Many businesses are migrating their Enterprise Resource Planning (ERP) systems from legacy, on-premises deployment to the cloud. Should you? There is no simple answer, unfortunately. The cloud offers some compelling benefits for ERP, but it’s not for everyone. Nor is it always possible to migrate all of your ERP to the cloud all at once even if you want to.
Migrating ERP is a Major Change. Change is Hard.
If you run your ERP on-premises, it’s going to be a project to move it to the cloud. There may be many good reasons to make the move, but it’s a change management process. The IT department will have to adapt. End users will have to deal with some disruption to their routines. They will have to learn new interfaces. No one likes change, even if the benefits are easy to see.
Types of Cloud ERP
People talk about the cloud as if it were a single thing. It isn’t. The cloud computing industry embodies a proliferation of service offerings. The best-known clouds are the major, public cloud service providers. These are Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform. These are multi-tenant cloud architectures, where your ERP will share space on a Virtual Machine (VM) with… well, who knows?
AWS and Azure are comparatively low cost, but you’re using shared compute resources, network connections and cloud storage. Within these public clouds, you can choose from a wide range of options. For example, for data-intensive workloads, you may able to select a VM configuration with a dedicated number of CPU cores and a specified amount of RAM to handle the data. Or, with some cloud providers, you can request a “bare metal” instance meaning you get your own, dedicated machine to run your ERP in the cloud.
Some of the most popular cloud ERP solutions are offered on a Software-as-a-Service (SaaS) basis. Acumatica and Microsoft Dynamics 365 fit this description. They host the solution on their own cloud infrastructure. They handle 100% of the management of the cloud instances. You consume it over the Internet on your devices.
Then, there are the private and hybrid cloud models. A private cloud is a cloud software architecture—meaning you get the abstraction between the user and the back-end—but it runs on your infrastructure, or on infrastructure you rent from a private cloud provider. Security and reliability are advantages of this approach, assuming you’re managing it right.
A hybrid cloud ERP, sometimes called a “multi-cloud” architecture, involves deploying an ERP solution across an on-premises instance and a public and/or private cloud. You can also have a multi-cloud that spans AWS, Azure and so forth. It can get complicated! Reasons for this approach includes a wise incrementalism along with a necessity to keep certain elements of ERP running on-premises.
Advantages of Cloud ERP
What are the benefits of migrating to the cloud? Here are some we have seen, based on our experience working with companies that have migrated some of their ERP solutions to the cloud:
- Economic benefits – The cloud gets you out of capital expense (CapEx) investments for hardware, software and data center facilities. Instead, you pay recurring, usage-based (or per-user) service fees, which are operating expenses (OpEx). It’s not always cheaper than on-premises, but it usually is.
- Functional gains – New cloud ERP solutions often come with features that you didn’t have before, or that you would have to buy separately and then install. For example, data analytics and data visualization/reporting tools are invariably standard in modern cloud ERP.
- Integration potential – The cloud tends to make software easier to integrate. Connecting ERP to your bank, or supply chain partners, is often faster and cheaper with cloud ERP than it is on-premises. This is due partly to cloud architecture, but also from the lack of demands on your ERP support team to oversee the integration.
- Support improvements – Moving to the cloud liberates your IT department from having to support the equipment and software that runs your ERP on-premises. The cloud provider handles the lion’s share of that work. That said, there are still support duties, even with cloud ERP. In general, though, the admin workload is lighter in the cloud.
- Mobility – Cloud ERP comes with built-in mobility. You can run apps like Acumatica on mobile devices. This is available with legacy ERP, too, but it takes effort and investment to realize.