Cloud ERP Versus On Premise ERP

A lot has been written about the cloud and how having your ERP system in the cloud is the best choice.  There are also a lot of folks that have been in this business for years and prefer the good old in-house installation where you can "have your data" where you can see it, feel it and "touch it" so to speak.  I guess I fall into the latter category.  But even for old dogs like me from time to time it is a good idea to take a fresh look at the numberssince so much changes so fast in the ERP world.   I had the opportunity to do just that with real numbers on a recent opportunity I was working for our company.  Here's what I found.

Having an on premise ERP certainly has its advantages and is by now a rather known outcome.  In this example the firm we were speaking with had 25 employees on their current ERP and wanted to add more.  The decision maker was in his late 50s and had been in the business for years.  They had an internal IT staff, albeit small with only 3 people, but nevertheless very efficient and effective.  They wanted an on premise solution, they thought, but wanted to run the numbers for both on premise and the cloud just in case, so we created an ROI for both.

Taking into account the amount it costs them today to run the IT staff which devoted about 40% of their time to the current ERP, and how much is had been costing them over the last three years for the internal servers, software licenses and hardware maintenance, we compared those to the ERP cloud solution they were considering.  The results actually surprised me.

  • Since they no longer needed a staff to devote time to the current system, they could use them to do other things that were important, saving money
  • The amount of employee costs and maintenance they saved in one year was actually more than the cost of the Cloud/SaaS licenses they were considering for the same year
  • They were actually saving money every year by using the cloud model over the on premise model by reduced costs, and they were getting new software that allowed them much more flexibility and power than they had ever had before.
  • In their assessment, this translated to about a 5% increase in the bottom line just on this one decision alone!

What was also apparent was that both cloud and on premise have their own trade-offs and neither is the one "fit all" solution for all companies.  It is imperativewhen choosing a new system to look at both options and decide which one is best for your company.  One other thing we noted was that the price for cloud and on premise vary widely, but in today's ERP world about 70% of the companies would be far better off with the cloud choice. And for those who want one option that gives you both the cloud and on premise choices to you, Acumatica is the Cloud ERP that can do that.  With Acumatica you are free to choose between either, and you can even change your mind later on if you'd like.  If you choose on premise, but want to move to the cloud after two years, you can do that with Acumatica… no other software offers that choice… you are either stuck with one or the other.

 

Ultimately the client mentioned above chose Acumatica cloud ERP fortheir software.  Need I even say their IT staff is ecstatic?

Cliff Hall