Right now, if you believe the hype, everything is being moved to the Cloud—whether it makes sense to or not for the organisations or processes/technology concerned. So sooner or later, it’s only natural that organisations would consider it as an option for ERP.
After all, at some point every organisation is faced with the prospect of upgrading its ERP system—so why not combine that with a move to the Cloud (especially with SAP giving its customers a deadline to move to the Cloud by 2025)?
Over the coming weeks, we’ll be looking at the five main options organisations have when deciding the future of their ERP systems:
- Migrating their ERP to the Cloud
- Switching to a SaaS solution
- Switching to a different ERP vendor
- Upgrading their ERP to the latest version
- Sticking with their existing ERP system
Today, we’ll focus on option #1: Cloud hosting. Is it really the best approach to ERP?
What’s the Deal with Cloud ERP Hosting?
When moving an ERP system to the Cloud, you have two basic options:
- You can move your current system to the Cloud as-is; or,
- You can perform an upgrade simultaneously with the migration (sometimes to a SaaS system like SAP’s S/4HANA, but we’ll cover that more in the next blog on SaaS)
Adding an extra layer of complexity, there are two types of Cloud hosting available: public and private.
- Public Clouds, such as those offered by Amazon (AWS) and Microsoft (Azure) provide a remote hosting platform and tools, but responsibility for the management of your hosting remains in-house. If you already have the necessary skills to manage public Cloud environments in-house, this is likely a good option.
- Private Clouds, provided by companies like Sungard AS and Connectria, offer tailored hosting solutions where the provider also handles management functions like patching and security. While private Clouds come with a higher price tag, they are a good option if you don’t have Cloud management and security skills in-house.
Why move to the Cloud?
Reliability: The main benefit of migrating your ERP to a Cloud environment is increased reliability and resilience. While in the Cloud, your ERP systems will be hosted on a virtualized server—spread across widely distributed data centres—and maintained by a dedicated team. As a result, backup and failover capabilities are far more comprehensive than can typically be achieved in-house, and your system is effectively future-proofed.
Cost Savings: Cloud hosting can also offer significant cost savings. When ERP solutions are hosted in-house, hardware upgrades will eventually be needed to avoid performance issues. By contrast, Cloud hosting costs are spread consistently over time, as all responsibility for maintaining and upgrading hardware lies with the provider. Although bear in mind that each use case will be different, and the initial costs of switching may not balance the ongoing savings that Cloud could provide.
Scalability: Cloud hosting is also highly scalable—you pay only for the resources you use, and can use as much or as little as needed in any given period. Naturally, this flexibility is not possible with on-premise hosting, where hardware must be capable of supporting peak usage even if only needed occasionally.
Of course, there are downsides.
Cloud services require constant Internet access, so if your organisation has limited bandwidth or connectivity issues your users could be left without access to ERP. Moving to the Cloud also means surrendering some control over security, so it’s important to choose a provider that can meet the requirements of your data and any relevant compliance frameworks. Organisations dealing with particularly sensitive data will need to consider this point carefully.
There is also the whole issue with SaaS Clouds like SAP S/4HANA, but we’ll cover the pros and cons of SaaS ERP Clouds in our next blog.
Moving your ERP to the Cloud:
|Can potentially reduce total cost of ownership.|
Increased reliability/reduced risk.
No hardware upgrades required.
|Reliance on an external Cloud provider.|
Strong Internet connectivity is essential.
Security & compliance are more complex.
What about support for Cloud ERP?
One of the major questions, when any changes to an ERP system are considered, is the availability of high-quality support. After all, reducing your ERP costs is no use if you can no longer get timely assistance when things go wrong.
Fortunately, Cloud migration can be combined with a move to a specialist third-party support provider—one that will ensure your Cloud-hosted ERP system remains up, running, and fully functional at all times. Organisations switching from official support programs to a third-party provider routinely see annual cost reductions of 50% or more, and can even help manage the migration.
Upgrading your ERP: Assessing your options
The prospect of upgrading your ERP system probably doesn’t fill you with joy. In fact, if we had to guess, we’d say it more likely fills you with dread. So if you find yourself in the position of assessing your options, we want to help.
Recently, we published a guide designed to help organisations make informed decisions about the future of their ERP systems.
So if you find yourself…
- Worried about falling “out of support” if you don’t stay on the latest version
- Receiving pressure from your ERP vendor to move to their SaaS product
- Wishing you could stick with your current, stable ERP… but unsure if that’s a viable option
…we can help.
If for any reason your organisation is considering upgrading, moving, or switching up its ERP system, this guide is for you.