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Whether it’s SAP, Oracle, MS Dynamics or whoever, the opportunity to switch from traditional on-premises ERP software to a cloud-based ERP ‘software-as-a-service’ approach is one that all organisations should at least consider. Do the advantages outweigh the disadvantages? Would it cost more in the long run for less hassle overall, or vice versa? Here we lay out some arguments and counter-arguments to help you decide.
According to Gartner, 47% of businesses plan to move their core ERP systems to the cloud by 2019-2020, so you’d hardly be a deranged maverick if you threw in your lot with them.
It’s tempting to go with the crowd, but what if the specific circumstances of your business stand you apart from other organisations? The same Gartner survey found a hardcore of 30% with no plans to embrace cloud ERP for the foreseeable future. Who’s to say they are making the wrong choice by eschewing cloud ERP and sticking to what they know, when they know what’s right for them?
Cloud means that ERP systems are no longer the exclusive playthings of elite multinationals. That’s because the economics of operating and consuming this technology are simplified into a predictable and affordable monthly cost, scaled to your size and usage.
This lowers the barriers of using advanced technology as a competitive enabler – good news if you’re a David rather than a Goliath. Just remember that it potentially makes slow-moving giants more agile and dynamic too.
Preserving CAPEX is a major priority for businesses large and small, hence the revolution we’ve seen in new IT consumption models enabled by cloud technology. Stripping away the hassles of on-premise ERP means you enjoy a service experience and can concentrate more on your core business, instead of having to be an expert on the huge lump of technology sat in the corner.
But it’s not quite that simple in reality. Ultimate responsibility cannot be outsourced, and you will find more challenges in securing your data in virtual cloud environments than if you controlled them on your premises. Compliance mandates are very hot on data residency and ‘territoriality’ and your software vendor will leave it up to you to solve that problem. Another advantage of an on-premise ERP is the control you have over application performance. Cloud performance is typically excellent but you may be more reliant on third parties to assure it.
ERP deployments are notorious for their sluggishness. If you want your new ERP spun up quickly, then the more cumbersome on-premise approach could take significantly longer than the web-scale, service-friendly principles of cloud.
That’s the theory anyway. In practice it will depend on your organisation, how you intend to use your ERP and what underlying processes (and legacy ERP systems) are already in place. It could be dangerous to assume that a cloud-based ERP deployment would not share many of the implementation challenges of the on-premises approach, simply by virtue of different IT delivery and payment models.
So here’s the compromise: hybrid ERP. I’m calling it the hokey-cokey paradigm. Not in, not out – more a case of ‘shake it all about’.
Hybrid ERP is a horses-for-courses, business function by business function approach. Keep your on-premise instance for a given component like sales and marketing, and expand out into the brave world of cloud ERP for something like inventory management.
Look at it this way. If you wanted to abandon on-premise ERP and migrate to cloud, you’re as likely as not to pursue this gradual bit-by-bit approach too. If you’re risk averse and feel like sticking to your guns, you’d be daft not to test-drive a business case for putting just a piece of the ERP puzzle in the cloud.
Cloud ERP makes it easier to upgrade new versions, but can be less accommodating to bespoke tinkering and tailoring. Undergoing the process of cloud ERP migration means adding a new skills requirement, even though the purpose of deploying cloud ERP is often to reduce it.
For and against arguments like these have a tendency to go on and on. What you gain on the swings, you lose on the roundabouts.
Helastel is passionate about the added possibilities of cloud ERP, but realistic about just how far these extend and what new obstacles it can throw up.
Stick or twist, there’s a lot of promise in the ERP space, and we’re as committed as ever to changing risks into opportunities and helping businesses achieve their full digital potential.
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