(Last Updated: 02/06/2020)
If your ERP software is older than 10 years you are likely using a legacy ERP application (like Great Plains, Macola, Syspro, etc). You may have also felt the need to assess your options for cloud hosting of the software. These ERP solutions have a long, distinguished track record as an on premise (installed on your servers at your site) deployed solution. These Independent Software Vendors (ISV’s) now claim to offer some form of cloud hosting options. Keep in mind, moving the legacy application to a data center does not make it a true Cloud ERP solution. In contrast, considering a true cloud ERP solutions offers a number of advantages typically not yet available from these legacy ERP vendors.
We’ll discuss what differentiates a true cloud ERP from a legacy ERP, as well as the advantages of true cloud ERP solutions.
What is a True Cloud ERP Solution?
There are a number of critical differences between an on premise ERP solution that has been moved into a cloud deployment and a true, cloud-native ERP. Don’t be confused, the issue is not just ERP functionality, as all of the solutions are likely similar in what they can do (Accounting, Distribution, Manufacturing). The real differences are primarily architectural in nature. A true cloud-native ERP is built on a multi-tenant, shared resources model. Drawing on essentially limitless pools of processing resources data storage, enhanced disaster recovery and security management services. Developed using the latest cloud-native programming language and cloud technology stack, true Cloud ERP solutions offer modern technology design. As one ISV itself admits, it is still forming a plan to create a multi-tenant cloud offering. Cloud ERP solutions offer a number of immediate advantages that legacy ERP solutions likely won’t be able to overcome.
Native Browser-Based Design
True cloud ERP solutions were born in the cloud and are designed to work natively in a browser. This results in a more intuitive user experience (UX). Cloud ERP solutions offer modern design and consistent look and feel throughout the application. The overall simplicity of design translates into reduced consulting costs and having the application available on any device, anytime and anywhere directly results in improved worker productivity. Legacy applications have inconsistent design with a hodgepodge of interfaces. You go here for this, but go there for that and have multiple windows and applications open, etc.
A cloud-native ERP is inherently more scalable than a single-tenant alternative. This actual scalability depends on the skill of the cloud architect, but it’s generally true. Modern cloud platforms which offer multi-tenant applications are designed for scaling as your business grows. Legacy ERP solutions require continual hardware and licensing upgrades which tend to be quite costly.
The modern, cloud-native ERP is easier to update than its on premise (or hosted) cousins. This is because cloud-native software is simply made for streamlined update processes. A change to the application deploys instantly across all tenant instances. A misconception is that true Could ERP solutions can’t be customized and that if they are, the Software cannot be updated. In fact, the software is designed so that changes made on the customization layer are not affected by system-wide updates. In contrast, older legacy ERP solutions have their own challenges with code written many years ago and older designs not taking advantage of the modern Cloud ERP design. Legacy ERP owners experience many costly disruptions and consulting engagements during any change or update cycle.
ERP solutions usually need to integrate with other applications. True cloud ERP solutions are typically built with Application Programming Interfaces (API’s) that facilitate seamless integration options. Use of standards-based APIs and the cloud architecture are natural partners. Native RESTful APIs, for example, make it possible to connect a true cloud ERP solution to virtually any other application or data source with relative ease. The Legacy ERP solutions typically have non-existent or incomplete API libraries and have to rely on other costly 3rd party connectors to mimic this functionality.
Pricing & Other Costs
The advantages we’ve discussed so far have been features of true cloud ERP’s. However, one of the greatest advantages a cloud ERP has over an on-premise legacy ERP is financial. BetterBuys.com compares the costs of cloud ERP vs. on-premise in their definitive cloud ERP guide. According the guide, all the up-front costs of legacy ERP’s (software licensing & customization, implementation & installation, support, etc.) may range from $75,000-$750,000 for small and medium businesses, and between $1 million and $10 million for large business. By contrast, a cloud ERP solution for 20 users may only cost about $4,000 per month, and businesses with over 100 employees could save 50% by choosing a cloud ERP over an on-premise one.
The iPro Advantage
We can help you assess your choices and highlight the advantages of moving off of your legacy ERP application. Our consultants have extensive experience in evaluating a company’s ERP needs and making recommendations for the most suitable cloud ERP solution. From there, we can work with you to execute the move out of the dark ages to a true cloud ERP. So if you think a true cloud ERP is right for you, give us a call!