Cloud ERP systems are the recent trend of ERP systems and Cloud ERP is experiencing tremendous growth as well as it is considered as an alternative to local ERP systems due to its benefits associated with the deployment of cloud ERP compared to traditional ERP and the other characteristics that cloud computing technology bring it, cloud ERP does not require much prior investment and can be deployed immediately. Cloud ERP systems provide several advantages for small and medium businesses (SMEs).
Considering the intense competition, data and information are the critical assets of any company. This helps companies better understand customers, business issues, and users. Because of the importance of big data, many companies are trying to adopt advanced information systems to organize, process, and store this data. ERP is one of the most important and most popular information systems for business enterprises.
The popularity of this solution is the common database which can share the information across operational areas and its functionality for integrated data department. One of the most important goals that ERP system developers have sought is to address legacy, fragmented systems by integrating all functions into one system.
Benefits and Challenges of Cloud ERP
Until recently many SMEs could not afford adoption traditional ERP systems, due to the costs of this system and the management of ERP systems in On-premise were expensive and significant resources commitment is required. On-premise ERP systems include huge investments in hardware infrastructures and software licenses, and their implementing require costs, time-consuming, and wide risks and changes in business processes. Therefore, it was natural that most of ERP’s clients were the large and most profitable organizations. In order to cater to the needs of SMEs.
SMALL AND MEDIUM ENTERPRISES (SMES)IN MALAYSIA
SMEs are known for the sustainable development of the country and its initiatives and have a major role in bringing about the economic growth of the country. It is the backbone of any country’s economy, especially developing countries. In Malaysia, SMEs account for 97.3% of the total number of companies in Malaysia, and they employed 5,854,142 people, equivalent to 57.4% of the total employment in the country; The percentage of Gross domestic product (GDP) for SMEs was 38.3%, as mentioned in the Department of Statistics Malaysia.
Generally, SMEs could categorize to major three categories as shown in figure 5:
- According to the manufacturing field, SMEs define as firms with sales capital that didn’t exceed RM50 m, or the number of fulltime staff didn’t exceed 200.
- related to the service and further fields, SMEs define as firms with sales capital didn’t exceed RM20 m, or the number of fulltime staff didn’t exceed 75.
Malaysian SMEs are striving to adapt to new business landscape to survive and succeed. Through continuous technological development and improving product quality, local small and medium-sized companies were able to play a pivotal role in maintaining economic growth.
Malaysia has worked to encourage the adoption of technology among small and medium-sized enterprises by developing motivated and supported strategies for the environmental and economic context. It has launched many initiatives that support small and medium enterprises (SMEs) such as soft loans over five years with minimal interest to urge them to purchase and use information systems to support their businesses. Small and Medium Enterprises (SMEs) can increase their ability to compete with large companies in their businesses by employing information and communication technology (ICT). Through the use of ERP it can help organization manage business operations systematically.
Cloud computing enables firms to deploy and adopt innovative technologies such as Cloud ERP. The continuity that the Internet provides to the Cloud ERP and the increasing reliability of the cloud infrastructure has made it economically viable and enabled it to gradually replace the traditional ERP. There are many benefits associated with the deployment of cloud ERP compared to traditional ERP systems such as continuity, low implementation costs, licensing and support, reduced implementation time of IT projects, and increased speed that enables enterprises to adapt to changing market environments, etc. Overall, Cloud ERP is experiencing tremendous growth and it could possibly be a force to be reckoned with in the future. Despite the many benefits of cloud ERP such as low upfront and cost of implementation and decrease in the duration of implementation that comes in the adoption of Cloud ERP, there is however a clear aversion in its adoption by several SMEs and still below expectations. many ERP providers began to introduce cloud-based ERP systems to meet the needs of SMEs. Because of the lack of success stories, companies do not have enough confidence, so they are reluctant to embrace cloud computing. before making the decision that whether to adopt cloud technology or not, SMEs prefer waiting in order to see and monitor and hear other companies’ feedback on cloud ERP adoption.
Key words: Cloud ERP, Cloud computing, ERP, SMEs, Adoption. Source: ; International Journal of Advanced Trends in Computer