Cloud-based ERPs are the Gateway to Successful Digital Transformation for SMEs

By Maher Al-Khaiyat

Constant flux, uncertainty, and digital disruption are the hallmarks of today’s society. To navigate this unpredictable landscape, companies need to be agile, because meeting ever-evolving needs more efficiently, quickly, and cost-effectively is what shapes success.

Agility is about gaining a competitive advantage. It’s about bolstering a company’s ability to “respond to and capitalise on its changing operating environment,” says Deloitte. For McKinsey, becoming agile necessitates a paradigm shift in which business and technology are no longer separated: it’s down to a digital transformation.

Cloud technology has arguably played the most pivotal role in helping companies digitally transform to remain relevant in the market. Indeed, cloud adoption was accelerated in the pandemic-induced lockdowns that saw businesses scrambling to enable remote working. Embracing the cloud enables far more than this, although it must be noted that the future of work requires businesses to be flexible in where they operate with hybrid work set ups to remain. Used strategically, cloud adoption builds the foundation for and development of enterprise agility. It’s the gateway to digital transformation, in which agile businesses can expect to see an average 30 per cent rise in efficiency, operational performance, employee engagement and, as a result, customer satisfaction.

A Harvard Business Review survey conducted in the early days of cloud adoption already pinpointed cloud’s ability to increase competitive advantage, something that 74 per cent of business respondents had experienced. With improvements to this enabling tech made over the years, the case in favour of cloud’s usefulness for businesses would likely only be strengthened. One area where it is most transformative is in business management, which is at the core of any company’s decision-making process.

Migrating Business Management to Cloud Removes barriers

For decision-making to be nimble, you need a unified overview of business operations. A cloud-based enterprise resource planning (ERP) system offers this. It connects previously siloed branches of an organisation’s operations (from accounting to warehouse management and more) in a secure, consolidated manner to provide a business with end-to-end, companywide insights. This is the future of streamlined operations.

Centralising business management solutions on the cloud has both cost-saving and growth-supporting benefits that businesses of any size would benefit from. Though, with many small- and medium-sized businesses (SMEs) operating on tighter budgets, with less capital, in an increasingly competitive environment, the merits of cloud-based ERP deployment are particularly relevant.

Some of the problems SMEs face with on-site ERPs include the cost and time involved to manually update the system to ensure data is kept up to date and security is maintained; the cost implications of scaling up, if necessary, should the organisation grow; and the staffing requirements and cost thereof to oversee and provide support of the system. These barriers are removed when an ERP is migrated to the cloud and managed by one trusted, expert service provider who can provide 24-hour support.

Testament to this is an international study conducted last year by Forrester. It looked at the economic impact for a business when migrating to Microsoft’s cloud-based Dynamics 365 Business Central, which is a comprehensive business management solution. Findings show that the need to hire new staff was reduced by 10%, while flow of operations improved by 8%. On average, savings of nearly $85 000 were made due to many reasons: fewer support-personnel were needed; license fees and infrastructure were reduced; and third-party reports could be replaced by more granular internally sourced reports leveraging Microsoft’s additional functionalities.

Benefits not quantified by the study, but important nonetheless, included a further streamlining of operations due to easy integration with other Microsoft solutions, and real-time visibility of key business data and metrics enabling proactive, efficient decision-making by making timely decisions using comprehensive, real-time reporting, embedded analytics and AI driven insights.

A recent Artsyl blog post highlights another crucial advantage: the reliability of a cloud-based ERP in terms of continued connectivity. Artsyl notes that businesses using “the leading cloud-based vendors enjoy 99.98 percent uptime,” as well as a “30 to 40 percent increase in productivity”. Strengthened productivity can be attributed, in part, to reliable connectivity.

SMEs are on a more level playing field

Being able to access the same type of ERP capabilities that larger companies have, without needing to invest a large capital outlay for on-site infrastructure and specialised IT teams, is a boon to SMEs, especially in the current economic climate.

Cost-savings and productivity boosts are vital, but what’s particularly advantageous for smaller businesses is being able to adjust operational needs. With a cloud-based ERP, an SME can scale up or down relatively quickly based on operational or budgetary needs. In other words, this solution can grow or contract with the business, which is important in times of flux when agility is called for.

Maher Al-Khaiyat, Regional Business Applications Director for Microsoft MEA