How Your Business Can Shine Through the Cloud
Introduction
Any serious review of modern ERP systems requires you to consider the deployment model. ERP
vendors increasingly aim to providea compelling cloud (or Software as a Service—SaaS) value
proposition. Over the last decade, enterprise application consumers have been convinced of the
lower total cost of ownership (TCO) of cloud deployment; the benefits of anywhere, anytime
access; the freedom of alleviating all the back-end systems management responsibilities; and the
opportunity to enjoy instant and worry-free updates and upgrades.
Hidden within this cloud promise is a sometimes unspoken tradeoff. Yes, the technical and
business benefits of the cloud are compelling—but at what price? What if your business needs
change? Are you comfortable delegating something as strategic as your long-term ERP strategy
to a vendor who has its own long-term interests that may conflict with your own?
This white paper will outline the benefits of the cloud, because they are indeed compelling, but it
will also help you determine if cloud is right for your business. Perhaps the cloud is the best choice
for you. If so, you should come to that conclusion on your own—not because of pressure from an
ERP vendor—and with a clear understanding determine if the cloud is right for your business, and
which cloud is right for your business.
The importance of choice
Arguably, the best way to approach any ERP selection process is to begin by determining which
ERP system is right for you (the vendor and product selection step). Once you’ve made that
decision, you would determine how you want to deploy it. Unfortunately, this approach gets
complicated if one of the vendors you’re considering can only offer a single deployment model.
Let’s assume you’re evaluating only ERP vendors who are committed to providing multiple
deployment options to their customers. Perhaps they offer cloud deployment of their ERP system,
but also offer on-premises deployment or a hybrid deployment. What do you need to know
before you make that deployment model decision? What are the assumptions you can safely
make, and what are the tradeoffs for choosing each of the options available to you?
Cloud vs. SaaS ERP Deployment
Though these terms are often used interchangeably, there are important differences.
Cloud refers to Internet-based deployment of a software solution—i.e., the system
is running remotely and generally accessed by users over the internet. SaaS refers
to a pay-as-you-go licensing model, and typically includes all system management
components as part of a monthly subscription. Cloud solutions aren’t necessarily SaaSbased, and SaaS solutions aren’t necessarily cloud-based, so it’s important to understand
the difference in order to find the solution that best serves your business needs.
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How Your Business Can Shine Through the Cloud
Deployment models
On-premises
The on-premises deployment model is typically most familiar to ERP users. It’s probably how your
current ERP system is deployed. With an on-premises deployment, the organization purchases the
software up front, and likely agrees to additional ongoing costs associated with a maintenance or
support plan for a determined period of time.
With on-premises deployments, you have a lot of latitude around how, where, and when the
system and deployed. You also get to determine for yourself which of the upgrades the vendor
delivers you want to deploy within your own company.
Unfortunately, on-premises deployments often come with hidden costs that aren’t necessarily
evident during the evaluation process. While you get to decide which upgrades you want to
install, you’ll likely be paying the vendor (or a third party) to provide the professional services
to complete each of those upgrades. On-premises systems also come with a sizable upfront
investment in hardware and infrastructure. Upkeep on those systems becomes an additional
burden on your IT department. To thoroughly understand the costs of on-premises deployment,
you must also factor in thousands of dollars in systems management and utility bills to cover the
electricity needed to run and cool your servers.
Despite these costs, there are businesses for whom an on-premises deployment remains the right
choice. Companies with exceptionally talented and well-resourced IT departments with deep
ERP management skills often choose on-premises deployments. Highly regulated organizations
that need absolute control over deployment, configuration, version, and upgrades because they
are closely monitored and audited by regulatory agencies will often choose to maintain an onpremises ERP system.
For businesses in either scenario, the cloud still warrants thoughtful consideration, but deploying
on premises may be the best option. If your company’s best fit today is an on-premises
deployment, consider choosing an ERP built to provide easy future migration of your system to
the cloud, eliminating the risk of ‘solution lock in.’
Infrastructure as a service
Some businesses want some of the benefits of cloud deployment, but still wish to retain control
over their ERP deployment and administration. For them, deploying a perpetually licensed ERP
system on an “infrastructure as a service” (IaaS) platform such as Amazon Web Services (AWS) or
Microsoft Azure may be ideal.
With an IaaS deployment, companies will take their perpetually licensed ERP systems—the
same way they would purchase for on-premises—and deploy them on cloud-based servers they
“system” to at AWS or Azure. IaaS is a compelling deployment model for organizations that
have strong ERP administration skills, but want to take advantage of the cloud’s ability to globally
deploy their solution to anyone with a web browser. This also relieves the administrative and
financial hassles of buying, maintaining, and upgrading the supporting infrastrucutre hardware.
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