Benefits of cloud ERP for digital native, high-tech companies

The idea of nimble and fast-growing digital native high-tech company implementing a dinosaur of an enterprise resource planning (ERP) system may seem like an oxymoron. But then, hummingbirds are distant descendants of theropods such as the Tyrannosaurus rex.

In other words, dinosaurs can evolve.

So it’s been with ERP systems. The cloud opened a gate for them to move off-prem. There, where many fast-growing companies roam, ERPs remanifested with new technological backbones, operational paradigms, and a host of complementary innovations. On the functional side, they first adapted to the ways of financial services and professional services firms.

Now cloud-based ERP systems have adapted to the needs of growing high-tech businesses – particularly software companies, but also, given the increasing ubiquity of product-service offerings, semiconductor and other high-tech specialists.

The benefits of cloud ERP for these businesses, as well as big companies with digital native spin-offs, are vast. Cloud-based ERPs cost less in an era of tight investment budgets. They’re much easier to set up.

And they combine the robustness, analytical capabilities, and back-office automation that ERPs are known for with high degrees of flexibility in establishing and executing the sorts of novel, complex business models that technology companies feed on.

Cloud ERP supports complex offerings

ERP’s most vivid adaptation to digital native business needs has been in enabling a wide range of product-service combinations. Modern ERP systems can automate the opportunity-to-order process, configuring bundles that optimize margins even as the salesperson works with the customer. Then they enable flexibility in how those product-service combinations get monetized.

These systems support various combinations of free trials, licenses, subscriptions, fee-for-service, consumption-based pricing, and other approaches.

Another cloud ERP benefit for digital-native business is entitlement management, which keeps track of what subscriptions or add-ons (such as service calls or training) someone has bought or qualified for and then how they use of those services. These capabilities also track overages and alert sales of upsell, renewal, and upgrade opportunities.

All of the above can help win more business, boost customer satisfaction, and increase revenues from new business models. Internally, they speed up book-to-provision time and avoid revenue-recognition delays and revenue leakage.

But it’s the combination of digital-native edge features with the clean core of the ERP that afford these systems real power to benefit high-growth, high-tech businesses.

Standardization with industry best-practices

Best business practices are best business practices whether you’re a corporate giant or a nimble, smaller entity exploiting a new niche. ERP systems embody long-proven, industry best-practice processes for standardization and consistency.

They provide highly automated corporate finance management with built-in compliance in multiple jurisdictions, meaning you’ll meet the local requirements of the geographies you grow into. Analytics and forecasting functions honed over decades are now increasingly AI-enhanced.

Reports and dashboards deliver a real-time views of the business at any level – top and bottom lines, margin and profitability, product offerings and production status, and overall company performance.

That means that, even if you’re flying fast, you’re not flying blind, and you can make data-driven decisions despite the torrid pace and bewildering complexity of a digital-native business.

On the financial side, these systems provide automated receivables management. In treasury, they enable greater insight and control over cash, liquidity, and risk management. Because the data is centralized, financial close happens faster and with less effort.

What’s more, these cloud-based ERP systems scale not just in terms of product-offering diversity, but also in transaction volumes and geographic reach. When acquisitions happen, they enable financial consolidation and rapid onboarding.

3 examples of high-tech companies using cloud ERP

1. A Chinese AI specialist in hardware-software integration has been able to handle the procurement and management of tens of millions of SKUs with fewer than 10 workers and has seen its workload for monthly settlement drop by half.
2. A U.S. spatial-computing company specializing in mixed-reality glasses reaped a 33% gain in inventory accuracy and saw 88% productivity gains in managing maintenance, repair, and operations processes.
3. A Swedish connected-car company is closing its monthly accounts 50% faster and can set and propagate mass price changes in a couple of days rather than several weeks.

Cloud agility vs duct-tape system

Implicit in all of this are the benefits fast-growing companies gain from having a single, integrated system rather than a potpourri that wasn’t designed to cooperate. You end up with integration and maintenance nightmares that translate into higher costs, for one thing.

But just as importantly, dynamic, growing businesses need systems capable of quickly responding to market opportunities with the right product-service combinations at the right time. The last thing they want are antiquated systems – or bric-a-brac duct-tape solutions – slowing them down.

To compete in high tech today, you need the speed and agility of the digital-native hummingbird with the robustness and the legacy of the dinosaur ERP. The cloud, fortunately, has enabled that combination.