Global best practices for ERP security and data governance in the cloud era

Why ERP security and data governance matter more than ever

ERP platforms are designed to integrate functions across an enterprise, from finance to manufacturing to human resources. In a cloud-first world, these systems rarely exist in isolation. APIs connect them to payment gateways, logistics providers, customer service platforms, and countless other endpoints. While this connectivity drives efficiency and innovation, it also expands the attack surface.

Cybercriminals increasingly target ERP systems because they provide a single point of access to valuable data. At the same time, global data protection regulations are tightening, with laws such as the EU’s GDPR, South Africa’s POPIA, and California’s CCPA imposing strict rules on how personal and sensitive information is handled, stored, and transferred. Organisations that fail to secure their ERP environment face not only operational disruption but also significant financial penalties and reputational harm.

Building a strong security foundation

The starting point for ERP security is ensuring the core infrastructure is resilient against known threats. This means hardening every layer, network, server, database, and application configuration, according to industry-recognised frameworks such as the NIST Cybersecurity Framework or the Cloud Security Alliance’s Cloud Controls Matrix.

Patching and vulnerability management remain critical. ERP vendors such as SAP and Oracle release security updates regularly, often addressing severe vulnerabilities that can be exploited remotely. Organisations should adopt a disciplined patching cadence, with strict service-level agreements to ensure that critical updates are tested and applied as quickly as possible. In highly regulated sectors, proof of timely patching should form part of compliance reporting.

Identity and access management in a zero-trust world

Identity is the new security perimeter. With users accessing systems from multiple locations and devices, traditional network-based security is no longer enough. A zero-trust approach, which assumes no user or device is trusted by default, is now considered best practice.

Identity and access management (IAM) in ERP should be based on the principles of least privilege, where users are given only the access necessary to perform their roles. Multi-factor authentication (MFA) should be mandatory for all administrative and high-privilege accounts, and preferably extended to all users. Privileged access management (PAM) tools can help monitor, approve, and record high-risk activities, while just-in-time access can grant temporary permissions only when needed.

Equally important is regular access review. As employees change roles or leave the organisation, access rights must be updated or removed immediately. Automated identity lifecycle management tools can streamline this process, reducing the risk of dormant accounts becoming entry points for attackers.

Data residency and sovereignty

As cloud ERP adoption grows, data residency and sovereignty have become central governance concerns. Data residency refers to where the data is physically stored, while data sovereignty refers to which country’s laws apply to that data. Even if your ERP provider stores data locally, it may still be subject to foreign legal requests depending on the provider’s country of origin.

For global organisations, this can create complex compliance challenges. Regulations may require that certain categories of data remain within national borders, or that transfers only occur to countries with equivalent privacy protections. A clear understanding of your ERP provider’s data centre locations, backup strategies, and subcontractor relationships is essential. These details should be explicitly documented in cloud contracts and reviewed periodically as providers expand or restructure their infrastructure.

Preparing for the post-quantum era

While quantum computing remains in its early stages, security leaders are already preparing for its impact. Quantum computers, once sufficiently advanced, could break many of the cryptographic algorithms currently used to protect ERP data. The threat is particularly acute for data with a long shelf life, such as financial records or intellectual property, because adversaries could harvest encrypted data now and decrypt it later once quantum capabilities mature.

To address this, standards bodies such as NIST have finalised quantum-resistant cryptographic algorithms. Organisations can begin preparing by conducting a cryptographic inventory to identify where vulnerable algorithms are used in their ERP environment. Contract discussions with cloud providers should include their roadmaps for implementing post-quantum cryptography, and internal development teams should explore hybrid encryption schemes that combine classical and quantum-resistant methods.

Compliance and privacy as ongoing disciplines

Compliance is not a one-time activity. As new regulations emerge and existing ones evolve, ERP security and data governance frameworks must adapt. For example, breach notification requirements vary significantly between jurisdictions, both in timelines and in the level of detail required in communications to regulators and affected individuals.

A strong governance programme includes regular policy reviews, internal audits, and cross-functional collaboration between IT, legal, compliance, and operational teams. Data classification schemes can help prioritise protection measures based on sensitivity, ensuring that the most critical information receives the highest level of security.

Embedding security in cloud ERP contracts

Many security and governance expectations can be built into contracts with ERP and cloud providers. Service-level agreements should cover patch timelines, incident response procedures, and breach notification commitments. Data protection addenda should define encryption standards, data residency commitments, and rules for subcontractor use. Organisations should also seek audit rights to verify compliance with agreed-upon controls.

Where possible, contracts should include options for customer-managed encryption keys, allowing the organisation to retain direct control over access to its ERP data. This provides an additional safeguard against unauthorised access, even from the cloud provider itself.

A culture of continuous security

Technology alone cannot secure an ERP environment. A culture of security awareness and accountability is equally important. Regular training helps employees recognise phishing attempts and social engineering tactics, which remain common entry points for attackers. Simulated security drills can test incident response plans, ensuring that teams are prepared to act quickly and effectively when a threat emerges.

Security should be viewed as an ongoing process rather than a project with an end date. As ERP systems evolve and integrate with new technologies such as AI-driven analytics or IoT-connected devices, new vulnerabilities will emerge. Continuous monitoring, threat intelligence, and adaptive governance frameworks are essential to stay ahead of these changes.

The road ahead

The convergence of ERP, cloud computing, and global compliance requirements has created a challenging environment for organisations. Yet, with the right combination of infrastructure hardening, identity access controls, data governance, and forward-looking cryptographic strategies, it is possible to operate ERP systems securely in a hyper-connected world.

By treating cybersecurity and data governance as core business priorities, embedded into contracts, culture, and daily operations, organisations can protect their most valuable digital assets while building trust with customers, partners, and regulators. The cloud era offers immense opportunity for efficiency and innovation; securing ERP systems is the key to unlocking it safely.