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Manufacturers begin to embrace cloud ERP software

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Manufacturers have been slower to embrace cloud ERP software, but more options and familiarity with the technology are spurring more companies to move to the cloud.

Manufacturing has been one of the slowest enterprise segments to move their ERP systems to the cloud, but more options and more familiarity with the advantages of the cloud may be changing this.

The reasons manufacturers have been reluctant to run cloud ERP software are as varied as the companies themselves, but they generally boil down to two main issues: security and control. Now, however, it appears that manufacturers are going to the cloud for the reason that most other segments do: It’s simply less hassle to have someone else run ERP. This is particularly attractive to smaller manufacturers who often lack the IT resources to run ERP systems on-premises.

Options abound now for any company that wants to run cloud ERP software systems. Large vendors like SAP, Oracle, Microsoft and Epicor have come out with cloud versions of flagship ERP systems or ramped up new cloud-first products. Smaller players in the ERP market also offer cloud versions, some that have been born and raised as cloud-only systems. Some of these smaller vendors may be more attractive to manufacturers because they offer targeted functions for manufacturing or specific industry segments.

Luxury van builder finds cloud worth investment

Waldoch, based in Forest Lake, Minn., a company that builds luxury vans and customized trucks, moved to the cloud with Epicor ERP two years ago. The results have been somewhat mixed, but satisfying for the most part, according to Billy Waldoch, the company’s general manager. Not worrying about managing the system is a plus, but Waldoch is concerned with diminished control over the system.

“Any ERP has struggles with upload time, but the nice thing about having it in the cloud is that we don’t have to worry about it going out — they do — so when it does go out we’re calling them wondering why we’re down or vice versa,” he said. “The bad part about that is that it’s not as fast, and we can’t always do what we want to do with it because it is in the cloud. When it’s on-site we can mess with it and do what we want, and it’s a lot faster because when you’re going over the Internet, you’re dealing with how fast your Internet speed is.”

Although cost effectiveness is often touted as a major reason to move to the cloud, Waldoch cautioned that this may not always be the case. Implementing Epicor ERP on the cloud cost much less upfront than any of the on-premises systems that Waldoch considered, but there have been significant ongoing costs. Nevertheless, on balance, the system is worth the investment, Waldoch said, and it allows the company to run ERP with far fewer management issues.

“If everything works right, you will save money with a cloud-based system, but it’s the initial getting it up and going is what a lot of people don’t realize,” he said. “I would say to anybody else that’s looking for one, get the salesperson, get the IT person, get the person that you’re going to be communicating with [from the vendor], and if there’s a problem, you get all those people involved before you make the decision.”

Cloud-based ERP frees up IT department

Freeing up the IT department has been a major benefit of running ERP in the cloud for AMVAC Chemical Corporation. The company, based in Newport Beach, Calif., develops, manufactures and markets crop protection and other agricultural products, with three manufacturing facilities in the U.S. and three in other countries. AMVAC has been running QAD’s ERP system since 1996 and moved everything to the cloud in 2012, which has helped them improve business processes, according to Ranier Laxamana, AMVAC’s IT director.

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