ERP Strategies: Cloud ERP or On-Premises or Hybrid Deployment
On-premises ERP used to be the only choice, and up until recently was hovering as the preferred choice for an organization’s mission critical ERP.
According to the Aberdeen Group, a leading research organization, the acceptance of the cloud as a choice to be considered for ERP deployment is now at 59% (2016). This number has more than doubled since 2009 where it was only 23%. With technology advancements, cloud benefits and many of the earlier security concerns being addressed, cloud ERP has become a good option for many.
Cloud ERP solutions can offer advantages over on-premises deployment. Sometimes offered as Software as a Service (SaaS), Cloud offerings are subscription based with the ERP solution hosted by the vendor. Access is provided over the internet or via a hybrid deployment of both direct internet access and client based installations.
Upon initial thought, one would think that the biggest benefit of moving to cloud ERP would be cost savings. Cost savings for cloud ERP can range from savings in hardware requirements, IT salaries, maintenance updates and more. However, the real benefit according to the Aberdeen Group’s research can be found elsewhere.
The Aberdeen Group’s research points to ‘the cloud’s ability to provide a single, centralized platform for all data needed to run an organization which can be accessed no matter where employees are’ as the number one driver of cloud deployment.’ With that, according to the Aberdeen Group’s research as of July 2016, the top six reasons organizations were looking to move to the cloud were as follows:
- Standardization onto a single system across multiple entities – 35%
- Need to collaborate amongst growing number of locations – 29%
- Scalability – 27%
- IT cost reduction – 23%
- Cost of capital funding is too high – 19%
- Dated technology infrastructure which slows down responsiveness – 17%
And yes, on-premise solutions require a larger upfront investment and an IT expert or an ERP consultant to maintain the system, and cloud ERP solutions offer a lower entry point, there are still some things to consider.
- Monthly cost for the cloud ERP solution including users
- Breakeven point for the cloud ERP solution
- Customizability of the cloud solution
- Scalability of the cloud solution
- Support and training options
- Software updates – how often and when.
- Hybrid ERP Solution
A hybrid solution, like Epicor ERP 10, combines on-premises with the cloud deployment. For example, a large, multi-site enterprise may have the ERP software installed on-premise at the corporate office while the subsidiaries deploy cloud ERP. By doing this, the enterprise saves money on hardware and maintenance costs as well as IT costs at the subsidiary level but gains benefits such as standardization across entities and collaboration.
As a final note, if your management team is comfortable with a cloud-based solution, then it is worth considering. Cloud solutions don’t always offer the robustness of an on-premises solution, or the customization and integration capabilities, so regardless of deployment, it is always advisable to ask to see a demonstration of the features or functionality most critical to your business.
If you have questions, or would like to learn more about ERP deployment options or Epicor ERP, or Epicor SaaS, contact MIS today.
“Cloud ERP’s Time Has Come,” The Aberdeen Group, July 2016