Over the past couple of years, there’s been a lot of noise from business management software manufacturers about cloud computing and the impact of the cloud on their products and services. Especially from those that produce CRM and ERP applications.
From a business user’s point of view, whether you choose to implement your software as an on-premise solution or choose a cloud-based option will depend on your business requirements: your aims, objectives, resources, preferred costing or payment methods, and what you need from your CRM software or ERP solution.
With cloud-based CRM and ERP solutions, the application and data is held on a network of computers kept in advanced data-centres, nearly always at a number of different locations. This means your software provider takes care of the running, maintenance and security of the application and servers 24 hours a day, seven days a week.
There are a variety of reasons businesses choose cloud-based applications. With CRM and ERP, the key reasons tend to be that a business can be up and running with the software relatively quickly. There’s also less need for in-house IT staff or high levels of technical skills, and things like security and upgrades are looked after by the vendor.
Probably the most common deciding factor between cloud and on-premise is that cloud-computing makes your software an operational expense rather than a capital spend. There’s usually little or no financial outlay in terms of hardware and IT infrastructure, and you pay a monthly fee to use the product, which is based on the number of users you have. That works both ways; some businesses prefer a capital spend and to ‘own’ the software. Others prefer an operational cost, as with the cloud. For cloud-based applications, you also need a reliable internet connection, and in some sectors there can be issues with the geography in which the data is actually held.
Many mainstream business software vendors are working to transfer their traditional on-premise applications in to the cloud. From a technical point of view, however, it’s not as straightforward as it may first appear. Although, once it’s achieved, the results are arguably superior to applications that have been developed as purely cloud-based applications. Why? Because they give customers choice. Not just for the initial implementation, but as their business grows, develops and changes, it’s easier to move from or to the cloud. Businesses can also move from the public cloud to their own private cloud, with the same application.
This is one of the unique benefits of Microsoft Dynamics CRM and its cloud-based version Microsoft Dynamics CRM Online. Both Microsoft Dynamics CRM and Microsoft Dynamics CRM Online are effectively the same products; they’re built using the same code base. So it’s not that difficult to move a company that’s using the on-premise version to the cloud version, or vice versa. Compare this with many of Microsoft’s cloud-based competitors (such as SalesForce) which are cloud-only applications. Because they are cloud-only, you can’t go on-premise even if your business strategy dictates it in the future.
Although there have been a few cloud-based ERP solutions around for a while, ERP in the cloud has been taking off at a slower pace than CRM. In April 2011, nearly three-quarters of Microsoft Dynamics CRM seats were sold for the cloud version. Concentrix TSG has been offering mid-market sister product Microsoft Dynamics NAV as an on-premise solution for several years. We started offering Microsoft Dynamics NAV as a cloud or software as a service option about a year ago, and although it has generated interest among a range of customers, the on-premise version remains more popular.
In a recent independent survey commissioned by Concentrix TSG, 67% of senior finance professionals said that they have no current interest in using a cloud-based ERP solution. The same survey cited concerns about security and a lack of information and understanding about cloud technology as the main reasons organisations are staying away from cloud ERP. For the vast majority of businesses, modern commercial cloud applications provide exceptionally high levels of security, including data protection and back-up, and are usually more secure than the majority of on-premise applications.
Sage CRM, the leading mid-market CRM application from Sage, is a web-based product which has had an online version (SageCRM.com) available for a few years. Sage were ahead of many other vendors with SageCRM.com. However, Sage 200, the small and mid-market ERP solution which effectively uses Sage CRM as its CRM module, isn’t due to have a cloud version released for some time. In fact it’s currently looking like the end of 2012.
Sage 200 was built from the ground up as a client-server type application. It also has many add-on products by third-party vendors, so getting it in to the cloud is not going to be straightforward. You could argue that by taking its time getting its popular business management solution in to the cloud; Sage is going to end up playing catch up with other vendors. But according to research carried out on behalf of Concentrix TSG, until ERP buyers agree with the benefits of cloud-computing, and are more convinced of its greater security, there’s actually no real hurry.
Would you consider a cloud-based ERP solution? At Concentrix TSG we’re very interested to hear your thoughts and comments.
By Concentrix TSG – independent CRM and ERP specialists
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