With more and more services being hosted in the cloud, legacy ERP systems can no longer keep up. Read on to learn how Cloud ERP can ensure your SME continues to grow in the current marketplace.
Blaise Radley
Editorial Strategist
Workday
Small or medium-sized enterprises (SMEs) might not operate at the scale of large corporations, but they face many of the same complexities. Managing operations, financials, inventory, and customer data—often with limited resources—can be just as challenging, if not more so. Without the right systems to support smart decision-making, opportunities for growth may be missed.
Cloud-based enterprise resource planning (ERP) systems offer a solution. By centralizing critical business processes, cloud ERP provides SMEs with real-time access to data, optimized workflows, and the flexibility to adapt more flexibly to evolving business demands. Unlike traditional on-premise solutions, it eliminates the need for costly infrastructure and makes advanced capabilities—such as AI and detailed analytics—more accessible.
Cloud ERP systems also help companies keep up in increasingly competitive markets where cloud-based solutions are becoming the status quo. In 2024, 78% of organizations reported using cloud-based systems (up from just 65% in 2023), and the market for cloud ERP solutions is expected to nearly double by 2029.
We’ve created this guide to help evaluate whether a cloud-based ERP system is the right fit for your small or midsized business, and to enable you to take the next steps for long-term success.
In 2024, 78% of organizations reported using cloud-based systems, up from 65% in 2023.
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Cloud ERP is an advanced enterprise resource planning system hosted in the cloud and designed to unify critical business functions across the enterprise. It is primarily provided via software as a service (SaaS) vendors.
ERP software integrates multiple data streams, such as finance, HR, and customer relationship management, in order to provide an easy-to-access single source of truth at an organization. Users can access this real-time operational data any time, anywhere, so long as they have access to the internet.
Traditional ERP systems rely on hardware housed on company premises, requiring upfront capital investment and ongoing maintenance. They struggle with scalability, demanding expensive upgrades as a business grows.
In contrast, cloud ERP operates on a subscription-based model and is maintained by the service provider, offering businesses seamless updates, high availability, and the ability to adapt quickly to changes.
With cloud ERP, businesses eliminate many of the challenges of legacy systems, such as long implementation cycles, limited accessibility, and hidden maintenance costs. This makes cloud ERP particularly appealing for SMEs seeking enterprise-grade solutions without the accompanying overheads.
Cloud-based ERP for SME offers transformative features that help businesses operate and scale with greater precision and intent. With features designed to meet modern demands, cloud ERP enables businesses to centralize their operations, reduce complexity, and stay focused on strategic growth. Key capabilities include:
One of the defining strengths of cloud ERP for SME is its ability to centralize diverse business functions, breaking down silos and creating a unified system of record. By integrating the following functions, cloud ERP enables SMEs to operate with the precision and efficiency of larger enterprises:
Cloud-based ERP systems offer SMEs a powerful alternative to on-premise solutions, providing access to enterprise-grade tools without the associated costs or complexity. They enable SMEs to operate with greater agility and efficiency while addressing common and pressing operational challenges. Here are four major business benefits cloud ERP can unlock for your small or medium business.
One of the most significant advantages of cloud ERP is its subscription model, since it avoids large upfront investments in hardware, software, and maintenance. This reduces initial costs and spreads expenses over time, allowing SMEs to allocate resources more strategically. Additionally, automatic updates and vendor-managed maintenance eliminate the hidden costs often associated with legacy systems.
Cloud ERP systems grow with your business. As SMEs expand into new markets, onboard additional employees, or increase transaction volumes, the system can scale seamlessly to meet evolving needs. Businesses can add users, activate new modules, or increase storage capacity without the need for disruptive upgrades or infrastructure overhauls.
A subscription model reduces initial costs and spreads expenses over time, allowing SMEs to allocate resources more strategically.
Access to real-time data is a game-changer for decision-making. Cloud ERP systems provide centralized, up-to-date insights across finance, operations, and customer management. Leadership teams can make faster, more informed decisions, whether it’s reallocating budgets or identifying emerging opportunities. Mobile access to live data also ensures connectivity between teams working across different work environments.
By centralizing business processes, cloud ERP eliminates silos and ensures that departments operate cohesively. Automation of routine tasks such as financial reporting, inventory tracking, and order processing frees up time for employees to focus on strategic initiatives. This integration also reduces errors, improves collaboration, and enables SMEs to deliver better results with fewer resources.
While cloud-based ERP systems offer transformative benefits, it’s important for SMEs to consider potential challenges and limitations when evaluating their options. Understanding these three obstacles will help prepare businesses to plan effectively and set realistic expectations for implementation.
Entrusting sensitive business information to a cloud-based system requires robust safeguards. While reputable ERP vendors implement advanced security measures such as encryption, multi-factor authentication, and compliance with data privacy regulations, businesses must also do due diligence by researching their vendor’s approach to security and training their employees on best practices.
Cloud ERP systems rely on stable internet connectivity. Unexpected downtime can disrupt workflows and access to critical data. While most vendors offer high availability and uptime guarantees, SMEs in areas with unreliable internet service may face challenges in ensuring consistent access.
Transitioning to a cloud-based ERP system requires time and effort, particularly during the implementation phase. Migrating data, integrating with existing tools, and training staff can temporarily disrupt operations. Without proper planning and support, businesses may face longer timelines and slower adoption rates. Partnering with a vendor that provides robust onboarding and ongoing training can mitigate these challenges.
Partnering with a vendor that provides robust onboarding and ongoing training can mitigate these challenges.
Deciding whether cloud-based ERP software is right for your business involves careful evaluation. Use this checklist to guide your decision-making process.
Cloud ERP systems are designed to handle a range of business sizes, but your decision should align with the complexity of your operations. Ask yourself:
If managing workflows and data feels increasingly unwieldy, a cloud ERP system can simplify operations and provide the scalability you need.
What bottlenecks or inefficiencies are holding your small or medium-sized business back? Consider issues such as:
If these challenges resonate, a cloud ERP system can centralize your processes and automate many of these tasks, giving your team time to focus on higher-value activities.
Cloud ERP systems typically operate on a subscription model, which offers predictable costs but requires ongoing investment. To evaluate whether it’s right for you:
Every industry has unique demands, and your ERP system should meet them. Choose a cloud ERP provider with experience in your industry and features tailored to your specific needs. Consider:
Take time to request demos, ask questions, and read case studies from businesses similar to yours.
Not all cloud ERP platforms are created equal. To find the best cloud-based ERP for your small business, evaluate potential vendors using this criteria:
Take time to request demos, ask questions, and read case studies from businesses similar to yours to ensure you’re making the best choice.
Cloud enterprise resource planning solutions offer more for SMEs than just a technology upgrade—it’s a strategic enabler. Whether you’re grappling with disconnected systems, inefficient workflows, or the challenge of scaling your operations, a cloud-based ERP system can help you overcome these hurdles.
By centralizing business processes, improving data visibility, and enabling real-time decision-making, cloud ERP empowers you to operate with the agility and sophistication of larger enterprises—without an unattainable price tag attached.
As you consider whether cloud ERP is the right fit, it’s essential to evaluate your unique business needs, from operational challenges to long-term growth goals. A thorough evaluation will help you identify how cloud ERP can align with your strategic priorities, streamline operations, and support your business as it evolves.
Workday can support you at every stage of your growth as a business. Explore how Workday and our Enterprise Management Cloud solutions can transform your SME and give you a competitive edge.
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