With cloud computing taking the world and New Zealand along with it by storm, there’s a pertinent question to be asked of Enterprise Resource Planning software: does it, too, belong in the cloud?
The simple answer is yes, it does. The less simple answer is an extension, which goes ‘yes it does, if that’s what works best for your company’. For many organisations, this isn’t the case. On-premise is still best in multiple scenarios for reasons which range from somewhat banal (the availability of connectivity), through to governance requirements, or complexity which necessitates an on-premise deployment over a cloud architected one.
iStart, which does a good job of covering ERP, has a couple of articles worth reading looking at on-prem versus cloud, explaining how and why you can expect to see both in the market for the foreseeable future.
Now, one of the major selling points for cloud anything has always been cost. Cost is a major advantage in many instances, but it isn’t the absolute cost which is typically calculated. Instead, it is the relative cost, and here cloud does do particularly well because it operationalises a capital expense.
However, if the lifetime cost is calculated, the reality is that cloud versus ERP stacks up relatively evenly over the long term; in fact, cloud could even end up costing more; this is delved into in another iStart piece which points out that ‘Cloud financials may not be cheaper than on-prem’. That’s according to research from Gartner.
Cost also depends to an extent on the availability of capital; for capital-flush companies, paying monthly or paying the lot up front might make no difference whatsoever (and we all wish we were running capital-flush companies).
Loans, too, can effectively operationalise the cost of anything, and if a loan comes in at a low interest rate or if the solution is vendor-financed, there might be little distinguishing payment regardless of how your software is configured and delivered.
With cost removed from the equation, the real purpose of ERP is all that’s left to focus on. And in this regard, the devil is in the detail and for many companies to this day, an on-premise solution remains the best answer. For others, a hosted version is optimal.
And on this point – a remotely hosted ERP solution – it is worth delving a little deeper.
One of the recurring criticisms or noted shortcomings of an on-prem or hosted solution, is the apparent lack of accessibility when compared with cloud solutions. Of course, in the old days, this was an entirely valid observation. However, these days on-prem and hosted solutions absolutely can be extended to mobile devices, providing all the access you might require. This is an issue which has been solved in modern on-prem or hosted solutions.
Then, let’s look at cloud software more broadly. Typically, cloud is associated with no or low-customisation; in other words, it’s ideal for organisations with ‘vanilla’ requirements, because it can be rapidly rolled out with most modules and processes pretty close to, if not bang-on, standard.
In other words, the choice of an ERP solution comes down to what’s best for your business and your use case. For probably the vast majority of organisations, cloud is indeed the best option, because it is accessible from multiple perspectives, including financial, technical and in terms of the capabilities required.
Certainly, for small or new businesses, cloud is a classic ‘no brainer’. But it isn’t the only option on the table. Some small or new businesses, for example, might have few staff but highly complex or unusual processes. In these instances, hosted or on-prem may well be the better answer.
It is for these (and plenty of other) reasons that a range of options is valuable; when your solution provider has this full range available to you, you can also be sure that with more tools in the toolbox, the right one is more likely to be selected.
If you’d like to learn more about ERP configuration options or look at what’s best for your organisation, do get in touch.