TECHNIC: THE CLOUD IS NOT A TERRIBLE THING AND ON-PREMISE IS STILL RELEVANT TODAY
Bernd Zipper
CEO zipcon consulting GmbH | Chairman Initiative Online Print e.V. | Founder Online Print Symposium | speaker | author | advisor | coach | philanthropist
It is a major decision whether the main components of a new ERP (Enterprise Resource Planning) system should be provided on dedicated servers within the company (on-premise) or in the cloud. Different options and costs depend upon this decision. Some vendors offer a mix of models where the cloud software is hosted on a company’s private servers. However, to consider the advantages and disadvantages, one should make a clear separation.
To be clear, the main difference is the investment costs at the beginning of a project. The low entry costs of cloud software have contributed to its popularity, especially in comparison to the high license fees of the purchase options. According to a Gartner study, 93 percent of companies currently use cloud-based software or system architecture, and the use of hybrid cloud systems has risen from 19 percent to 57 percent within a year.
Over time, costs will converge. The following table shows the total cost of ownership (TCO) for cloud-based and on-premise software over a 15-year period. There are enough ERP system users who have been using their current software with maintenance contracts and training for more than 15 years. As it stands, the cloud solution is cheaper to calculate over 14 years. This of course is just business theory without knowing where we stand technologically in 2035.
owner / ceo Dataline Solutions nv
4 年The question shouldn’t be about the technical background of an ERP system, as long as it’s future is guaranteed. Investing in an ERP system (new or replacement) should always, like any other investment be taken on basis of a solid ROI. Implementing a new ERP solution is about change management. How can we make our company perform better to be able to keep our business profitable in the future. The new ERP should be able to do just that. Helping you to achieve your business goals. The question if this should be on premise or in the cloud is in that fact of less importance. Future proof is of course important, not only on the technology of the software but even more on the company developing and implementing it.