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Is Putting Your ERP System in the Cloud Right For You?

Three or four years ago, the question posed in the title of this blog post was seldom, if ever, asked.  But, if it was asked, another question usually had to be answered first…what is a cloud?   That was a few years ago and things have changed since 2009.   Most people have a working understanding of what a cloud is, but they are still struggling with the question: Is putting my ERP system in the cloud right for my business?

According to the Aberdeen Group, between 2009 to 2011, organizations willing to consider traditional on-premises hosting solutions for their ERP applications decreased, but the willingness to consider Software-as-a-Service (SaaS) or Cloud solutions increased.  The trend to outsource mission critical systems like ERP applications has been growing as businesses gain more trust in third-party SaaS and Cloud hosting providers.

However, from 2011 to 2012, another change has taken place that indicates ERP deployment options (Traditional on-premises vs. SaaS vs. Cloud) are leveling out, and the percentage of difference between them has remained static for the past year.  In other words, the percentage of ERP deployments as SaaS or in a Cloud has increased only slightly since 2011. There is still a strong tendency for organizations to consider cloud-based solutions, but this trend is seen more in the small and mid-sized companies rather than in the larger organizations.

The larger companies appear to be taking a wait-and-see approach right now as they follow the tremendous technological upheavals and advances that are occurring. With expensive game-changers like Big Data, Mobility, and Business Intelligence all vying for attention and dollars, it’s no wonder the larger companies are taking things a bit slower.

For almost all organizations there are many factors to consider regarding their ERP systems, with deployment as just one consideration.   However, once an organization makes a final ERP selection or re-commits to the ERP system they have currently, then how it is deployed and supported becomes extremely important.

ERP Deployment Methods

Not too many years ago there was just one deployment method – it was on-premise using physical servers.  Now there are three different deployment categories. The Aberdeen Group provides the following definitions for those categories:

  1. Traditional Licensed On-premises: software is licensed for use on a particular computer or for a set number of users and the software is located in-house.
  2. SaaS or On-demand:  software is not licensed or owned by the end-user, it is provided as a service by the vendor.  The service is paid for on a subscription basis and can be accessed by way of the Internet.   SaaS is sometimes referred to as a Public Cloud.
  3. Hosted or Private Cloud: Licensed applications are hosted by a third party.  This deployment method may be in a separate instance on a separate piece of dedicated hardware (Private Cloud), or in a separate virtual instances that is dedicated to a single organization where the application is running in a multi-tenant environment.

Which Deployment Method Should You Use?

Before you decide which deployment method to use for your organization, it is a good idea to take a long look at the following list and make sure you can confidently answer each question:

  1. Does the ERP system have the functionality you need?
  2. Can you support the system in-house?
  3. Is your ERP system used to support a global business?
  4. How much time do you have to implement the ERP system?
  5. To what extent is security an issue?
  6. What happens if the ERP system goes down?
  7. How do you want to pay for the ERP system?

There is no right or wrong answer to any of the above questions, but your answers can guide your decision about how to deploy the ERP system.

Because an ERP decision involves a long-term financial commitment, as well as the infrastructure and human resources needed to manage the entire ERP environment, it is vitally important to make the right decision. It all boils down to the ERP system delivering the functionality needed to operate the business at peak efficiency. Is it better to host the system in-house, or find a SaaS provider, or purchase the ERP licenses yourself and outsource to an enterprise-level Cloud provider?

While the trend for most companies has been moving towards SaaS and Cloud models, the cost of providing all the support and infrastructure in-house has become increasingly large. This makes it more difficult to build a strong business case in favor of traditional in-sourcing of ERP systems. With some ERP vendors offering systems in a SaaS model, those can be a good alternative as long as the application can provide all the functionality and performance needed. The SaaS model can also take away some of your ability to customize the ERP system to meet any specific needs.

For many mission-critical ERP systems a Private Cloud is the best of all worlds.  The ERP system can deliver all the functionality required by the business, without sacrificing performance for high security. Add to the functional benefits the fact that a Private Cloud is often more cost effective than in-house hosting and you have the best candidate to build a rational business case around.

Secure-24

Secure-24 offers all the services and systems needed to host your ERP environment in a secure Private Cloud, and it can be in either a virtual or traditional infrastructure. By providing SOC 1 Type 2 certified hosting centers, Secure-24 is ideally positioned to give our clients the security and peace of mind they need by knowing their ERP system is running at peak efficiency and is in the safest possible environment.