As we’ve noted in the past, there are as many opinions about using the cloud for business apps as there are opinionated people. Last year, an outfit called Compare Business Products wrote a white paper you can find here comparing on-premise ERP solutions with off-premise, and made some good points. After detailing the basics, and how SaaS (Software as a Service, another word for cloud hosting) is deployed by application area (i.e., ERP, CRM, Office Suites, etc.), the authors point out an important consideration, which we quote directly below:
Companies often assume that network infrastructure is not important when it comes to deploying a cloud solution, and that network costs will be significantly reduced. Although this is a strong possibility, there are still other network-related issues that have to be dealt with when implementing a cloud-based solution, such as compliance and security issues. Also, if the existing network infrastructure is solid enough to handle running ERP in the cloud and existing staff are knowledgeable about cloud networking requirements, then chances are network costs will be reduced. One final point to consider is where the company is physically located in order to ensure adequate bandwidth and Internet access.
That last point about ‘adequate bandwidth’ is a vital one. When you evaluate the full and real costs of cloud applications, and then multiply that by the mission-critical nature of the application, you begin to see that the cost savings of cloud over on-premise hosting may not be all they appear to be.
So the authors offer up “Five Questions to Help Guide Your Decision” as follows:
- What is my IT spending situation and overall revenue picture, how big is my company, and what is my industry? They make the point that while the initial cost of SaaS may be lower, in the long run, “the overall cost will likely be higher since you are essentially paying to use the software for however long you use it – similar to leasing a car versus buying one.”
- Control, accessibility, and reliability – how much is enough? By its very nature, cloud forces you to give up control over software and maintenance. There are pros and cons both ways, but be sure you know what they are before you leap.
- How experienced is my IT staff and how much bandwidth do they have? If you don’t have the IT resources, on-premise ERP gets harder and more costly. However, these can usually be outsourced (or brought in from your local hardware provider) on an as-needed basis. Consider your investment both ways.
- Do I require a highly-customized ERP solution and what is my timeline for deployment? In some industries, like manufacturing, customization is pretty much a given. Cloud solutions are a lot less flexible in this regard because you can’t really customize the software. Cloud’s decreased flexibility and customization-ability can make it quicker to deploy, but leave you less than fulfilled in the long run.
- Is this an upgrade to an existing ERP system and/or do I need to integrate with existing systems? As the article notes “SaaS vendors often struggle with having to provide on-premise integration for their customers to integrate cloud applications with existing legacy applications.”
Ultimately, the cloud answer comes down to your individual specifics, including budget, IT resources and capabilities, short-term vs. long-term point of view, required for customization and the need for greater control and integration of your systems. Truly, there is no one-size fits all solution.