While few things shock these days, a business decision to implement an on-premises ERP in this cloud era is a ‘surprise’ moment.
We all lose sales opportunities at times; that’s the nature of business. We mourn, and we move on. But what drives genuine long-term disappointment is seeing a company making the deliberate decision to, in effect, go technologically and financially backwards.
The gap between the business benefits of on-premises and cloud ERP systems has grown exponentially in the last few years. So, in case you’ve not caught up, here’s a quick guide to cloud vs on-premises.
1. Let’s talk cloud, on-premises, and COVID
Businesses have collectively endured two of the most disruptive years in recent history. Worst case scenario, we’ve been unable to open at all. The luckier of us have sent our people to work at home, or maintained essential on-site staff numbers who have endured rigorous restraints to everyday work life.
For those with cloud-based infrastructures, it was to a large degree business-as-usual. Administration, sales, financials, aged payables and receivables, marketing, professional services and more, could all be done from home. All that was required was an internet connection and a device.
Those businesses reliant on on-premises solutions fared poorly. Access to applications was harder; IT security faced new challenges as teams unused to remote working struggled to log in via VPNs to securely login, share or download data, documents and more.
It was hard work, and a far cry from the seamless technology experience most people are used to these days. And as far as scaling business capabilities up or down, or even pivoting to attract new markets — it was like climbing Everest in ballet flats.
2. Ownership vs lease comes at a cost
Maintaining a commitment or making a new investment in an on-premises ERP is not cheap.
Just as buying company vehicles attracts unsustainable running, depreciation, and service and replacement costs, so does hosting your software on an internal server. As well as requiring a specific garaging environment (dust-free, temperature-controlled, and secure), servers are prone to failure and have a limited lifespan. Then there’s the software itself. Upgrades, patches, and backups usually require manual intervention and need an internal or contracted resource or business to manage.
As for cloud ERPs — they’re subscription-based. They’re designed to allow you to focus on running your business, not supporting an IT infrastructure. And after your initial investment in implementation and data migration, it’s pay-as-you-go. So, you’ve got a predictable OPEX, which can quickly scale up or down along with your business needs.
Cloud ERP is also hands-off, in a good way. SaaS ERP is always up-to-date, compatible with other applications, is available from anywhere with an internet connection, is secure, and has automated backup and recovery.
And keeping it in tip-top running condition isn’t your responsibility. As a result, you’re freed from the ownership costs of expensive physical servers. And liberated from the ongoing expense of middleware, databases, networks, operating systems, user interfaces, virtual agents, support staff, and replication for failover and high availability.
With a cloud ERP, you’re investing in a modern cloud application that’s technologically risk-free, globally accepted and proven around the world. As well as supporting your business with the most current version, features, functions, and all-important mobility, a cloud ERP is constantly improving. It will have millions and millions of R&D dollars invested annually from the global software vendors committed to improving their software. So there’s no need to make a conscious price- and hassle-based decision about moving to the next version, and worry about the impact on your business. The process of continuous improvement of cloud ERP is part of the package.
Unless the circumstances are unique, it’s hard to see the sense in embracing a high-risk, on-premises solution that drives up costs and requires hands-on IT team management.
3. Customisation is so yesterday
Historically, customising software was costly and complex. Hard-coded modifications are difficult to maintain through upgrades and integrations and often reflect outdated and less than optimal business processes. Customisation was usually the result of a team demanding that the software replicate their own way of doing things — step by painful step.
By comparison, with a modern cloud ERP, you’re no longer constrained by hard-coded customisation — in fact, the base code is untouchable. So while your technology partner can stretch, bend, manipulate, personalise, and configure your ERP to meet your business needs, it’s all done without touching the underlying code. This doesn’t mean that you’re constrained, just that your partner (whoever they are) can’t break it, and upgrades are supported.
And best of all, some ERPs come with best-practice options for a range of industries, so the most up-to-date, fully streamlined processes are already there and ready to use.
4. We live in strange times
It’s a matter of record that Christchurch, New Zealand, has suffered more earthquake damage in recent times than any other city in New Zealand. And Australia has been beset by any number of natural disasters, from cyclones to raging bush fires.
The businesses that stored their data offsite were least affected by these events. Cloud computing provided a level of business continuity that played a crucial role in enabling companies to recover more quickly. End of story.
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