Things to Consider When Evaluating Cloud ERP vs On-Premise
When pricing Cloud vs. On-Site or On-Premise ERP/CRM solutions, consider these factors:
1. Where are the hidden expenses in On-Premise solutions? Consider utility costs and infrastructure.
- On-Premise: When running a server and network system 24/7/365, that is a lot of electricity being used. How about the energy needed to cool all of that equipment? How much are you paying in utilities alone?
- Cloud: No large utility bills because there is no physical asset house.
2. Consider the build-out or construction of any special IT needs or growing IT needs.
- On-Premise: How much are you paying for office space per square meter/foot? Most places it’s a premium. Housing IT equipment and extra IT staff means paying for extra overhead costs. Plus, server and equipment rooms tend to produce more heat and that heat needs to be expelled. How much does that unique fit-out cost? Also, that room needs to be kept cooler than others in the office, so is there a separate HVAC system for that ONE ROOM?
- Cloud: No special consideration for infrastructure because there is no physical asset to house and maintain.
3. Consider IT Resources and Staffing.
- On-Premise: Staffing per employee alone can cost over $100,000 per year easily for experienced staff. And if you don’t want to pay for “experience”, what are the trade-offs? RISK. More experience = less risk. Even if you only have a 5-20 person company, you’ll need that expertise to maintain the system for which your ENTIRE COMPANY relies.
- On-Premise: Extra IT equipment needed, or kept in storage, is a huge cost. Unfortunately you need duplicates of everything in case of emergency. But it is an absolute necessity in case of failure.
- Cloud: No additional staff to hire to maintain systems and no IT inventory in storage.
4. How long are you willing to be “down” or offline? If your building has a power failure, flooding or weather conditions occur you can be down days or weeks.
- On-Premise: How much is your business worth per hour? Breakdown your hourly, daily or weekly revenue as a company and assess how much risk you are willing to tolerate, if any.
- Cloud: SaaS solutions have browser-based accessibility. That means any device, any computer, any browser, anywhere that you can have internet access you can simply login and make sure business gets done.
5. Consider Being “Locked” to a Certain Hardware Platform. How Does It Feel to Have ZERO Options?
- On-Premise: Certain software is compatible only with particular hardware systems, meaning you don’t have the freedom to give your business or your staff the technology that helps them work best. You can only give them what works within the parameters of your exclusive platform.
- Cloud: Windows or Mac computer? Android, Windows or Apple device? Anything and everything with a browser and internet connection. No VPN’s, no portals, no restrictions. Employees can use whichever computer they feel comfortable with and older/outdated hardware can still be used as long as the browser is compatible.
6. Consider Backup and Recovery Options.
- On-Premise: Backup can be a time-consuming effort for IT staff, or an expensive service to outsource. If your IT staff has to work odd hours, or late night shifts, to create backups and run IT services while most of the wider world is sleeping that is going to cost you, one way or another. Overtime pay, where staff have to work weekends and national holidays to attend to IT needs is stressful because of the small windows for opportunity and system “lock-outs” that need to be in place so upgrades, patches and fixes are implemented correctly with no interference.
- Cloud: It’s fully managed. SaaS and Cloud takes care of all the data backup, redundancy and recovery. It is included in the price of your annual subscription. Voila!
7. Consider mobile application development and sophistication.
- On-Premise: If your field operations are essential to the company than you want to be heavily invested in an ERP/CRM with cutting-edge mobile application development. This can be the backbone of your success or failure when engaging clients out of the office. If your ERP/CRM solution can only be accessed on a Windows machine through Internet Explorer, how likely is it that you will be able to access it from your iPhone 6?? Not very. The need for accurate, reliable, real-time data access in the field is crucial. Don’t loose a bit!!
- Cloud: SaaS providers have industry-leading software development since their software is going to be used by several different platforms and technologies, they must be constantly improving and keeping pace with the wide world of technology.