When to Choose the Cloud or Install On-premise for ERP

If you’re in the market for a mid-market ERP business management system you are probably considering choosing the Cloud or installing on-premise. A lot has been written about reasons to go to the Cloud or keep systems installed in-house or on-premise. One commonly quoted reason for not going to the Cloud is based on fear: the concern about how secure your data is. Let’s say you decide to host your system on a Microsoft Azure Cloud maintained by Microsoft themselves. The reality in today’s business world is that almost every businesses need to expose their systems to the web to enable remote access by employees, management, customers, etc. That means your system is already exposed to the world! So who would you rather have watching over your network security, Microsoft or that poor harried IT guy with a million things to do in your business? Something to remember is that most viruses are exposed after Microsoft has already figured out how to patch them and it becomes a race between the virus writers and your IT guy.

So security is probably not a valid reason, based on the above, so why should you not go on the Cloud? There are two common reasons. One is if you, for a variety of reasons, already have significant IT infrastructure in place so you might as well utilize it. The second is the Cloud can become very expensive in situations like this as you are now investing in two sets of infrastructure, one in the Cloud and the other in-house. The costs mount up very rapidly in just a few years.

There are three common situations where the Cloud makes a lot of sense. The first is where the organization does not have any real IT capability and it becomes cost-effective to spin ERP off to the Cloud. The second is where a business needs to rapidly start up a new business venture and the Cloud generally makes this possible. The ERP system can usually be moved in-house later, if required. The third reason is to preserve scarce investment capital where the business can generate sufficient operating cash flow to pay for the system.

My final comment is that the Cloud is not always what you think it is. Watch for a further blog post about “There’s the Cloud, and then there’s the Cloud”, where this topic will be discussed in more detail.

Malcolm Roach of Open Door Technology, Microsoft Dynamics NAV Gold Partner in Calgary, Alberta