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The Evolution of ERP Solutions: From In-House To Cloud-Hosted, Part 1

25 Feb

The Evolution of ERP Solutions: From In-House To Cloud-Hosted, Part 1

by SMB Suite
in Managed IT, SMB Blog
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465986029Enterprise software has gone through quite an evolution throughout its lifetime; the ERP solutions of today hardly seem to be of the same lineage as traditional versions.

Since their inception, ERP solutions have been traditionally hosted in-house. Businesses spend quite a bit of their budgets building an IT infrastructure and purchasing the equipment upfront to run the business management system as a whole.

On-premise ERP software is both a thing of the past and a thing of the present: Its technology is outdated, but it’s still in use by many small and mid-sized businesses today. Let’s investigate the components and typical structure of a traditional ERP system:

Hardware

Hardware is one of the biggest costs plaguing setup of on-premise ERP software. You need to purchase expensive hardware and equipment – all of which is difficult and costly to maintain.

Equipment Maintenance

As servers and hardware age, they break or become obsolete. In order to keep your business running, you’re on the hook for immediate repair costs – otherwise, you run the risk of indefinite downtime and inevitable productivity lapses.

Break/fix is a familiar model for IT, but it’s also painfully unsustainable. Temporary repairs are just that – temporary. You know the problem will rear its ugly head again, sooner or later, and that you’ll need to do the same emergency scramble when it does. Break/fix is rarely cost-effective and never the best solution.

Software

In order to use traditional ERP software, you need to purchase the license upfront. It’s an expensive cost, and the software becomes obsolete quickly if you don’t perform bug fixes and updates.

Upgrades, Updates And Maintenance

Every update, upgrade and fix you perform on your traditional ERP software costs you money. If you choose to ignore this maintenance, you’re sacrificing the functionality, security and efficacy of your business management system.

Traditional ERP software maintenance is usually performed yearly, and businesses are charged an annual enhancement fee. Unfortunately, annual maintenance is hardly enough to keep the ERP system running optimally. Since the fee is often radically high, it’s difficult to see the value in this software model. Ideally, these upgrade costs should be included in a predictable subscription plan – a feature unavailable with outdated, on-premise ERP.

Delivery

Unlike newer versions of ERP software, on-premise ERP implementation takes years, costs an exorbitant amount of money and sacrifices your productivity. You’re typically charged for the time and materials that go into system setup, so the final cost racks up as a direct result of the length of time it takes to deliver the solution. It’s nearly impossible to budget for a cost that keeps rising, so traditional ERP software is often more of a hindrance than a help.

Security

The servers that house on-premise ERP software are surprisingly fragile for their robust sizes and price tags. Exposure to extreme temperatures or humidity is enough to cause irreparable damage to these servers (and since a typical ERP system requires a room full of servers, the task of maintaining a constant temperature is a difficult one at best). In-house ERP software is also vulnerable to natural disasters, power outages and break-ins, putting your private business data at risk.

Data And Server Backup

Information privacy is critical for any business, and encryption (to prevent hacking or theft) and backup (to prevent loss) are the two biggest focuses for on-premise ERP software. Unfortunately, these are two incredibly expensive and time-consuming security measures, and the onus is completely on the business to incur the cost. Like the rising cost of ERP implementation, server backup is a necessary, but often crippling, evil.

Support

Traditionally, after you purchase the software license from an ERP vendor, you’re on your own. Any time you have questions about configuration, inquiries about training or need help with troubleshooting, you’re billed for time and materials. Customer service is an extra cost – not an included one, as it is with current ERP systems – and you’re forced to pay for the support you require. Depending on the complexity and frequency of these customer service calls, this is an unpredictable cost that has the potential to deliver a real blow to your business budget.

ERP software is a great tool for small and mid-sized companies, and is an absolutely essential component to any good business management system. It is, however, severely limited in functionality when deployed in-house. Stay tuned for the second installment of this series, where we explore the next phase in the evolution of ERP software: cloud-hosted systems.

Interested in learning how to promote and sustain growth in your business? It all starts with the right software system. Click the link below to download our tip sheet, 9 Ways To Leverage Your Business Software For Sustainable Success.

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Steve’s been with SMB Suite since 1998 and has been involved with nearly every aspects of the Company’s business as a strategist, professional services executive, cloud solutions architect, and senior consultant. In his current role, Steve is responsible for SMB Suite’s revenue and oversees the execution of ERP, CRM and BI projects for customers across a broad range of industries. Steve combines his expertise in MS Dynamics GP, CRM and other Microsoft products with a strong foundation in accounting and business to identify gaps and streamline customers’ processes. Prior to co-founding SMB Suite, Steve was previously Corporate Controller for MEHLE Behr and, prior to that, Audit Senior for Ernst & Young. Steve holds a Bachelor of Business Administration degree from the University of Texas at Arlington.

Jeremy is responsible for SMB Suite’s technology vision, strategy and implementation and is the architect of the Company’s Dynamics Cloud Platform. Highly adept in every facet of managed services, ERP systems and e-commerce platforms, Jeremy’s expertise spans the implementation and support of business and financial software solutions, as well as the customization and integration of SMB Suite’s cloud ERP technology stack. He holds numerous Microsoft and industry-related certifications, and was primarily responsible for designing the Company’s progressive business services platform in the early days of the Cloud. Prior to SMB Suite, Jeremy served as the financial analyst, systems administrator, and information systems liaison for a $2 billion financial services corporation.

Monty is responsible for SMB Suite’s day-to-day operation and, most importantly, its customers. As a leader, motivator and mentor, Monty creates loyal high performance teams willing to “walk through walls” to accomplish their goals. Prior to SMB Suite, Monty served as President of The Bradshaw Group (TBG), a global distributor, manufacturer, and repair facility for digital printers. In this role, he was the Company’s ambassador to its most important domestic, European and Latin American customers and TBG achieved a best-in-class Net Promoter Score of 74 for its superb customer satisfaction. Prior to TBG, Monty served as the General Manager of Sam’s Clubs three highest grossing U.S. stores and was named Regional Operator of the Year in 1999. Monty holds a BBA in Marketing from Texas Tech University and is an active member of Business Navigators. He has been active in Vistage International, Executives in Action, the Dallas/Fort Worth Retail Executives Association, as well as, A.P.I.C.S., the leading professional association for supply chain and operations management. Monty also volunteers with Hunger Busters and ManeGait, a therapeutic horsemanship organization.

David is a proven financial and information technology professional with expertise in providing business accounting software and computing solutions. He began his career by starting and managing a successful independent consulting practice for several years. He then launched the local systems consulting unit of Ernst & Young’s Entrepreneurial Services Group, leading the office into the hi-tech consulting arena. After successfully developing the unit for Ernst & Young, David founded NextCorp (which became SMB Suite in 2013) to serve the business software needs of clients throughout the US. David has made SMB Suite one of the best cloud ERP providers in the industry. In addition to being a successful entrepreneur and leader, he is a software and technology specialist, holding certifications in various Microsoft and other technologies.