Why Would You Use an Old ERP When You Could Have the Power of Cloud?

Introduction:
Having compatibility issues with your ERP? Is your current ERP capable of giving you what you want? Does it cover all your needs? Does it require a lot of money and time to upgrade?

If all these questions apply to your business then what are you waiting for? Simplify your business processes with cloud based ERP, which does not require extra cost and time to upgrade and is fast and streamlined.

"According to research by Forrester 50% of the customers are stuck with aging EPR that may be four or more years old."

As the world is moves toward digitization on-premise applications are becoming less important in the market while on-cloud applications are gaining greater importance. Technology is constantly changing and everyday some new innovation is being introduced to the eagerly awaiting world. However, there is at least one area that is not changing so quickly, on-premise ERPs. Installation is slow and costly for these systems and upgrades are rare.

Consider the following scenario "You are a client who wants to deploy an on-premise ERP on your system to help with the daily workings of your business. Are you willing to pay extra to upgrade your ERP? Do you want your employees to have mobile access to your application? Do you want to reduce the amount of paperwork required? Would you still want to buy an on-premise ERP if it is beyond your budget?

The answer to these questions is "No." When you can get all of these things in one application at a reasonable cost, why would you choose anything else? Technology has changed the way of doing business in today's world. Employees now can perform their business function from every corner of world by accessing the cloud.

The Six Ways Obsolete ERP is damaging your Business

There are many challenges that are faced while using an on-premise ERP. Neglecting these issues may damage your business. Many companies are looking to the cloud to help resolve these issues. Some of these issues are:


1. Integration:
The most common drawback in on-premise ERPs is integration. The ERP cannot be integrated with any other applications. In order to get the extra functionality a user would have to buy a new ERP application or add-on to gain the functionality instead of integrating it with the current application. This can be very costly and may lead to confusion and duplications.
2. Costly and Time-Consuming:
The major drawback of on-premise application is it is very costly and requires a lot of time to install and upgrade. In today's fierce competition people value their time and want their work to be done on time and in a cost effective manner. On-premise applications don't match these needs and are costly and time consuming.

3. Accessibility:
Accessibility is a key issue with on-premise ERPs. The lack of mobility solutions forces employees to be in the office to access the system.
This leads to delays in updating and entering information and can even lead to incorrect or duplicate information being entered into the system. In the world of mobilization who wants to use the beefy PCs instead of using smart phones and I-pads for doing their work. These PCs have their own drawbacks as compared to these latest technologies.
4. High Infrastructure Maintenance Costs:
The cost of maintaining IT infrastructure continues to rise causing an increase in the cost of maintaining on-premise ERPs. Companies nowadays are spending heavily on IT infrastructure and thereby making processes automated and streamlined to make their process efficient and effective.

As paperwork is on the verge of being eliminated, spending on IT services is becoming mandatory. For even the tiniest piece of work, IT is required.

On the other hand, cloud applications require zero maintenance and no upgrade costs.

5. Complex Systems:
An on-premise ERP system can be complex, requiring a long training period. This can be very frustrating for the user and cause them to not want to use the system.
6. Installation:
For on-premise applications you have wait for hours to get it install and pay extra cost for upgrades. The customers have to purchase the whole application, which is very expensive, and if he wants to change the ERP then it is an additional cost for the change and reinstallation. Customers of on-cloud applications do not have to buy the application. He can instead purchase a pay as you go subscription, it just like renting a car; you pay for your use.

What You Need to Know Before Joining the Cloud.
Today more businesses are moving to the cloud from on-premise applications. Cloud applications offer a range of benefits from easy accessibility to being simple to use. Below are some reasons to take into account when considering whether to switch to the cloud:
Security:
The first issue that every customer thinks of is security. How safe is my data? Cloud data storage is actually more common than you realize, the web and mobile applications for you bank and insurance providers are cloud applications. Even many US Government organizations are using cloud applications for their data. Cloud developers understand your concerns and make data security their number one priority.
Stay Flexible:
Cloud applications give your business the flexibility to effortlessly evolve and update business processes. It can also be integrated with your current on-premise or on-cloud software applications allowing you to import and export data securely as needed between the applications. Cloud applications are more flexible in nature when compared to on-premise applications; they can be easily integrated and replace your old ERP. Flexibility options are one of the biggest benefits to cloud applications.
Mobility:
Cloud applications offers you the ability to access your information from anywhere in the world at anytime. This allows your employees to enter the data from an off-site meeting without having to first return to the office. Mobility has become an increasingly important feature in past few years as most people are using smart phones or tablets at their workplace.
Upgrades:
Cloud applications are upgraded automatically from the server and the user is not required to pay extra for up the upgrade. The upgrade process is quick and the application retains all your configurations.
Affordable Cost:
On-cloud applications do not have hidden costs. Instead it allows the user to pay on a rental basis with a pay per user per application subscription. As it is a cloud application it also does not require you to pay to maintain an IT infrastructure.
Easy Deployment:
The soul reason why many organizations are switching to on cloud applications is easy installation of these applications. On-cloud applications can be customized according to the users need and can be swiftly deployed. The deployment time is less than half of most on-premise ERPs.
Initial Investment:
On-cloud applications don't have higher initial investment cost when compared to the on-premise applications and any company can afford it as the payment is on a monthly rental basis. It not a high cost to the customers.
Customization:
On-cloud applications can be customized easier than the traditional on-premise ERP applications. On-cloud applications are “tailored made” and can easily be customized according to the changing needs and trends of the company.
User Interface:
A user can experience better interface on cloud than on-premise applications and as there are no minimum requirements for hardware and software.

Comparison between SaaS ERP and On Premise ERP

Cost Time SaaS ERP On-Premise ERP
License Fee - Initial One - Time None $$$ Variable
License Fee - Upgrades Periodic None $$ Variable
Subscription Fee Annual/Recurring Charged by User, Volume/Usage or Company size None
Maintenance Cost (plus extra for customization) Annual/Recurring Included in Subscription Fee 15-25% of license annually
Support Costs Annual/Recurring Included in Subscription Fee Maybe part of or in addition to maintenance fee
Hardware Costs Periodic Minimal (Browser) Extensive
IT Infrastructure Costs Recurring Minimal (Internet Connection) Extensive
IT Personnel/Support Costs Recurring Minimal Extensive
Implementation Costs - External (Based on timescale/duration of install) One - Time $$ Variable $$$ Variable
Implementation Costs - Internal (Based on timescale/duration of install) One - Time $$ Variable $$$ Variable
Courtesy: IDC Manufacturing Insights, 2010

Conclusion:
Making the final decision on a correct ERP solution is always difficult for organizations. If an unsuitable ERP is chosen, it will result in losses to the organization in terms of cost, productivity and more. So before making any decision the organization must analyze several factors. Are they going on a right path? Does this ERP will really help their organization and make their work easier? An organization can only make their decision after analyzing each parameter in detail. These are just a few of the issues business face while using on-premise ERPs for their daily business functions.

Every organization looks for a cost effective ERP solution which will benefit their organization and increase their productivity. Cloud applications are becoming more common as they are very cost effective and require no hardware cost unlike on-premise applications. Small and medium size organizations are switching to cloud application as compared to large organization. Every ERP application whether on-premise or on-cloud have their own pros and cons, so an organization must evaluate each according to their needs and choose the best ERP for them.
 
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