When selecting an enterprise planning resource system like Microsoft Dynamics NAV, many factors should be considered. One of the biggest questions executives need to ask whether the company should use an in-house system or a cloud-based one. While both options have a long list of both pros and cons, only after careful consideration of the company's needs can a decision be reached.

If, after an extensive examination of the company's needs, the determination to go with a cloud-based ERP system seems like the correct option, then begins the next step in choosing the right cloud-based system. Companies need to ensure the cloud-based program they choose meets the company's demands and has the available features to create a successful system. Cloud-based systems will have different features and functionality, most which may benefit the company. However, there are some programs that could could not only hinder growth, but may be outright detrimental to the company.

Here are four common cloud-based ERP system mistakes to avoid:

1. Lack of scalability
Economic expansion is the backbone of the economy and it's usually the main goal for all companies. Executives choosing their cloud-based ERP system need to have a solid grasp of how the company plans on expanding their companies' operational planning year-over-year, ERP Focus reported. Without a scalable system, the company will eventually hit a growth wall.

2. Failing to understand the developer's role
According to Panorama Consulting, the developer's role in cloud-based ERP deployments involves focusing more on coding and testing as opposed to system managing. This is different than the developer's role with an on-premise cloud system, which is more focused on monitoring and managing the applications.

3. Focusing only on the cost
The total cost of ownership for an ERP system can be hefty. While cloud-based systems tend to run cheaper than in-house ones, the long-term costs of annual subscriptions can certainly add up over time. However, while many executives will choose a cloud-based system because they are generally cheaper, they must consider the system's available functionality. If the cheaper cloud-based system does not offer the functionality the company needs, choosing that one based solely on the price will ultimately hurt the company in the long run.

4. Underestimating the flexibility
Since cloud-based ERP systems are more uniform, many lack the customization features. When choosing a company's program, executives need to be aware whether the available features and functionality will be sufficient enough for the company's needs. If the system doesn't offer the required customization options, companies can get bogged down trying to implement a workaround that will do what an otherwise customizable ERP system will do. This can be tricky if the executives don't have a solid grasp on what they expect from the system.

By focusing on the functionality of the cloud-based system and the inherent qualities it provides a company, those in charge of choosing the system will have a better understanding of which one works best for them.

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