“Small to medium enterprises (SMEs) with less than 1,000 employees are also moving swiftly from on-premise to cloud, because of lower costs and the convenience of getting a third party manage their IT.”
On-Premise to Cloud: Taking Your Business to the Next Level
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By Erwan Philippe — Head of SAP Business One & SAP Business ByDesign – Asia Pacific
Ninety percent of businesses will be making a cloud decision by 2018. Why is that? What makes cloud so appealing? It’s because cloud computing enables companies to consume computing resources as a utility, just like electricity, without the need to build and maintain any computing infrastructure in-house.
The cloud has three powerful core features that make it the next logical step for businesses to go from on-premise to cloud migration. It’s fully customisable at any time, allowing users to manage and create their own systems for fast deployment. Secondly, it’s highly scalable, giving users the ability to adjust their needed resources based on how much the system is being used. Lastly, you pay for only what you use.
Large corporations are embracing cloud, because of the need to move nimbly in today’s dynamic environment without being held down by immovable and inflexible IT infrastructure. Small to medium enterprises (SMEs) with less than 1,000 employees are also moving swiftly from on-premise to cloud, because of lower costs and the convenience of getting a third party manage their IT.
The Big Shift to Cloud
Cloud began in the early 2000s when applications such as Salesforce were written as software as a service or SaaS applications. Cloud’s popularity began to grow in the mid 2000s—by this time, many enterprises moved their email, document sharing, and customer relationship management to the cloud. Amazon introduced their web-based retail services, and in late 2000s, Google stepped in with their new cloud computing infrastructure through Google Docs services.
While cloud computing solutions cover a gamut of applications, in this blog post, we’ll zero in on enterprise resource planning (ERP) software.
ERP is a business management software made up of different applications that perform certain business functions like automation, project management, finance planning, and inventory tracking. On-premise ERP is when the ERP is installed in the company’s hardware and maintained at a physical office. Some companies still use on-premise ERP, because they see it as a capital expenditure, a one-time upfront large investment. They view cloud-based ERP as an operating expenditure, one that they should pay on an on-going basis.
On-premise ERP benefits include having an increased ability to customise the system and control over the implementation process. However, these benefits come at a cost of heavy upfront investment, the need to pay for associated hardware and IT costs, as well as risking data security that might not have optimised security protocols. These are further coupled with implementation delays that might come from ERP customisations.
Such disadvantages laid the ground work for a business to shift from on-premise ERP to cloud ERP. And for many organisations, the move to cloud was just irresistible. Why keep spending on IT when they could just ‘set it and forget it’?
How Cloud ERP Benefits Your Business
Businesses big and small are embracing the on-premise ERP to cloud ERP shift, because the benefits are clear and point to cost efficiency. Even SMEs in Singapore have been adopting cloud solutions. According to International Data Corporation, by 2017, the cloud computing market in Singapore, one of the biggest adopters of cloud technology in Asia Pacific, will grow to US$1 billion.
Indeed, business owners and finance managers have been paying attention to cloud’s practical business benefits, which include:
Lowered Costs. One of the advantages business owners find in cloud is the lack of heavy maintenance required to keep their businesses running. Thanks to its SaaS model, they can save on hardware infrastructure costs as well as do away with experienced IT experts who were supposed to manage and run the solution. Office space, utility, and manpower costs are saved.
The move to cloud technology also helps businesses in both their cash flow and business processes. Without the need for big upfront costs, upgrade, or third party license costs, users can enjoy predictable costs without being handcuffed to physical hardware. They also get to tailor the terms including the number of users and contract length to fit their business.
Convenience of Auto-Updates and Reliability. No longer will slow speed, system downtimes, and disaster recovery be a concern. All of these will be handled by the ERP provider.
Better Security. Entrepreneurs might be wondering if the shift from an on-premise to cloud ERP business would affect security. Not at all. Cloud vendors typically provide a higher level of security than most companies could achieve on their own. With cloud, essential integration at the data, process, and user interface level with the enterprise application isn’t any issue as well.
The Ability to Be Agile and Scale Quickly. The business climate nowadays is getting more unpredictable, and cloud ERP helps business owners and stakeholders respond to the dynamic needs of their clients more quickly, giving them the edge to outmanoeuvre their competition.
An on-premise to cloud transition improves not only the productivity of the work flow, but also helps save the business capital upfront and ongoing manpower costs that might otherwise be needed.
How to Transition from On-Premise ERP to Cloud ERP
Would the on-premise ERP to cloud ERP transition shift be troublesome and difficult? As with any overhaul of systems, transitioning to the cloud has a learning curve, but it is an easy curve if you’re partnered with the right company.
When migrating to cloud, you need to identify processes, make an inventory of systems, and define the integration points of your business.
You need to ask yourself these questions as well:
- What cloud adoption strategies should you consider?
- Who is responsible for your cloud data?
- Which functions and data will you move to the cloud?
- What skills and organisational structures are required for cloud innovation?
- How should you measure your business value now you’re in cloud?
- Which vendors will provide user training and testing to ensure a smooth transition to the cloud?
- Who’s accountable for damages when there are service interruptions?
- What’s in the small print of your cloud service level agreement?
- What are the grounds for cloud provider service termination?
Taking some time to go through these considerations will prevent you from experiencing a transition that could impact your business negatively.
A popular solution is to use a hybrid approach that balances using local servers and the cloud. By utilising virtual servers on a local machine and selectively choosing the right applications to run on cloud, you reap the benefits of simple management and efficient operation. The core servers and applications the business relies on can be maintained locally while customer relationship management (CRM) and ERP systems can be managed on the cloud.
Make sure you find a vendor that ensures a smooth transition to cloud. Choosing the right vendor would make the difference between a painless move and one that might cost your organisation time and money.
Critical Tools at Your Fingertips
When moving to cloud, it’s important that your ERP remains to be on top of every aspect of your business and can standardise and streamline the processes in key functional areas like accounting and finance, sales and customer management, purchasing operations, inventory and distribution as well as reporting and administration.
With processes streamlined through your cloud ERP, easy access to integrated and real-time data will help you make better business decisions. And because a cloud ERP solution is a software-as-a-service, you get to deploy and extend functionality quickly. This enables you to gain an advantage over your competition as you can react faster to changing market conditions.
No matter how large or small your business, you will profit from these attributes as they allow you to focus your time on growth and achieving competitive differentiation, as opposed to resources like IT support.
And as your business grows, you can easily adapt and respond to the ever-changing market landscape and overcome workplace complexities. With so many business efficiency benefits, can you afford not to move to the cloud?
Part two and part three of this on-premise to cloud series will highlight SAP Business by Design: Cloud-based ERP for mid-market companies and subsidiaries as well as SAP S/4 HANA, an in-memory ERP suite that supports Big Data, real-time analytics, mobile, business networks and more to act as the “digital core” of your entire enterprise.