5 New Findings Explain an Increasing Shift Toward Cloud-Based ERP Systems

Epicor has seen the growing interest in cloud-based ERP among distributors. So we conducted research on what hundreds of decision-makers are saying about cloud capabilities. We asked distributors what’s important to their business, what challenges cloud is solving for them, and what companies need from an ERP provider to make cloud adoption a success. The research led to key insights into how businesses are using and implementing cloud technology to connect to the future of distribution.

Here’s what we learned:

  1. Distribution Is Evolving Rapidly

We asked distributors to identify their company’s biggest current challenges. The findings will be no surprise to you. The last few years were difficult for distribution, with rapid and widespread changes. The Covid 19 pandemic delivered multiple challenges, from disrupting supply chains to provoking unexpected shifts in demand and fast-tracking new ways of working. Most distributors cited cybersecurity (46%), technology changes (40%), and industry trajectory (38%) as the biggest challenges.

Businesses also know it’s crucial to protect themselves from the increase in cyberthreats. With new technology quickly proliferating, companies are looking for ways to integrate everything seamlessly. Meanwhile, the continuing disintermediation of the sector is raising questions about where distribution is heading.

  1. New Technology Will Significantly Impact Your Business

Distributors were asked which technologies they believe will significantly change their business over the next five years. Cloud and mobility came out on top, followed by data and analytics, artificial intelligence, machine learning, and various others. This aligns to the forward thinking needed to manage a highly complex supply chain. Distributors are combining cloud with other enabling technologies to help them establish a single source of truth to run their operations more efficiently.

It’s a complex and demanding new world for distributors. Thankfully, a new generation of cloud ERP solutions can deliver the functionality and integration you need, as well as state-of-the-art data security to address risks.

  1. Distributors Are Shifting to Cloud-Based ERP Solutions

There was a major acceleration in cloud ERP adoption over the last two years, especially for mid-market players with revenues of $20M-$250M. Forty-six percent of distributors moved most or all business processes to the cloud, and a further 27% are using a combination of cloud and on-premises solutions. Across the industry, businesses are realizing they can no longer ignore powerful cloud benefits.

Cloud adoption in distribution is driven by several factors, including the high cost of maintaining legacy on-premises systems and the urgent need for digital transformation fueled by Covid 19 pandemic disruption. The numbers reveal the huge shift happening. Over the next 12 months, 83% of distributors plan to migrate all or most of their solutions to cloud, especially in manufacturing and operations, document management, supply chain management, and CRM.

“By choosing the cloud option, we moved to a modern ERP and got out of the hardware management business. We don’t have to pay to update servers or move our legacy technology along with all the expensive customizations to new servers – it would have been costly.”

-Scott Young, President George E. Booth Co., Inc.

  1. Cloud is Fast Becoming a Business Necessity

As cloud becomes ever more crucial to staying competitive, distributors consider improved cost control as a top benefit, followed by better data security. Research also found that always being up to date and having improved quality control are the other perceived benefits encouraging businesses to make the shift.

Distributors understand the benefits, but a few concerns remain.

What’s making some distributors cautious about moving to cloud? Most are concerned about the ability to customize. Some distributors indicated concern about a lengthy migration process, but that, too, is a misperception. The newest cloud solutions can be quickly implemented and easy to integrate.

“Move to the cloud, I’ll be telling everyone. Don’t be afraid of the initial cost. I don’t have to buy new servers every five years, I don’t have to maintain the servers, and the software maintenance is rolled into the monthly cost. It just makes sense.”

-Keith Nowak, President | MPT Drives

  1. Security is More Important Now Than Ever

Security is a top concern for distributors, and cloud is the best way to keep your data safe.  Companies that are thinking about a cloud-based solution for the first time might feel like they’re risking their data because it’s unknown territory. After all, cyber threats are constant, persistent, and increasing. Without proper security measures in place, every business is vulnerable to cyberattack.

Thankfully, cloud ERP offers state-of-the-art security, from data encryption to system firewalls, and many other powerful features. In a cloud-based solution, your data is backed up on servers that are continuously updated to combat the newest cyberthreats. Cloud solutions also isolate email from ERP business applications, making it much harder to infiltrate organizations through cyberattacks. By contrast, on-premises solutions can be harder to protect, slower to respond to an attack, and more vulnerable to break-ins or natural disasters.

Across all industries, almost nine in 10 companies believe their data is safer in the cloud. Increased security in the cloud is giving leaders confidence to finally make the move and protect their businesses.

Cloud Delivers the Flexibility Distributors Need

Eighty-seven percent of the business owners surveyed agreed that cloud solutions offer the flexibility to meet their needs. In addition, cloud unlocks further capabilities that help boost the bottom line.

With built-in flexibility and scalability, cloud solutions help you customize your IT resources to suit your transforming requirements. Whether you need to add more users, increase bandwidth, or boost storage capacity, cloud solutions give you the ability to flex in whichever direction you want. It’s exactly what hard-working distributors need.

When it comes to regulatory compliance, cloud makes life simpler, too. When you partner with an expert that knows distribution, they guide the migration process to help you avoid any compliance issues. And once migrated, you have instant access to the latest technology, security patches, and updates. Eighty-six percent of businesses entirely or mostly on cloud agree—they reported that it’s easier to adhere to the latest regulations.

In a fast-changing world, cloud technology helps you adapt. By enabling the shift to remote and hybrid working, the cloud alleviated Covid 19’s business impact by bringing employees together through video conferencing and collaborative tools. And cloud-based business applications give you access to data whenever and wherever you need it, from office to warehouse, to sales visits. With cloud, you’re better prepared for whatever the future brings.

As the leader in industry productivity solutions, Epicor is already the trusted partner to thousands of distributors worldwide. This report reaffirms that the future of distribution is in the cloud. At Epicor, we’re leading the way to empower a world of better business.