Cloud ERP Compared to On-Premises ERP
You are a wholesale distributor and need ERP software to run your business. Your ERP software provides sales management, CRM, multi-channel eCommerce, order management and processing, inventory control and tracking, purchasing management, warehouse management, accounting and financial management, and more. But how do you think about Cloud ERP compared to on-premises ERP? Cloud ERP solutions are rapidly taking market share, so that should tell you something. Also, aside from Cloud 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 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 how to consider Cloud ERP compared to On-Premises ERP as well as some of the basic drivers of the growth in Cloud ERP at the expense of on-premises ERP.
What is Cloud ERP Software?
Cloud 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 publisher like ADS Solutions installs, manages, updates, and maintains the Cloud ERP software, which runs in a public Cloud like Amazon Web Services (AWS) or a private cloud that the software vendor offers. Unlike Cloud ERP, on-premises ERP 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 ERP compared to on-premises ERP software is its ease of use. With on-premises ERP 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 setup and management of on-premises ERP systems difficult, time-consuming and expensive. With Cloud ERP in contrast to on-premises ERP all this is taken care of for you. You don’t need an ERP server and once the ERP server is gone, since so many other enterprise applications are already on the Cloud, you may not even need a LAN. You don’t need to install or upgrade Cloud ERP software - it is always up to date. Because Cloud ERP is always up to date, you'll get the productivity enhancements of new functionality much sooner than with on-premises ERP. And Cloud ERP compared to on-premises ERP solutions can be accessed anytime, from anywhere, using any device which improves productivity for yor remote workers.
Getting Up and Running
Getting up and running on Cloud ERP compared to on-premises ERP is much simpler. With on-premises ERP software, getting a new system up and running is a lengthy process. You need to buy the server, get it configured and join it 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 ERP, 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.
The security of Cloud ERP compared on premises ERP systems is typically substantially greater. 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 an on-premises ERP system has been comprised. Public Clouds like AWS have hardened threat detection, intrusion prevention and remediation processes that are much more sophisticated than typical on-premises systems. Also, on a Cloud platform you have data redundancy and disaster recovery options that don’t typically exist with on-premises systems.
Even more importantly, Cloud ERP compared to on-premises ERP has fewer attack vectors. The user interface of Cloud ERP is a website which doesn’t allow installation of any code, nor does it provide direct access to the database. So, with Cloud ERP a compromised password, for example, won’t let a virus in or give an attacker access to the database. In contrast an on-premises ERP system can be breached in multiple ways including email scams, and once a virus gets into your LAN it makes its way to the domain controller and then can infect everything on the network including your ERP database.
Availability and Performance
Cloud ERP compared to on-premises ERP will typically provide much better uptime. On-premises ERP 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. Downtime is substantially reduced with Cloud 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 which runs on load-balanced, auto-scaling servers. If there is a big load the system automatically adds another server.
Another major advantage of Cloud ERP compared to on-premises ERP software is in the cash-flow profile. With Cloud ERP software the initial outlays are much smaller. With on-premises ERP 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 ERP servers, you need to invest in more than you currently need to allow for growth. With Cloud 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. The lower upfront cost of Cloud ERP compared to on-premises ERP 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 ERP software.
There are structural reasons why the ongoing all-in cost should be lower for Cloud ERP compared to on-premises ERP 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 per server that 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 ERP software publisher’s costs of deploying, and upgrading a multi-tenant system per software user are significantly less than the costs you would incur to have your IT department download and install the software and upgrades. To analyze the cost of Cloud ERP compared to on-premises ERP you need to come up with the true all-in cost of on-premises ERP 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 ERP compared to on-premises ERP software.
Accolent ERP Cloud ERP software and runs completely in the AWS Public Cloud. Accolent ERP is optimized for small and medium sized wholesale distributors, light manufacturers and services businesses. Contact us today to demo Accolent Cloud ERP and compare to on-premises ERP.