08 Sep Why cloud ERP? …why not?
Why cloud ERP? …why not?
If you could access full-function ERP for a manageable fee in a matter of minutes, wouldn’t you want that? Discover why this is possible with the cloud.
COVID-19 has been an eye opener. As the pandemic swept across the globe, it highlighted the vulnerabilities of not only us as humans but also of companies – certain sectors and industries more so than others.
But it wasn’t doom and gloom for everyone. For some businesses, COVID-19 led to a boom in sales, however many more missed the opportunity because they were hampered by outdated infrastructure and on-premise technology. They couldn’t pivot, scale or be agile.
This is one of a half a dozen key reasons why your business should be either moving to cloud-based ERP now or at the very least be in the process of mapping out how to do so in the coming months (not years).
Today, let’s dive into the factors that make cloud interesting (and potentially very lucrative), and learn why we always answer the question “why cloud ERP?” with “why not?”.
Wondering about digital transformation more broadly? Start here: “Digital transformation: What is it, and how do you start?”
Understanding cloud technology
Believe it or not, cloud is the new standard for business computing and delivery of software/applications. If you’re using a mobile device or accessing the internet right now, you can be pretty sure you are using some form of cloud-based technology to do so.
Cloud has many forms, but in this article we’re going to focus on software as a service (SaaS) – and what it means for the world of enterprise resource planning (ERP).
The growth of SaaS
The SaaS model has rapidly overtaken traditional in-house, on-premise systems as a reliable, scalable, innovative, secure and cost-effective platform (still not sure what it is? See diagram below).
We probably have Microsoft to thank for bringing it to the masses with Office365, and in some respects we can even thank software pirates for forcing the industry to change its delivery methods: Remember all those old system CDs you had to spin up to install a new piece of software? Those were a cash cow for the black market back in the 2000s. Things had to change, so they did.
Learn more: “Be honest – do construction companies really need ERP?”
What else is driving this change?
Well, two things.
Just a couple of decades ago, the internet was a new thing to most people and some simply didn’t get it, let alone trust it. Now, rightly or wrongly we trust the internet as part of our daily lives and constantly interact with it – and the businesses that use it to provide goods and services.
Over the last couple of decades, the amount of data being processed and consumed has been growing at an exponential rate. Some estimate data growth YOY to be upwards of 40-50%, and it could be even higher.
For any company utilising legacy, on-premise infrastructure, how can they possibly keep up with that level of growth? The reality is, they can’t.
Today, companies are striving to reinvent themselves in this ‘new normal’ of ours, which is heavily reliant on technology. The ability to be agile and create innovative goods and services for customers is now paramount to ongoing success.
Learn more: “Your guide to the best business systems software”
Cloud ERP vs. on-premise: 5 reasons to choose the cloud
Cloud ERP offers an enhanced level of scalability in comparison to on-premise. While technically the only difference between ERP in the cloud and in-house is the physical location of the software, this one change plays a hugely important role.
The on-demand virtual nature of cloud computing has unlimited storage space and unlimited server resources. The big players in this market who host these platforms – such as AWS (Amazon Web Services) and Microsoft Azure – can spin up or down extra servers as and when they are required. This could be because you’re getting more traffic, consuming more data, or simply (in the ERP context) because you want to add more users, or bolt on another critical business application.
In this way, scaling cloud ERP up or down, adding more capacity, users or functionality, can be performed in mere minutes and with limited IT expertise required.
Cloud ERP is SaaS. As described above, it is hosted elsewhere and accessed over the internet. So, because of this, so long as you have a device with internet access, you can log in to the system.
That means employees anywhere in the world, on any device, have business-critical applications at their fingertips. This is useful for everyone, but especially those organisations with multiple facilities, or those who hope to expand locations. Multiple locations – still all one interconnected system.
Data and applications hosted in the cloud are typically distributed across multiple servers and regions. If one server fails, its counterparts pick up the slack. In this way, there is no service downtime and the data is never lost – even if a huge natural disaster struck the company which owns these servers, their centres in another region would keep the cloud operating.
The cloud’s ability to spin up unlimited resources also means your cloud-based applications can operate with more power, performing the same tasks at a faster rate.
Legacy on-premise systems are far from resilient and cannot guarantee a consistently high level of server performance. Most businesses struggle to commit to maintaining their infrastructure, and don’t often plan ahead with regards to their server needs. Typically, IT infrastructure is only replaced when it is either falling over or about to fall over. This reactive decision making becomes rushed as a result.
This mentality doesn’t usually sit well with a younger workforce who feel hampered by limiting technology and want the latest, fastest, most adaptable tools to work with. When this occurs we often see a drop in workplace productivity and, worse still, a negative us versus them culture emerge around IT support and investment, or lack thereof.
One of the primary benefits of cloud-based technology is its cost effectiveness. For SMEs, this is particularly valuable. SaaS provides access to full-function applications for a manageable monthly fee without a substantial upfront expenditure for hardware and software. This allows businesses to optimise their budgets more effectively, removing the heavy burden of CAPEX to a more controllable OPEX.
Running on-premise technology has a lot of costly moving parts. There’s the time specifying and sourcing the hardware, hiring staff to maintain the system (or outsourcing it to a managed services company, which puts you about halfway to a SaaS model anyway), conducting regular maintenance and upgrades, developing in-house solutions or apps, managing the software license for the hardware, adding suitable access systems like VPNs, and of course the security protocols needed to keep all your data safe.
With SaaS, the only part you have to manage is your own data.
Pizza as a Service has been well used over the years to breakdown the differences of On Premise, IaaS, PaaS and SaaS.
Security is one aspect of cloud technology that opponents typically use as the reason to avoid it. However, the major cloud computing companies are multi-billion-dollar corporations investing heavily in the world’s best technology, focusing on security, service and performance. Advanced threat intelligence, AI, data encryption, access telemetry, they use it all.
Because of their desire to maintain their own bottom line, as well as their reputation (and avoid government scrutiny in the likes of the US and EU), corporations like Amazon, Microsoft and Google hold their cloud centres in Fort Knox type complexes.
In contrast, even small-time hackers these days have the ability to break into legacy on-premise systems within a matter of minutes. All it takes is a bit of phishing and some cheap ransomware, bought on the dark web for relatively very little cash.
Cloud-based SaaS ERP can do the same things on-premise systems can, but bigger and faster – and without the same capital expenditure. For a manageable monthly fee, even SMEs can access the world’s best technology hosted on some of the most secure platforms, getting full-function applications in a matter of minutes.
So, our answer stands: Why not cloud ERP?
Moving to the cloud is not a question of “if” anymore, but “when”.