Cloud ERP has grown quickly over the past few years; however, questions remain around the cost-effectiveness and benefits of these solutions. Some say it is cheaper to maintain on-premise installations compared to the Cloud. They argue that hosting is expensive and that companies still need IT staff to manage the hardware and systems that remain on-site. In addition, they assert that poor integration with hosting centers still gets in the way, and is more expensive and unreliable than integrations on-premise, particularly with applications that cannot interoperate. Some also find that Cloud vendors hide many fees that raise the price of their services, and that there is a lack of customization that forces businesses to conform to a limited set of Cloud model offerings.
While there may be some exceptions that would support the points above, my experience and observations of this industry have proved the opposite. I have found that Cloud ERP is much more cost-effective than on-premise solutions, and that only the Cloud can offer the flexibility, security, and cost-effectiveness that businesses are looking for today. Here’s why.
For starters, let’s consider mid-market ERP software that requires a cluster of at least three servers to support portal technology. Following industry best practices, you’ll want a separate test environment for User Acceptance Testing (UAT) and upgrades. This doubles your server needs. Virtualization can work quite well for client applications, but still lacks performance for SQL Server data which is why server configurations are often complicated with virtualization. Most properly configured Cloud environments store data while virtualizing the rest of the stack in a storage area network (SAN). SANs however, are usually beyond the reach of mid-market companies. Factor in the need to replace your hardware every three years, monthly service packs for all servers, and other system administration requirements and you’ve got an accurate estimate of a typical in-house system. A little pricy to say the least.
There is a growing gap between what good Cloud service providers can deliver compared to expensive on-premise environments. The biggest difference is in the depth and variety of capabilities that are available with the typically large, specialized IT support included with good Cloud environments. It’s a rare single in-house IT person – or small IT department – that can fully know and support the entire required technology stack, compared to the robust IT support that the Cloud can provide. Access to a Cloud provider’s depth and available personnel is far less expensive than hiring in-house. In fact, our numbers have shown that our Cloud customers have 80% fewer issues than their on-premise peers. Of course, there’s nothing fundamentally “wrong” with the on-premise system and support– it’s just that the Cloud provides an easier alternative to meet higher standards and become more efficient.
Regarding the argument that the Cloud makes integration more difficult, I would counter that integration is never easy regardless of whether it’s in the Cloud or on-premise. Cloud integration options are now moving towards established web services for each application and new mapping/integration technology to pull it all together – in other words, integration is getting a whole lot better in the cloud. Providers like Boomi, Cast-Iron, Pervasive, Adeptia, and CLEO promise seamless integration for web-services enabled applications, and some of these actually do deliver on that promise. Today, EAI (Enterprise Application Integration) is more of a reality than EDI (Electronic Data Interchange) ever was. In fact, it can be a better way to support EDI. Cloud-to-Cloud CRM/ERP integrations can be done in 60 days or less, supply chain integrations in about the same time frame, and ERP-to-ERP (hub and spoke) in around 4-5 months. These timeframes are now a reality improving ROI and increasing efficiency.
Moving ERP to the Cloud doesn’t fully remove the need for in-house IT staff, however, it definitely re-defines the role of your over-stretched IT support resources. Once the complexities of an in-house ERP stack are eliminated by switching to the Cloud, companies can refocus their IT staff to value-add roles like business and report analysis. Desktop support is still required, and network/internet access is more important than ever, but repurposing some maintenance staff to true value-add roles can be extremely beneficial.
In short, I think it’s becoming harder and harder to ignore the true benefits of Cloud ERP. The naysayers are now having to split hairs over piddling issues. Cloud ERP is becoming the solution of choice for businesses looking for flexible, secure and cost-effective solutions.
Want to explore Cloud ERP for your technology business? Give us a call at 888.450.4030 x411 or salesteam@tensoft.com.
By Tensoft, Cloud ERP Partner for the Technology Industry