It is a well-known fact: the year 2020 has seen a massive acceleration in the digitization of companies. What caused this important push forward was, of course, the health emergency, which forced companies either to find new solutions, or to improve previous ones, to be able to work effectively even by smart working and in an extremely flexibly way. It is therefore not surprising that the goal shared by Italian companies has been, in many cases, to focus on the cloud. A survey by the Cloud Transformation Observatory of the Milan Polytechnic, which reports a 21% growth in the cloud market in 2020, has taken the measurements of this evolution. More specifically, the adoption of cloud solutions by Italian companies grew by 42%, in a market that reached a value of €3.34 billion. Cloud ERP systems, the management software designed for maximum flexibility, took the lion’s share.
Growth of the cloud
Before taking a closer look at the features of cloud ERP systems and explaining the difference between cloud and on-premise ERP systems, it is worth mentioning some other interesting data from the survey already mentioned. The Cloud Transformation Observatory recorded an 11% growth in the hosted cloud service, i.e. rental of exclusive portions of servers from external providers, with a clear shift towards “as a service” services. Confirming this is the lack of growth in the company’s own endowments, which compared to 2019 mark a meager +6%. Commenting on the adoption of new cloud solutions by large and small companies, Alessandro Piva, director of the Cloud Transformation Observatory, explains that “however, the challenge is now: in order to continue on the path towards a real transformation of the organization, it is necessary to move from tactical response to an emergency to a real digital strategy based on the cloud, promoted by the success achieved during the crisis”.
The difference between cloud ERP systems and on-premise ERP systems
So, what are cloud ERP systems, and how do they differ from traditional ERP systems? Up until not so long ago, the standard was on-premise management software, and therefore proprietary solutions. This means that the necessary infrastructure of a traditional ERP is installed on the company’s premises, using proprietary hardware and servers. It is therefore clear that the on-premise ERP option has two major drawbacks, consisting of a very high initial investment, as well as the need to manage the infrastructure personally, which often leads to the need to hire dedicated staff. This is different with cloud ERP systems, which do not involve any installation on company premises. The company that relies on a cloud management system can therefore do without the initial large investment, does not have to think about management or maintenance of the infrastructure, let alone licenses, configuration or upgrades, and is thus able to focus on its core business.
Digital transformation, and with it the shift to the cloud, is undoubtedly one of the crucial aspects of the recovery. It is precisely for this reason that, in order to help SMEs, the 2020 Budget Law provides for some precious help as tax credit, a new form of incentive previously known as super depreciation allowance and hyper depreciation allowance.