You are a wholesale distributor and need ERP software for distributors to run your business. But should you look at Cloud-based ERP software or on-premises software? Cloud ERP solutions are rapidly taking market share, so that should tell you something. Also, aside from Cloud-based ERP software, more and more other software solutions are being delivered as Cloud-based services. You have only to look at how major software providers are moving to Cloud-based offerings like Microsoft’s Office 365, Google’s Workspace, Adobe’s Document Cloud and Creative Cloud to name a few. Gartner predicts that global end-user spending on public cloud services is expected to exceed $480 billion next year.
What is driving this shift to Cloud ERP solutions? In this article we look at some of the basic drivers of the growth in Cloud-based ERP software at the expense of on-premises software.
What is Cloud-Based ERP Software?
Cloud-based ERP software runs in a public or private Cloud and is accessed through a web address or URL over the Internet, using a web browser like Chrome or Edge. You can use any device and you don’t need any software other than the web browser. A software vendor like ADS Solutions installs, manages, updates, and maintains the Cloud-based ERP software, which runs in a public Cloud like Amazon Web Services (AWS) or a private cloud that the vendor offers. In contrast, on-premises software is purchased by the user and installed on the user’s owned on-premises server and managed, updated and maintained by the user.
One of the biggest benefits of Cloud-based ERP software compared to on-premises software is its ease of use. With on-premises systems you have to buy and configure the server, set up the server in a LAN and maintain, secure, and monitor the system. Then you have to install the ERP software and periodically install upgrades to the software. You also have to provide and maintain remote access for your off-site salespersons and IT specialists. All this makes the set up and management of on-premises systems difficult, time-consuming and expensive. With Cloud-based ERP software all this is taken care of for you. You don’t need a server and once the server is gone you may not even need a LAN. You don’t need to install or upgrade Cloud-based ERP software - it is always up to date. And you can access Cloud ERP solutions anytime from anywhere.
Getting Up and Running
With on-premises software, getting a new system up and running is a lengthy process. You need to buy the server, get it configured and joined to the LAN. Then you need to download and install the software. Also bringing different locations up on-premises, usually requires installing more servers. Adding eCommerce also requires adding servers or finding an eCommerce hosting company. With Cloud-based ERP software, this is all much more straightforward and no time is wasted buying configuring and installing hardware. Your system can be up and running in a couple of days. Scaling up or down is simple and can be done quickly to respond to changes.
In today’s world, we have to deal with Ransomware and other virus attacks every day. Staying abreast of these cybersecurity threats and blocking them is a huge undertaking with on-premises systems. Even more burdensome is the job of recovering once your on-premises system has been comprised. Public Clouds like AWS have hardened threat detection, intrusion prevention and remediation processes that are much more sophisticated than on-premises systems. Also, on a Cloud platform you have data redundancy and disaster recovery options that don’t exist with on-premises systems.
Even more importantly, the user interface of Cloud-based ERP software is a website which doesn’t allow installation of any code or provide direct access to the database. So, with Cloud-based ERP software a compromised password, for example, won’t let a virus in or give an attacker access to the database. In contrast an on-premises system can be breached in multiple ways including email scams, and once a virus gets into your LAN it can infect everything on the network including your ERP database.
Availability and Performance
On-premises software is often down because of hardware issues, operating system updates, software upgrades, etc. You also have the headache of tracking down the IT specialist you need when you have to respond to a problem. Down time is substantially reduced with Cloud-based ERP software which runs on a Cloud platform that uses standardized, virtual servers that are constantly upgraded and updated. For example, AWS delivers greater than 99.95% uptime. Also, on-premises servers can slow down if there is a big load on the server. This is not the case with Cloud ERP solutions that are designed to run on load-balanced, auto-scaling servers. If there is a big load the system automatically adds another server.
Another major advantage of Cloud-based ERP software over on-premises software is in the cash-flow profile. With Cloud-based ERP software the initial outlays are much smaller. With on-premises systems you need to purchase the hardware and the software upfront, and you need the IT department to dedicate resources to get the system set up. Also, when you’re purchasing on-premises servers, you need to invest in more than you currently need to allow for growth. With Cloud-based ERP software you just pay an annual subscription fee that covers the use of the Cloud-platform, the use of the software and the maintenance, and you can pay only for what you need now. This lower upfront cost of Cloud ERP solutions frees up cash to allow you to invest in growing your business rather than investing in hardware and software. With an annual subscription fee budgeting is easier than having to plan for unknown, hardware or IT costs that you could incur with on-premises software.
There are structural reasons why the ongoing all-in cost of Cloud ERP solutions should be lower than the cost of on-premises software. What are these reasons? Unless you’re buying hundreds of servers at a time, Cloud providers like AWS can purchase and configure standardized servers at a fraction of the cost you can purchase one server and have your IT department set it up. Also, the costs of monitoring and securing a Cloud platform will be considerably less per server than your IT department can deliver. Similarly, the Cloud-based ERP software publisher’s costs of deploying, and upgrading the software are significantly less than the costs you would incur to have your IT department download and install the software and upgrades. To compare the costs of Cloud ERP solutions to on-premises software you need to come up with a true all-in cost of on-premises software. This is not easy to do - it involves the cost of the hardware the software, upgrades, IT costs as well as a probability weighted cost of remediation after a cyberattack, and all these costs have to be amortized over the life of the system. When this is done correctly, it should always result in a lower all-in cost for Cloud-based ERP software.
Accolent ERP is Cloud-based ERP software and runs completely in the AWS Public Cloud. Accolent ERP is optimized for small and medium sized wholesale distributors and services businesses. Contact ADS Solutions today to demo Accolent ERP