Cloud ERP has been proven to reduce costs in many ways because it
- Avoids upfront costs for all computing infrastructure such as hardware and data servers
- Reduces IT support services because IT is in the cloud
- Eliminates paying upfront for application software licenses
- Shrinks the cost of maintaining and supporting those applications since the cloud vendor handles the updates and upgrades
The most important benefits of Cloud ERP go beyond cost-savings and include
- Paying only for the computing resources needed
- A fixed monthly rate so companies can use their cash on other business initiatives
- Taking advantage of Cloud ERP applications faster since installation of hardware and software on servers or user devices is not required
- The ability to adjust the amount of cloud service as a company’s computing or storage needs fluctuate
- Enjoying the confidence that the data has been backed up and there is a disaster recovery plan
- Avoiding attacks on the company’s server because the data in not stored locally, but in the cloud
- Accessing the system from anywhere makes it easy for a company to expand geographically since the Internet is everywhere and there is no need to implement hardware and software at remote locations
At its most basic, cloud computing is all about renting processing resources and storage rather than buying and maintaining them in-house (on-premise). It may come as a surprise to some, but this is not a new concept. In the 1970’s, service firms used large mainframes to run applications and provide data storage for other companies that would rent those computer resources and storage space. This was called “time-sharing”.
Time-sharing was expensive and fell out of favor once the price of computers dropped and companies could afford to buy and maintain their own systems. For the last few decades, companies have been buying, installing and maintaining their hardware and software in their own facilities.
Fortunately, new technologies have been introduced such as widespread Internet availability, low cost of mobile devices, expansion of computing power and massive storage availability. Technology has improved so much that very high functioning applications can safely and securely run remotely on somebody else’s hardware. This eliminates the need for individual companies to deal with hardware issues and allows their employees to work anywhere at any time.
IDC, a premier global provider of market intelligence, recent wrote about the “IT Industry’s 3rd Platform for Innovation and Growth”. In their eBook, “True Cloud Applications for Agile and Fast-Growing Businesses”, IDC discusses the “explosion of innovation” that we are witnessing.
Download the eBook to see what is in store for IT.
Talk about the Cloud is everywhere, but so are cloud buzzwords, which result in confusion and misconceptions. Here is a brief discussion of the more common terms:
Licensing options: Purchase or Subscription
- Perpetual or Purchase: These terms refer to when a company BUYS a software license. The company pays to owns the license and also pays an annual maintenance fee for upgrades.
- Subscription: The company pays an annual or monthly charge to use the software license. Upgrades to the software is usually included in the subscription price.
Deployment options: On-premise, Hosted, or SaaS
- On-premise or in-house: The company is responsible for the infrastructure (hardware, system software, communication hardware, software on user devices, etc.) and the deployment of the application software (implementation, support, upgrading, etc.)
- Hosted: The company or hoster buys a license for the software. The hoster manages all, or most, of the infrastructure and software deployment as described above. The hoster can be an independent company or a division of the company itself. Hosting is a way to outsource IT operations.
- Software as a Service (SaaS): This newest method of deployment is a combined software licensing and delivery model in which software is licensed on a subscription basis and hosted by the software provider, all for a single price that is typically a fixed amount. In many cases the software provider uses a Public Cloud for the hosting.
Private Cloud and Public Cloud
- Private cloud is privately owned and maintained by the company or a hoster. Based on business requirements or regulations, sometimes this may be the only option.
- Public cloud is owned by a service company, such as Microsoft, IBM or Amazon. The service provides all the hardware, load balancing, backup and security.
- Hybrid cloud is a blended approach with a mix of on-premises, private cloud and third-party, public cloud services.
- Multi-tenancy is where the Cloud software provider has single instance (version) of software on a server and serves multiple tenants (customers) simultaneously.
- Single-tenancy is where each customer has their own application and data base.
- Cost Savings
- It is believed that multi-tenancy reduces the cost for the software provider, which is absolutely true for cloud apps that are quickly purchased and downloaded like Pandora, Facebook, etc.
- For Cloud ERP, the cost savings is insignificant compared to: providing the server hardware, operating system and database; development of the very sophisticated ERP programs; sales and marketing required; as well as on-going support.
- Flexibility is reduced when you share the same program with many others. The impact may be loss of control in:
- Customization and tailoring
- Upgrading schedules
Note: Acumatica can run either multi-tenancy or single-tenancy depending on the customers’ needs.
Thin client & Web services
- Thin client in cloud terms is a device (PC, tablet or phone) that requires NO application or communication software to be downloaded. Any thin client can access the application from anywhere, similar to a web page.
- Web services are simply application components. They are designed for and used on the Web. Common examples are the widgets on a phone, such a weather. Business applications may include zip code look up, sales tax calculation or much more sophisticated applications.
To help in clarifying all the confusion the SMB group has created an eBook called “Clearing the ERP Clouds”.
Use this eBook to help guide you.
Beware of “cloud washing” and “faux cloud” adaptations of last generation applications that purport to be re-engineered for cloud deployment. Most legacy applications have just been retrofitted to run on the web.
You can identify a “faux cloud” product because they will require software to be installed on the client (PC or device). Others add another special server between the applications and the user to interpret the application and serve up web pages to the client. Neither approach delivers the speed and responsiveness of a true cloud design. True cloud applications have no application code on the client device except a browser. They are designed and built for the web and mobile devices. True Cloud screens must be responsive and change size based on the device, which is a productivity aid for a mobile employee or customer.
When vendors place legacy software on a hosted virtual server, they claim to have a “cloud-based ERP solution”; but without web-based software, customers receive very few of the benefits described in the first section above. The presence of a thick client (a full-featured computer that requires software installed on the device) often requires longer installation times, dispersed data, client upgrades, and complicated remote access software. When looking for cloud ERP software, make sure that it is web-based and true cloud!
To help clarify the confusion, the SMB group has created an eBook called “Clearing the ERP Clouds”.
Use this eBook to help guide you.
MYOB Advanced Cloud ERP is a flexible and cost-effective option for small and medium-sized businesses.
More importantly, it is designed to respond to and overcome the inflexibility of many existing ERP solutions. This is done by allowing CHOICE of:
- Functionality you wish to license with the MYOB Advanced standard suites as well as optional add-on features
- Computing power and data storage size needed now and when the business changes
- Deployment options ranging from SaaS, hosted in a private cloud or on-premise, which can be switched as needs change
- Licensing models of annual subscription or perpetual license
- Data access to copy or move the data at any time, unlike many systems
- Device mobility to easily switch between desired mobile device such as an Apple iPad, iPhone and Google Android or use a Windows, Mac or Linux desktop computer.
All the flexibility above, plus the safety and security of a hosting provider such as Amazon Web Services and Microsoft Azure public clouds.