Cloud vs. On-premise

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Tackling the Cloud vs. On-premise Conundrum

The inevitability of the cloud

Regardless of where you are in your ERP technology update/acquisition cycle, you are probably assessing how the cloud can help your business. For most companies, the IT department already has an idea whether to keep applications on premise, move entirely to the cloud or implement a combined solution, and are typically the best advisors for the final decision. This info-sheet will help you guide the conversation with your IT team, business leadership team, and advisors.
For some business decision makers, this decision can be overwhelming and paralyzing, but it doesn’t need to be. There is no right or wrong answer – it’s just about what’s best for your business, and what’s available from the ERP software vendors. Alternatives should be considered and ruled in/out if you are being comprehensive in your assessment process.

Let’s start with simple definitions

Cloud computing has been the buzz now for several years, and it’s exactly what it sounds like; at its most essential, cloud computing means you access and house data and programs on the Internet, not your internal servers and hard drives. With a pure cloud computing solution, all data and programs are accessed via the internet. Some businesses are harnessing the power of the cloud for their entire operation. Some are staying on premise for their business. It’s truly a decision that is as unique as each business that makes it.

Hosting solution comparison

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Decisions covered in this article:

  • How Microsoft Dynamics stacks up in your ERP decision
  • Should you choose a cloud or on-premise ERP solution for your business

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On-premise

  • On site (hard drives and servers)
  • Installed locally, accessed internally
  • Security is in hands of the organization
  • One-time license fee (+ support, training, updates)
  • Lowest overall cost (depends on current environment)
  • Capital intensive up front
  • Best if financing is required
  • More customizable

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Private Cloud

  • Hosted at provider location – single client
  • Access over internet/private network
  • Shared infrastructure
  • Security in hands of vendor
  • Monthly or annual subscription (+ fees for support, training, updates)
  • Predictable costs over time
  • May end up spending more over the course of the system’s life
  • Support shared between implementation partner, hosting provider and ERP vendor
  • More stability and continuous updates
  • Less customizable
  • Faster to implement

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Public cloud

  • Hosted at provider location – multiple clients
  • Access over internet
  • Shared infrastructure
  • Security in hands of vendor
  • Monthly or annual subscription (+ fees for support, training, updates)
  • Predictable costs over time
  • May end up spending more over the course of the system’s life
  • Support shared between ERP vendor and implementation partner
  • More stability and continuous updates
  • Less customizable
  • Faster to implement

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What are the benefits of each solution?

Some ERP software vendors are completely cloud-based and only offer their applications over the web. Some vendors offer both on-premise and cloud solutions. And, depending on the customer’s needs, some vendors encourage customers to operate in a hybrid environment, with both cloud and on-premise software.

On-premise solutions are more customizable, and businesses have more control of their data. Think of it like designing and owning your house, and then paying off your mortgage. While it’s a big investment at the outset, in the end, it’s paid-for and fully customized for your preferences. The downside of on-premise solutions is that they can be more expensive up front, and some are weaker with mobile accessibility options.

The primary benefit of the public cloud is that businesses with little or no network infrastructure or IT staff can still have fully functioning business software solutions that their employees can access from the Web anywhere they happen to be. Which means that the benefit of the public cloud is mostly economical. You can potentially save money, time, and physical space by using the hardware, infrastructure, and software of a third-party provider.

The benefit of the private cloud is that it effectively uses the same tools and technology as public cloud computing but operates from within local data centers. “Cloud computing” refers to the public cloud as a technological term, and “private cloud” is effectively the same thing, but with higher levels of control and security.
The low cost of entry for cloud-based software—compared with potentially large, upfront perpetual license fees—has contributed to its widespread adoption. According to one study, 69 percent of enterprises were using cloud-based software or system architecture in 2014. It should be noted, however, that over time, system costs do appear to converge.

Which is best for your organization?

There are myriad options for businesses of all sizes when it comes to choosing a new ERP system. On-premise solutions provide more control, and cloud-based deployment models have made this software more accessible. It’s up to you to decide what works best for your business.

Once you’ve decided – tips for a pain-free implementation

1. Get support from upper management: Your project has the best chance for success with executive sponsorship.

2. Keep mobile users in mind: Mobile usage is trending to overtake computers, and your solution needs to accommodate “untethered” productivity.

3. Be on purpose about customization: Customization is essential to many businesses. Just be sure there isn’t already a standardized process that could work just as well before you invest in customizing.

4. Utilize change management techniques: An ERP implementation project can necessitate significant change within your organization. Carefully planned communications, workshops, and overall management of the change will determine the difference between your project’s success and failure. [see organizational change management article ]

5. Designate an internal ERP champ: And provide that person with tools for success.

6. Provide training for your employees: Accommodating change for your users with training and resources will create an environment that is set up for a successful implementation.

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