Making Sense of the Great ERP System Cloud Migration

Enterprise resource planning (ERP) systems have long been the backbone of enterprise businesses.

And for too long, these systems — which enable organizations to integrate and manage core business processes across departments such as finance, supply chain, human resources and customer relationship management (CRM) — have had any updates and modernizations put on the back burner.

For the first two decades of the 21st century, ERP was among the categories of enterprise software stuck in the past, remaining on-premises and maintained by in-house IT teams, while more compelling front-office applications got future-fit face lifts and cloud migrations. In part, this was due to senior decision-makers’ aversion to risk.

But, driven by the need for cost-efficiency, real-time data access and advanced features, businesses are increasingly moving away from on-premises solutions in favor of cloud-based platforms. As cloud computing continues to evolve, ERP systems are becoming even more intelligent, interconnected and indispensable to modern businesses that decide to migrate their back-office operations to the cloud.

While the migration process presents challenges, the long-term benefits of cloud ERP — from scalability and flexibility to enhanced security and innovation — are hard to ignore.

Read more: How APIs Bridge Modern and Legacy B2B Payment Architectures

The Cloud Advantage: Why ERP Is Moving Off-Premises

PYMNTS intelligence finds CFOs will invest in workflows and tools to reduce uncertainty, giving them visibility in data and payments flows. For organizations looking to stay competitive in a rapidly changing business environment, the shift to cloud ERP is not just an option; it’s becoming a necessity.

One of the primary reasons to consider shifting ERP systems to the cloud is the significant reduction in both upfront and long-term costs. Traditional onsite ERP systems require substantial capital expenditure, as businesses need to purchase expensive hardware, license software and employ IT staff to maintain and upgrade the system.

Cloud models shifts ERP from a capital expense (CapEx) to an operational expense (OpEx), offering greater flexibility, especially for small and medium-sized businesses (SMBs) that may lack the financial resources to invest heavily in on-premises infrastructure.

Additionally, cloud ERP allows businesses to scale their system usage up or down depending on their needs. As companies grow, they can easily add new users, modules or functionalities without requiring significant infrastructure investments. This scalability is a key advantage over traditional ERP systems, which are often rigid and costly to expand.

At the same time, many digital payment mechanisms are designed to integrate seamlessly with modern ERP systems, enabling automated reconciliation and providing real-time visibility into financial transactions. PYMNTS Intelligence has found that automation, virtual cards and digital payments are becoming cornerstones of B2B payments, with businesses increasingly recognizing their role in strengthening buyer-supplier relationships.

The modern business environment demands real-time access to data for informed decision-making. With cloud ERP, employees can access critical business information from anywhere in the world, at any time. For instance, finance teams can instantly access sales and inventory data, enabling more accurate cash flow forecasts and financial planning. This accessibility is particularly vital for companies with global operations or remote workforces, where teams need to collaborate across time zones and geographies.

“Our clients care about driving business results and analytics around understanding the value and transparency of every transaction. They want more automation, as much as possible,” Ernest Rolfson, founder and CEO of Finexio, told PYMNTS.

See also: 3 Tips for Choosing the Right B2B Payment Method From Industry Execs

Unlocking the Future of Enterprise Resource Planning

As with any major IT transformation, migrating to cloud ERP requires significant change management efforts. Employees must be trained on the new system, and the organization’s workflows may need to be adjusted to accommodate the new platform. Companies must invest in employee training and support to ensure a smooth transition and avoid disruptions to daily operations.

Meg Garand, head of CashPro Payments and CashPro API at Bank of America, told PYMNTS that growing partnerships between banks and FinTechs is allowing ERP and treasury management system (TMS) providers to optimize their own software solutions.

“Companies can remain focused on running and growing their business without spending a ton of time on technical bank integration,” she said, noting that the ease of integration provided by bank and FinTech collaborations also results in the reduction of manual work, allowing staff to focus on strategic efforts. Garand cited, as an example, one entertainment company that was previously spending 10 days on monthly reconciliations and can now complete the process in 2½ days because of the integration of CashPro API with its ERP system.

One of the most exciting developments in cloud ERP is the integration of artificial intelligence (AI) and machine learning. These technologies enable ERP systems to analyze vast amounts of data and provide actionable insights that help businesses optimize their operations. For example, AI-driven ERP systems can predict inventory needs, identify cost-saving opportunities or automate routine tasks such as financial reconciliations.

And by connecting ERP systems with external applications and services, businesses can gain real-time visibility into their financial data, enabling informed decision-making and faster response to market dynamics. Whether it’s identifying cost-saving opportunities, mitigating risks or capitalizing on emerging trends, ERP modernizations empower businesses to stay agile and competitive.

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