What Is Cloud ERP and Does a Factory Need It?

Cloud ERP is an ERP that runs on infrastructure the vendor or a provider operates, reached through a browser, with no server in your building. You rent capacity rather than buying hardware. The software itself is usually the same product as the on-premise version; what changes is where it runs and who maintains it.

What is cloud ERP?

An ERP delivered as a service over a network, rather than installed on a machine you own. The National Institute of Standards and Technology defines cloud computing by five characteristics, including on-demand self-service, broad network access and measured service. Cloud ERP is that model applied to business software, almost always as software as a service.

In practice: you log in through a browser, the vendor runs the servers, applies updates and takes backups, and you pay a subscription instead of a licence plus hardware.

What cloud does not change is the product. An industry-specific textile ERP hosted in the cloud is the same system with the same modules as the on-premise build. Deployment and product type are separate decisions, as our guide to the types of ERP system sets out, and conflating them is the most common error in this part of the evaluation.

What does cloud actually change for a factory?

Five things change and the rest stays the same. Worth being specific, because most of what gets claimed for cloud is really a claim about the vendor's release cycle.

Read the three-year row carefully. Cloud is usually presented as cheaper and it mostly is not; it is differently shaped. You trade a capital purchase for an operating subscription, and over three years the totals land close enough that the decision should turn on the other seven rows.

Does cloud ERP work with unreliable internet and power?

This is the question that actually decides it in Bangladesh, and the honest answer is: it depends which failure you are more exposed to, and the two have opposite implications.

An internet outage stops cloud entirely. No connection means no system, so cutting cannot book a lay, the store cannot issue fabric, and production cannot record output. A factory on cloud with a single internet connection has made its production recording dependent on its ISP. The mitigations are real but they cost money: two providers on different routes, automatic failover, and a plan for what the floor does when both fail.

A power outage is the opposite case. With cloud, your data and application are somewhere else and unaffected; you need only enough power for terminals and the router. With on-premise, an outage during a write can corrupt, so you need a UPS sized for a graceful shutdown and a generator if you want to keep running.

Which is why hybrid is common here and rarely recommended in advice written elsewhere. Core transactional work runs on site so the floor never stops, with cloud for reporting, consolidation and access from other units. It costs more than either pure model and is frequently correct for a multi-unit group.

Check your own exposure first. BPDB publishes generation and load data and BTRC publishes connectivity statistics, but your own site's outage log for the past year is better evidence than either.

Where is your data, and does that matter?

It matters more than most vendors volunteer. With cloud, your records sit in a data centre that may be outside Bangladesh, operated by a company you have no contract with, under another country's law.

For most factory data that is unremarkable. For three categories it deserves a conversation. Statutory records that an NBR officer or a Customs Bond Commissionerate audit may demand, where you need to be able to produce them on request regardless of a vendor relationship. Worker personal data under HR and payroll, where social compliance auditors and buyers increasingly ask where it is held. And commercially sensitive buyer pricing, which in a multi-unit group is often the most closely guarded data you have.

Four questions to put in writing before signing a cloud contract. In which country is the data stored. Who else can access it, including the provider's staff. What happens to your data if you stop paying or the vendor ceases trading. And can you take a complete, usable export whenever you want, in a format you can read without their software.

That last one is the important one and it is routinely waved through. A cloud ERP you cannot fully export from is a system you cannot leave.

Which should a Bangladeshi factory choose?

Decide from your connectivity and your IT staffing, not from the vendor's hosting preference. The shape of the answer is fairly consistent.

A single factory with one internet connection and no IT staff is usually better on-premise or hybrid, because an ISP outage should not stop production. A multi-unit group that needs consolidated numbers and access across sites gains most from cloud or hybrid, because the alternative is VPNs and a reconciliation habit. A buying house or a sourcing office, which has no production floor to protect and staff who travel, is the clearest case for pure cloud, and our buying house ERP covers that operation type.

One thing not to do: choose deployment before product. If the system does not model your process, hosting it well will not help.

Frequently asked questions

What is cloud ERP? An ERP that runs on infrastructure the vendor or a provider operates, reached through a browser, with no server in your building. You pay a subscription rather than buying hardware and a licence, and the vendor applies updates and takes backups. The software is usually the same product as the on-premise version.

Is cloud ERP cheaper than on-premise? Over three years the totals usually land close together. Cloud has lower up-front cost and a continuing subscription; on-premise front-loads hardware and licence cost. Cloud is differently shaped rather than cheaper, so the decision should turn on connectivity, IT staffing and data residency instead.

Does cloud ERP work without internet? No. An internet outage stops a cloud system entirely, so production cannot be recorded and material cannot be issued. Factories relying on cloud need two providers on different routes with failover, or a hybrid deployment where core transactions run on site.

Is cloud ERP safe for factory and worker data? It can be, and you should establish the terms in writing. Ask in which country the data is stored, who at the provider can access it, what happens to it if you stop paying or the vendor closes, and whether you can take a complete usable export at any time without their software.

Is cloud ERP a different type of ERP? No. Cloud is a deployment model, not a product category. An industry-specific textile ERP, a generic mid-market product, an open source platform and a global enterprise suite can each be deployed in the cloud, on-premise or as a hybrid. Choose the product type first.

What is hybrid ERP deployment? Core transactional work running on a server at your site so the floor keeps working during an internet outage, with cloud used for reporting, group consolidation and access from other units. It costs more than either pure model and is frequently the right answer for a multi-unit group in Bangladesh.

Sources

• National Institute of Standards and Technology, The NIST Definition of Cloud Computing, Special Publication 800-145, September 2011. https://csrc.nist.gov/pubs/sp/800/145/final
• Gartner IT Glossary, definition of Enterprise Resource Planning. https://www.gartner.com/en/information-technology/glossary/enterprise-resource-planning-erp
• Bangladesh Power Development Board, generation and load data. https://www.bpdb.gov.bd
• Bangladesh Telecommunication Regulatory Commission, operator and connectivity statistics. http://www.btrc.gov.bd
• National Board of Revenue, Value Added Tax and Supplementary Duty Act 2012 and rules made under it, on record-keeping requirements. https://nbr.gov.bd
• Customs Bond Commissionerate, Dhaka, on bonded warehouse register requirements. http://www.dhakabond.gov.bd