In recent years, Cloud computing has revolutionalized the IT industry by introducing a whole new concept and platform of enterprise systems (ES). The traditional ES seem to be too clunky, expensive and complex for most organizations to implement anduse. To improve such situation Cloud ES concept was recently introduced to offer competitive advantage to organizations through flexibility, scalability and independence in IT infrastructure and capabilities. Today, this area has not been fully explored in the academia due to little available literature but it has attracted tremendous interest from the general practitioners. This study seeks to contribute to IS literature by conceptualising Cloud ES from a pragmatic understanding between practitioners and academic. It further elaborates the advantages and challenges of Cloud ES and discussesthe potential of Cloud ES as an attractive option to SME in solving the problems of high investments in IT infrastructures and IT resources.