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The Real Costs You Need to Know – On-Premise vs Cloud ERP

Many businesses have experienced the pain of dealing with multiple, disparate systems which don’t talk to each other or need complex integrations to share data between them. Realising the need for a unified ERP (Enterprise Resource Planning) system becomes clear at this point.

Comparing Apples to Oranges

When you first start researching the ERP options out there, it can seem like the solutions available are quite similar. But look a little deeper and it can be like comparing apples to oranges – especially when it comes costs.

There are some big differences in the costs between on-premise ERP solutions (where your software is installed locally on your company’s hardware, being managed by your own IT resources) and cloud ERP software (also referred to as SaaS, or Software As a Service, where everything is provided by your cloud ERP vendor on a subscription basis). Some of those differences are clear, others you may not realise until digging deeper. 

The True Cost of Ownership

Close-Up of technician plugging patch cable in a rack mounted server in server room.jpegOn-premise ERP solutions generally require large, up-front investments to be made for the cost of software, hardware such as servers and backup devices, operating system software for your servers, and secure facilities for all your physical equipment. If you don’t have dedicated IT staff, you’ll also need to consider either training or hiring IT staff to handle ongoing monitoring and maintenance needs. For many businesses, the investment in time and costs to manage the technical infrastructure in-house is simply out of reach. Outsourcing this management is another option, though this can sometimes bring a lack of visibility and control. 

The risk and cost of system issues and outages that need to be seen rectified quickly should also be considered. Paying overtime rates or penalty rates for out-of-hours calls to your IT resources can increase your maintenance costs substantially unless system users are prepared to wait for standard “within business hours” fixes.

Faster ROI with Rapid Implementation

To see fast ERP implementation ROI, core functionality can be set up as a priority, to support your daily business requirements. Cloud ERP provides increased speed of deployment to provide ROI sooner. There’s no need for physical servers and complex IT infrastructure, streamlining the setup process. Many cloud ERP providers also offer rapid implementation approaches, which can be particularly appealing to start-up companies and SMEs who need to get their core operations functioning as soon as possible. See our article, Start Simply, Start Quickly, for more tips on how to focus your implementation to gain an even more rapid ERP implementation. 

System Performance

Managing system performance can be a frustrating component of on-premise systems. When the system slows down, creating a sluggish experience for end users, this often results in a call to IT resources requesting answers and investigation.

Being built for the cloud, ERP systems such as NetSuite will operate even on low-bandwidth connections. Several tools are also available to users to see real-time performance monitoring - literally at the click of a button. They can see at a glance whether there are internal network issues or if their laptop or desktop resources are causing slow-downs. This saves a lot of investigation time and cost, with users able to see first-hand the factors impacting the perceived system performance.

System Upgrades

Double exposure of business man hand working on blank screen laptop computer on wooden desk as concept with social media diagram  .jpegWhen customising on-premises ERP systems, the upgrade cycle also needs to be considered. When new versions of on-premise software are released, it’s up to each individual company to test the updates including any system customisations made to ensure everything continues operating as expected. IT resources are needed to test new releases and compatibility with existing customisations. Deployments are usually scheduled outside of business hours to minimise disruption.

In comparison, cloud ERP software is regularly upgraded, with rigorous testing processes being undertaken by the cloud ERP vendor. Updates happen seamlessly in the background, so there is generally no downtime experienced by users. Specific customisations are carried forward and new features are made available with detailed documentation available to users.

Future-Proofing with Scalability

Any organisation with goals of expanding sales or growing the business should be planning their future ERP requirements right from the start. Having a system which can support you now and into the future can save significant long-term costs. As your business grows, moving to a package that caters to medium or enterprise-level needs can often mean re-implementation, data migration and re-testing. There’s also upgraded hardware costs, along with any additional IT resourcing needed to support increased requirements.

JCurve ERP is one solution that’s truly scalable. Based on NetSuite, It allows businesses to gain the benefits of an enterprise developed cloud ERP system at a low cost of entry. Seamless upgrade paths are available to extend functionality right up to enterprise-level requirements. Being an exclusive small business edition of the global #1 cloud ERP, NetSuite, there is no change of software, no re-implementation, and no re-training for staff needed when your business needs evolve. A simple change of your license grants you access to the features you need.

 


 

When comparing ERP solutions, consider all the costs involved - including server hardware, IT infrastructure, operating system software, database management software, dedicated IT staff, change management planning and resourcing for system upgrades.

Also look at the implementation methodology, how long it will take to get up and running and how soon you’ll begin seeing ROI. The comparison between systems can certainly be like comparing apples with oranges, but getting the right information together can clarify the cost benefits of your available options.

If you’d like more information, have read of our whitepaper, The Real Costs of ERP - On-Premise and Cloud Compared, or get in touch to start a conversation.

 

Whitepaper download - The Real Costs of ERP - On-Premise and Cloud Compared