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In today’s business world, you need to be sure when putting your proprietary data into cloud computing systems that it’s safeguarded by a trusted “watchdog”. You can’t just hand it over to anyone, or anything – especially if you’re in professional services that are heavily regulated. So, should your ERP solution be in the cloud at all? Experts would say yes, with a lengthy caveat.
When considering an ERP system for your business, you have many choices. As you ponder the available options, one of the most important decisions you’ll need to make is whether to use a cloud-based ERP solution, or one that’s installed locally, or on-premise.
The basic difference between on-premise ERP and cloud ERP is: On-premise ERP solutions are installed locally on your company’s hardware and servers and then managed by your IT staff while cloud ERP—also called SaaS, or Software-as-a-Service—is provided as a service. With this type of deployment, a company’s ERP software and its associated data are managed centrally in the cloud by the ERP vendor and are accessed by customers using a web browser.
The type of ERP deployment model you choose can impact your business significantly.
Here are some key factors that you need to consider when weighing whether to use on-premise or cloud-based ERP software:
What is Cloud ERP Software?
Cloud-based computing (also called Software as a Service, or SaaS) allows users access to software applications that run on shared computing resources (for example, processing power, memory, and disk storage) via the Internet. These computing resources are maintained in remote data centers dedicated to hosting various applications on multiple platforms.
Cloud ERP is Software as a Service that allows users to access Enterprise Resource Planning (ERP) software over the Internet. Cloud ERP generally has much lower upfront costs, because computing resources are leased by the month rather than purchased outright and maintained on premises. A cloud ERP solution also gives companies access to their business-critical applications at any time from any location.
While technically the only difference between Cloud ERP and on-premises ERP is where the software is physically located, there are other significant differences.
Here, we’ll explain some of the key characteristics and advantages of Cloud ERP software.
The Cloud is particularly valuable to small and medium-sized businesses because it provides access to full-function applications at a reasonable price without a substantial upfront expenditure for hardware and software. Using the right cloud provider, a company can rapidly scale their business productivity software as their business grows or a new company is added.
With Cloud ERP You Have No Ownership Costs
An on-premise ERP solution usually requires large upfront and ongoing investments to purchase and manage the software and the related hardware, servers, and facilities necessary to run it.
If your company doesn’t have a large or experienced in-house IT staff, you may also have to also invest more time and money in additional personnel and train them. Even more importantly, an on-premise ERP solution requires that your IT team spend a substantial amount of their time ensuring your system is up-and-running when you need it, including maintenance of hardware, server rooms, and more. When it’s time for your ERP system to be upgraded, IT must then redeploy the system across the various users’ computers and re-implement various customizations and integrations that your business installed on your previous software.
For a cloud-based ERP solution, initial costs are typically much lower because you simply implement the software to your requirements and then access it through your computer’s internet connection. A cloud ERP provider (such as CPU) hosts and maintains all of the IT infrastructures for you, ensures the system is always running, that the data is secure, and that product enhancements are rolled out painlessly to your ERP solution without breaking your previously implemented customizations.
Ultimately, this all allows your IT resources to focus on innovating and helping grow the business more effectively, rather than spending a disproportionate amount of their time on maintaining and managing your on-premise systems. A cloud ERP solution from Computer Programming Unlimited also offers a predictable, pay-as-you-go subscription model that can make cash flow management and planning much easier.
Over time, those IT savings add up. When comparing the total cost of ownership of on-premise ERP solutions relative to cloud systems, one industry analyst study found that cloud-based ERP can cost 50 percent less than on-site ERP for a 100-employee company over a four-year period.
System Upgrades and Enhancements
On-site ERP software can be customized, but those customizations are tied to your current software deployment and are not easy to re-implement with future versions. As your on-site ERP provider releases new product updates and enhancements, your previously implemented customizations will be wiped out when you upgrade and your IT team will have to start customizing from scratch again. That’s the main reason many companies simply avoid upgrading their on-site ERP software and just settle for running their business on out-of-date technology.
Need an upgrade? Two-thirds of mid-size businesses are running outdated versions of their ERP software.
In contrast, cloud ERP solutions like CPU’s are continually upgraded, so you can be sure you’re always using the latest, most advanced version of your ERP software. Because of the cloud platform today’s leading cloud applications are built upon, your previously implemented customizations and integrations automatically carry forward when the solution is updated without additional investment.
Improved System Performance and Accessibility
Cloud ERP often delivers better performance than on-premise solutions. Cloud software architecture is designed from the ground up for maximum network performance, which can mean better application availability than traditional on-site ERP systems. Cloud-based ERP also offers optimized performance that can adapt to your needs. If there is a spike in your business, cloud ERP automatically adjusts and dynamically provisions additional resources to handle the surge.
For example, CPU customers experience 99.98% average uptime performance over the past 12 months and makes uptime performance information available to all customers 24/7 on our website. A local IT department is unlikely to be able to achieve these results, and may not even be able to regularly report their system uptime results to management.
It’s also important to note that cloud-based ERP provides real-time data that can be accessed via the Internet anywhere at any time. That means that staff at your company can see accurate information on laptops, smartphones, and tablet devices while they travel or telecommute—all without extra setup fees or ongoing costs.
Not only can cloud-based ERP provide better performance and greater accessibility, but better security as well. Because it’s part of our core competency, Cloud ERP providers like CPU make securing their systems a top priority by providing strong, industry standard data security certifications such as compliance with PCI DSS and SAS 70 standards.
Faster Deployment Time
Every ERP deployment takes time and requires careful planning, but cloud ERP offers clear advantages when you consider the speed of deployment. Since cloud ERP requires no additional hardware, your business doesn’t have to waste time procuring and installing IT infrastructure.
With cloud ERP, you can easily roll it out across multiple regions, subsidiaries, and divisions, avoiding the cost associated with those rollouts. If you chose a cloud-based ERP system, these differences can add up to a significant time saving: Cloud ERP deployments usually take 3-6 months compared to the 12 months that it typically takes to implement an on-premise solution.
Cloud-based ERP systems are also easier to scale, giving you the flexibility to add more users as your business grows. On-site ERP solutions don’t offer the same freedom—to give more employees access to an on-site system, it’s often necessary to provide additional hardware.
Get the Cloud-Based ERP Solution You Need from CPU
Each business is unique, so taking the time to consider how the various ERP deployment options will affect your company is critical (and we can help you determine that).
To learn more about deploying a cloud-based ERP solution, contact us at (419) 872-9119 or info@CPUonline.com for more information – we’re located in the Toledo OH area and are happy to serve businesses of all industries here.
Published on 12th December 2017 by Jeanne DeWitt.