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On-premises vs cloud

How and if to choose your ERP service.


Johannesburg, 26 Sep 2017
Bernard Ford, CEO, One Channel.
Bernard Ford, CEO, One Channel.

Many definitions of cloud create the impression that it has to be a distant service, delivered over external networks to your business. This is not accurate. Yes, a majority of cloud services use that exact model, with you as the subscribing business accessing their applications across an Internet connection. But cloud itself is a far wider concept, involving the very nature of how applications are built and operate. It is significantly more powerful, efficient and versatile than traditional systems.

Cloud systems can work on-premises as well, providing they were designed for that purpose. In this case you have a choice between a remote cloud service and one that operates within your business.

"The real value of the industry 4.0 revolution is not just being derived from networks and ad hoc services," says Bernard Ford, One Channel CEO. "Those can play an important role. But the true potential of these technologies is their ability to scale, the ease of accessing and using them, not to mention better management of costs. A modern cloud ERP system, engineered for both online and on-site deployment, can offer all of that."

This is a critical choice, particularly around a core business application such as an ERP. So how should companies make a confident decision? Let's explore the two sides:

The case for hosted Cloud ERP

You want to avoid hefty infrastructure investment
It is time to shed the old technology and refresh your company's infrastructure. But this is expensive and very hefty in up-front costs, requiring a lot of motivation for an appropriate budget. A hosted cloud ERP sidesteps this almost completely, switching operational expenditure into capital expenditure. Investments are much easier to motivate and spending can be brought down to per-user or even ad hoc usage - without necessarily spending a cent on new servers.

You want to scale your ERP in a fast-growing environment
On-premise, even a local cloud instance, is a magnet for complexity. That can be advantageous, but in many scenarios it is unwelcome - especially in fast-growing businesses where stretched budgets and thin resources weigh heavily on forward-planning. A hosted cloud platform can easily enrol or remove users as needed, with only the cost of adding and maintaining them. Also to this point: hosted cloud ERPs are faster to deploy than on-site cloud ERPs.

You have a highly mobile workforce
Many of today's employees don't follow the job. The job follows them. While on-premises cloud platforms can still reach those people and their devices, it requires a rock-solid network complete with thorough security and redundancy measures. A cloud host often does a lot of that heavy lifting, making it far simpler for the right information to reach the right people on the right device.

The case for on-premises Cloud ERP

You want absolute control over your data
Using a hosted cloud ERP means your data will at times reside on off-site, third-party servers. Providing you scrutinise their certifications, as well as deploy your own security and data management/regulation systems, that shouldn't pose problems. But an on-site cloud ERP solution gives considerably more control over company data.

You have significant existing infrastructure
Shedding legacy systems is often a motivation for embracing a remotely hosted cloud platform. But you may still have assets to sweat or other reasons to invest in on-premises infrastructure. Perhaps you already run a well-performing local system such as Microsoft Internet Information Server. In such cases, integrating an on-premises cloud ERP into those systems would make sense.

You plan to make big customisations
Hosted cloud platforms can be customised, but nothing to the extent of on-premises systems. Companies often find differentiation in the nuances of their ERP and many are reluctant to move to cloud because it could limit this. But with an on-premises cloud ERP, it is possible to have the best of both worlds.

"It should be added that there is a significant difference between an on-premises cloud ERP (sometimes called a hybrid ERP) and a more traditional ERP solely designed for on-site use. But a cloud ERP designed to accommodate both hosted and on-premises flavours is a boon, no matter which one you choose," says Ford.

"Cloud is a massive evolution. It's not an alternative to on-premises, but instead an entirely new and better way to use business technology. Many people don't realise you can still have your on-premises controls and oversight along with the power of cloud architecture."

Cloud is not forcing your hand. You don't have to use an online host, nor do you have to stick with outdated on-premises systems. But both are possible with the right ERP choice.

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