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Cloud-Based ERP: Is It Really Cost Effective?


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It goes without saying that there is now beyond “a lot of buzz” around Cloud Computing, SaaS, IaaS, PaaS, XaaS, other Cloud Services, etc. However, what do all these buzz words and acronyms really mean, and which should you consider for your business? In this blog we will focus on ERP Software as a Cloud Service, or SaaS.

Q: EXPLAIN CLOUD ONE MORE TIME

First off, let’s simplify the concept of Cloud Services in general terms. For the most part a “Business Cloud Solution” can be described as a remote resource delivered as a service over a network (i.e., the internet). There could be a database in this remote resource you’re plugging into. There may be an application (i.e., CRM, ERP) and a database you’re accessing. If the database or application is on a server dedicated just for you and your stuff, then this is a “Private Cloud” environment, if the server is being shared, it is a “Public Cloud”. Everything looks and, with most solutions, performs as if the application and data is loaded locally on your individual machine, desktop shortcut icons and all. As far as you know, the resource is on a server in the next room, even though it may be in Iowa. (View an infographic on 'What is Cloud Computing?')

Q: BUT AFTER A YEAR OR TWO MY MONTHLY SUBSCRIPTION SURPASSES THE INITIAL COST OF THE ON-PREMISE OPTION

Cloud solutions provide excellent cost benefits, among other business benefits. Cloud ERP, as an example, requires less upfront capital outlay to license and deploy most solutions. This is because the systems foundation, if you will, is already implemented. Some Cloud ERP offerings like Stratos, take this a step further by preconfiguring the system to match common and industry specific needs, thus further reducing billable hours you would otherwise need to pay for in a traditional implementation. Service estimates for Cloud ERP solutions like Stratos may just need to include data migration, any further configuration that’s desired, integration (if desired) and training. Also, since you are “subscribing” to the technology, you don’t need to worry about investing tens of thousands of dollars for perpetual, static licenses that may also require a year over year maintenance fee against that license cost.

However, the true “cost savings” is not so obvious. Your investment in the Cloud just brought your business to the latest ERP release, and upgrades to later releases are now effortless. No more annual maintenance fees and your shiny new sophisticated ERP solution nestled safely and securely in a world-class data center that you don’t have to manage or maintain. With all the disaster recovery, redundancy, and security you would ever need. This is what the “Per user/ per month” investment includes, not just a license. Moreover, the “Per user/ per month” model is a more predictable cost model.

Applications like Microsoft Dynamics ERP in the cloud are even more beneficial because it provides the flexibility of bringing your Cloud ERP back in-house should you desire to later down the road. There are a few leading Cloud ERP solutions that will not allow this.

Q: SO WHAT QUESTIONS SHOULD I ASK CLOUD SERVICE PROVIDERS?

As you start evaluating Business Critical Applications like ERP, CRM, etc. and you would like to explore providers of these applications in the Cloud, I would make sure to ask the following 3 questions to make sure you receive the maximum cost benefits of Cloud Services:

1)      Do you offer pre-configuration of this application for my industry?

2)      Does the application allow me the flexibility to bring it back in-house should I ever desire to later down the road?

3)      Are there penalties for discontinuing users or functional areas (modules)? If so, what are they?

 

If you are interested in evaluating cloud ERP solutions or discussing the differences between public or private cloud environments, contact SBS Group here.  SBS Group's private cloud offering, Stratos Cloud Solutions, delivers the same functionality of on-premise Microsoft Dynamics ERP software in a safe and secure private cloud through one of our 4 SAS-70 compliant datacenters.  Learn more about Stratos Cloud Solutions here: http://www.sbsgroupusa.com/CloudSolutions/Pages/Stratos-Cloud-Solutions.aspx.

 

 

By: SBS Group – New Jersey Microsoft Dynamics ERP & CRM Gold Partner, Microsoft Master VAR

3 Responses to “Cloud-Based ERP: Is It Really Cost Effective?”

  1. Kim Kohlhepp says:

    Thanks for the feedback! If you have any questions regarding Cloud ERP, please feel free to contact us at [email protected]

  2. Mark Hampton says:

    It’s GREAT to finally find someone explain this without all the sales jargon. Thanks!

  3. Samuel William says:

    providing information is helping in saving money and grooming a business so thanks provide knowledge regarding cloud based ERP.