Defining the Business Case for Moving ERP to the Cloud

ERP to the cloud

ERP platforms continue to evolve from traditional on-premise editions to cloud-based systems to address enterprise needs. While small-sized businesses are focused on saving time, reducing upfront costs, leveraging ease of use and broad system functionality, large-scale companies prefer to control all business processes using their own hardware and network.

In a previous blog, we discussed how your business can choose between on-premise and on-Cloud Editions. Today we will talk about why you need to move your system to the cloud. Let’s check out some numbers.

  • Forbes reported that 73% of companies are planning to move to a fully software-defined data center within 2 years and 80% of all IT budgets will be committed to cloud solutions.
  • As per Statista, the global cloud ERP market is expected to be worth $28B by 2022, attaining an 8% compound annual growth rate (CAGR) between 2016 and 2022.

Today’s complex business environment has ensured that organizations are staying on top of their game, and educating themselves about latest trends and opportunities in the digital economy. It is no surprise then that they are spending considerable time and effort into analyzing and deducing estimated financial value of  moving to the cloud.

While it is proven that cloud-based ERP platforms offer multiple benefits in comparison to traditional outdated systems, it is not fair to expect a simple figure of ROI or cash flow value that can be derived from moving to the cloud. Our approach to define the business case for moving ERP to the cloud is based on compelling logic and concrete evidence, which will be talked about more below:

Benefits of cloud-based ERP system:

1. Lower initial investment

Cloud ERP significantly reduces initial investments, including lower equipment, TCO and implementation costs. In comparison to traditional systems, you don’t need to spend money on your own hardware, which means low maintenance, free space in the office and reduced electricity bills. But that’s not all; cloud services are offered on a pay-as-you-go subscription basis, which eliminates unexpected expenditures and allows you to pay a regulated monthly fee without any hidden surprises.

2. Security

Data security is undoubtedly the most significant concern of potential customers. A Forbes report, has identified that 66% of IT professionals fear adopting a cloud strategy due to insecure data migration, reported Forbes. Therefore, cloud solution providers guarantee careful protection of data and privacy, in order to stay in the market. Cloud-based platforms have a highly qualified IT team which is responsible to defend your mission-critical data from all types of cyber attacks. Vendors of cloud-based ERP systems are aware of the latest threats and ready to support 24/7 to provide smooth running of the system. In the traditional on-premise system, safety of your data is completely your responsibility.

Learn more: How to choose the right SAP support and maintenance provider

3. Quick implementation

ERP cloud systems allow you to save time because cloud solution vendors host and manage the entire system from software installation and configuration to post-implementation support. Your company doesn’t need to install any hardware unlike traditional on-premise platforms. This enables you to implement an application rapidly as you don’t waste time in setting up equipment or additional software. Because cloud-based platforms leverage browsers, you can start your work instantly.

Learn more: How SAP S/4HANA is rising to the challenge of cloud ERP

4. Scalability

As your business grows, so does the data that you need to store, which means you are forced to upgrade your hardware constantly when using on-premise systems. Cloud systems, on the other hand are designed to cater to enterprises of all sizes, enabling ease of scalability and value creation. Instead of having to worry about what needs to be done as your business grows, you can leverage the strategic flexibility that cloud offers to grow exponentially while staying competitive.

5. Less IT staff required

Small and medium-sized enterprises have to spend their budget carefully. It may not always make sense to have a full-time IT staff as expenses can add up rather quickly.  Using cloud platforms eliminates these extraneous investments. While you focus on creating business strategies, your cloud solution provider manages your server. Leveraging a cloud platform eliminates the challenges associated with on-premise systems – taking care of regular system upgrades, conducting security checks, fixing server fails, and so on. By “outsourcing” ERP to the cloud, you won’t have to invest in frequent staff training sessions on the all important and evolving challenges of data security either.

Case Study: Learn how ArcLight Cinemas was able to process over 30Million transactions after migrating to SAP S/4HANA

6. Rapid automatic upgrades and disaster recovery

Any system is vulnerable to risks of failure and data loss. Cloud platforms copy data in at least two locations to eliminate any possibility of losing your information. Increasingly, businesses are also starting to leverage cloud services for disaster recovery. This is especially helpful for companies that can not afford to spend on bringing additional IT resources on board for this purpose. With a pay-as-you-use model, smaller companies can now leverage cloud-based disaster recovery options that allow for significant cost reductions, reduced need for IT infrastructure and resources, as well reduced data center space.

When using an on-premise platform, your IT team has to update the system manually, which can unfortunately mean that at times, you may be required to close your server for a certain period. Your team will then have to make backup copies on time to ensure data safety. However, when you are using the cloud, regular upgrades of the system happen automatically, so you will always have the latest version of your edition without any inconvenience.

Learn more: 5 Factors to consider when migrating from ECC to Cloud

7. Easy accessibility

Cloud ERP-solutions are accessed through the Internet, which basically involves simply login and start. Thus, any authorized person can access ERP through web browsers at any time, from any device and in any place. You don’t even need to have an office, you can just hire remote workers from any part of the world, which means your business can run 24/7. On-premise edition, on the other hand, is accessed through the internal server and network. You have to be in the office to authorize or if you want to use your personal device,  you have to install the software before doing any work.

8. Higher integration capabilities

Cloud ERP solutions are designed to integrate other relevant products and solutions available in the market. For specific needs, cloud solution providers offer specific cross-platform interfaces to simplify interoperability. Cloud ERP applications can be easily integrated with other cloud-based systems. Having access to a variety of options helps to build a unique and specific system to run your business more efficiently. This flexibility and ease of integration with other applications is not easy to achieve with on-premise systems.

As business needs continue to evolve, day to day processes in enterprises demand security, scalability, flexibility, and equally importantly, affordability. Customers expect real-time data accessible anywhere, any time and from any device with maximum capabilities.

There is no doubt that cloud computing is the next generation solution for data storage in the digital economy. In order to establish themselves for rapid innovation, it is vital that businesses consider what moving their ERP to the cloud can entail.

As you start exploring cloud-based ERP solutions to evaluate whether they would be a good fit for your business, we are happy to answer any questions you may have.  Talk to us.

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