or modules.

Productivity and Efficiency Gains

Another key benefit of cloud-based ERP systems for SMBs is the potential to improve productivity and efficiency. By streamlining business processes and providing real-time data insights, cloud-based ERP systems can help SMBs make better-informed decisions and operate more efficiently. Here are some of the ways that cloud-based ERP systems can help SMBs improve productivity and efficiency −

Streamlined Workflows

Cloud-based ERP systems can help automate and streamline workflows, reducing the need for manual data entry and other time-consuming tasks. This can help employees focus on value-added activities that contribute to business growth, such as improving customer experience, developing new products, or exploring new market opportunities.

Real-time Data Insights

These systems provide real-time data insights into key business metrics, such as inventory levels, order processing times, and financial performance. This can help SMBs make more informed decisions and identify areas for improvement.

Improved Collaboration

These systems provide a centralized platform for sharing data and communicating with team members, which can help to improve coordination between employees. This can help reduce errors and improve communication, improving overall productivity.

Scalability, Security, and Mobility

Beyond the advantages we've covered, cloud-based ERP systems provide SMBs with additional benefits such as greater scalability, improved security, and enhanced mobility. Let's explore these advantages in more detail −

Scalability

As SMBs grow, they may need to scale their business operations to accommodate new customers, products, or markets. Cloud-based ERP systems can offer greater scalability than on-premises solutions, allowing businesses to easily add new users or functionalities without requiring significant IT infrastructure upgrades.

Security

Cloud-based ERP systems can provide SMBs with better security than traditional on-premises solutions, as cloud providers invest much in security protocols to protect their customers' data. Cloud-based ERP systems can offer data backups, disaster recovery, and other features to help SMBs mitigate the risk of data loss or breaches.

Mobility

With cloud-based ERP systems, SMBs can access critical business data from anywhere, anytime, using any device with an internet connection. This can enable remote work, reduce the need for on-site infrastructure, and provide greater flexibility and agility for businesses. This can help businesses with limited IT resources or those that need to operate in a fast-paced, agile environment.

Reports on ROI of cloud-based ERP systems for SMBs

A few reports provide insights into the ROI of cloud-based ERP systems for SMBs in India. For example, a study by Frost & Sullivan and Zoho in 2021 found that SMBs in India that adopted cloud-based ERP systems achieved an average ROI of 150% over 3 years.

Another study by KPMG in India in 2020 found that adopting cloud-based ERP systems resulted in an average reduction of 17% in operating costs and a 25% increase in revenue for SMBs in India.

It is important to note that these figures may vary depending on the specific circumstances of each business. Still, they indicate that cloud-based ERP systems can offer significant ROI benefits for SMBs in India.

Conclusion

In conclusion, cloud-based ERP systems can provide significant ROI benefits for SMBs in India by enabling cost savings, productivity gains, and other advantages such as scalability, security, and mobility. Cloud-based ERP systems can help SMBs save money by eliminating the need for expensive upfront hardware and software investments and reducing ongoing IT maintenance costs. They can also streamline workflows, provide real-time data insights, and improve employee collaboration, increasing productivity and efficiency.

Moreover, cloud-based ERP systems offer greater scalability, better security, and enhanced mobility, allowing businesses to operate flexibly and adapt to changing market demands. The reports by Frost & Sullivan, Zoho, and KPMG highlight the potential ROI benefits SMBs in India can achieve by adopting cloud-based ERP systems.