The costs associated with enterprise resource planning (ERP) solutions go far beyond the base platform pricing. The total cost of ownership involves many factors, such as the amount of data you’re migrating from another ERP, the customizations required for the ERP to support your business needs, the hardware needed to support the solution, and the resources needed to get new users up to speed. One way to reduce the TCO of an ERP solution is to move from an on-premises deployment to the cloud.
The Cost Benefits of a Cloud-Based ERP Solution
Both upfront and ongoing expenses are substantially reduced by choosing a cloud deployment for your ERP system. Here are the major areas where you reduce the total cost of ownership:
- Limited upfront equipment costs: In most cases, you can roll out the cloud-based ERP solution without investing in additional servers and clients. Employees can access the new system on the most convenient connected device that they have available, rather than being locked-in to a particular workstation.
- Vendor covers hardware and software maintenance: If something goes wrong with the hardware and software supporting the ERP platform, then the third-party vendor uses its own resources to address the problem. Your in-house staff can spend its time addressing end-user tickets and optimizing the ERP configuration for your business.
- Limited downtime for updates: Updates occur on a rolling basis as the ERP supplier releases them. The change happens on the cloud provider’s systems, so you don’t need to go through an update process on your end to get access to new features. Downtime is limited or completely nonexistent.
- Access to more powerful security measures: Data breaches cause significant financial setbacks for companies. Your internal cybersecurity budget may not cover the latest innovations, but you can leverage the ERP provider’s systems to better protect your company.
- Seamless scalability: You can increase and decrease the ERP resources that you use on an as-needed basis. Most ERP providers charge you through a subscription-based model, which can adjust as your usage changes.
Cloud-based ERP solutions impact the total cost of ownership in many ways. Consider these factors when you’re making the decision between on-premises and cloud-based.