We’ve often heard this in real estate. It’s all about location. Where you house your ERP applications & data is no different. It’s one of the biggest decisions you’ll make. If you only do a cursory review, you probably think you only have 2 choices, on-premise or in the cloud. There’s a third option and we’ll discuss all three.
In the last few years cloud Enterprise Planning Resource (ERP) software has made a huge marketing push. Let’s get past the marketing and look at each option so you can make a proper business decision as to what’s best for you. First up, let’s look at “On-Premise” with which we should all be familiar.
It’s not new, it’s not flashy and it can be large up-front cost. (A cash flow alternative to outright hardware purchases is HAAS or Hardware As A Service.) It’s no wonder fewer companies want to stay with on premise ERP. So why do it? Control. If you own it, you control it. In a nutshell this is a blanket for many other reasons to keep it in house. You can control when & how quickly the equipment is depreciated, upgraded, and replaced. The pitfall to this is responsibility. You’re responsible for the upkeep, the maintenance, the backups, what a pain! You might even need to hire someone special to be responsible for all that, like an IT type. More costs, yuck! But it’s hard to beat that “warm & fuzzy” of knowing you can control your own equipment.
It’s new, it’s cool, why aren’t you “in the cloud” yet? We hear this constantly, but is it right for your company? Some ERP solutions are strictly cloud based, kept on hardware maintained by the ERP developer. We’ve all heard the horror stories about “losing your data forever”, but the key is to do your research to eliminate such worries. For startup companies, this is a great introduction into the ERP world. No huge upfront costs and often you get “bells & whistles” included. But should you wish to move off of that solution down the road, be sure you know exactly HOW you can access your data for export. The last big consideration with cloud is history data. Rarely do we convert history transactions from the old ERP to the new ERP due to the cost. It’s too easy to keep the old ERP running should the need arise to access it. Not so with cloud, you’ll need to convert EVERYTHING before you make that last monthly payment. Cloud is still a great alternative; just know this going into it.
HOSTED ERP (Hybrid)
Could this be the acceptable compromise? In a hosted environment the computer network infrastructure is “in the cloud”, but it isn’t kept by the software developer. The hardware is hosted by an independent company with the sole responsibility of acting as your IT department for the hardware. Your data is always your data. You still have control over your applications without the worry about the rest of that “network stuff.” This can be an efficient alternative to the other options when your company isn’t quite large enough to warrant full time IT staff. Should you switch ERP in the future, no big deal. The hosting company is agnostic to whatever applications you’re running. Hosting company responsibilities vary as you may still be responsible to update any software running on the hardware. This includes security patches & application updates. So keep this in mind also. Ask who is handles the BDR (Backup/Disaster Recovery) of your operations. It’s Imperative it is handled properly.
Each option has advantages and pitfalls. It’s great to have each of these options available because each company is different. Do your homework or hire a consultant (like me) to help layout the options clearly for your management team to make informed decisions. Ultimately, ERP running under any of the options is a step forward for your company.
One final word on “being in the cloud.” If you fear being in the cloud for data security reasons, (a good fear to have) consider the following:
- Do you have employees connecting remotely into your network through a VPN or other method?
- Do you access on-premise email from outside the office? This could be either via a webpage or via your smartphone.
If you said yes to either of these, congratulations! Your company network is officially “IN THE CLOUD.” If that’s the case, when was the last time you had a network security assessment performed? Schedule one SOON to ensure you’re protected.
About the author, Rick Rusch | Cyber Security Evangelist
For over 25 years Rick has helped companies utilize technology safely & productively. Recognizing the dangers of the Internet age several years ago, Rick has passionately focused on cybersecurity to help clients guard their reputations & their most precious asset, their digital data.