What does being "in The Cloud" actually mean, and how does it impact the technology choices that businesses make regarding their infrastructure? Your decisions regarding an Enterprise Resource Planning (ERP) system will be greatly influenced by your approach to cloud computing. Here are some things you should know about that subject to help you make informed decisions regarding your IT deployment, infrastructure, and, ultimately, your ERP system.
So, what exactly is The Cloud?
Despite it's ethereal-sounding name, “Cloud” is simply a generic term for computing resources that are provided from a remote location. This single, broad term covers everything from storing personal email or documents on commercial services, like Gmail or Dropbox, to remotely hosting and maintaining the entire computing infrastructure of a major international corporation from a remote data center.
At its most basic, cloud computing is just about renting storage and/or processing resources rather than buying and maintaining them in-house (on-premise). In its highest-quality form, however, cloud services offer more secure storage, redundancy, updated hardware and software, and faster processing than can be deployed internally; all for comparable costs of a self-maintained infrastructure.
Business applications that run in The Cloud
Major business applications - like ERP and CRM - that are capable of running in The Cloud are often referred to as “cloud-hosted” or “cloud-based” software. They are often (though not exclusively) provided to companies using the Software-as-a-Service (SaaS) licensing model. SaaS licensing is based on a monthly fee (i.e. pay-for-what-you-use basis) and includes the majority of IT and software costs. There is no up-front software license fee, though the software is ultimately leased rather than owned. There is no server hardware, operating system, or software to buy, install, and maintain on-premise.
As you learn more about the differences between SaaS and on-premise deployments, it's important to keep in mind a third option: hosted services. Cloud-based software is capable of running in any hosting provider's environment; not just in the software manufacturer's cloud. This gives organizations that would prefer to license the software the option to purchase it - thereby receiving the financial benefits of ownership - but host it with a managed services provider of their choosing like Bennett/Porter - thereby receiving the benefits of a managed IT infrastructure.
The differences between SaaS and on-premise business applications
Cloud/SaaS deployment is very different from traditional on-premise installations from a financial perspective. Traditional software licensing involves an up-front capital cost for the software license as well as purchase and installation of the hardware, operating system, database, and other elements. With SaaS, all operating costs are built into the monthly fee.
Some suppliers and advocates claim that implementation is much faster with cloud/SaaS ERP. While there are some savings in not having to install the hardware and software, all remaining implementation tasks apply equally to on-premise and cloud/SaaS implementations. A successful implementation will depend more on the quality of your team than the location of your software.
Over the long term, on-premise implementations require on-going support and maintenance costs, including backup hardware/software, disaster contingency, server optimization, load balancing, and insuring business-grade security remains active and current. With The Cloud, these support and maintenance costs are typically absorbed into an SaaS monthly fee; usually at a savings.
Cloud-based software deployments remain extremely scalable throughout their lifespans. As companies grow, so do their computing needs, and especially their ERP computing requirments. In a cloud-hosted environment, you can add or remove users and add hardware power painlessly and almost instantly with a phone call to your provider, who will change the resources and adjust the monthly fee accordingly.
SaaS deployment options: single-tenant or multi-tenant
There are many variations of cloud-based SaaS applications, but the majority can be classified as either single-tenant or multi-tenant.
Single-tenant SaaS hosts your applications remotely just the way they would be installed in a traditional on-premise purchase. Your company's applications and data are installed and managed by your cloud-hosting provider, and your users access them through the Internet or leased lines.
In multi-tenant SaaS, there is one instance (i.e. a single copy) of the software and each user company has its own separate (and secured) database that includes application tailoring for the way they want to use the software. In other words, all subscribers share a single but partitioned instance of the software. On the plus side, all users are constantly up-to-date with the latest enhancements and fixes since they are all operating with the same software. The potential disadvantage is that user companies have limited control over the software they depend upon, and modifications and integration to outside systems can sometimes be problematic.
With on-premise ERP software deployment - and slightly less so with single-tenant SaaS - you control the implementation, configuration, and support around your environment. You're organization can customize and integrate readily depending on its business needs. You also control the upgrade cycle. In a multi-tenant environment, these responsibilities are controlled by your provider according to the terms of the specific contract arrangement.
Beware of legacy applications “re-engineered” for The Cloud
It's important to be cautious of legacy applications that purport to be "re-engineered" for cloud deployment. Many such products have simply been given a browser-like, user inter-face-lift but still require client software on your PC or device. Others use a special server between the application and the user to serve up web pages to the client. Neither approach delivers the speed and responsiveness of a true cloud design. True cloud applications run no code on the client device except within a browser. They are designed and built for the web. The screens are responsive and seamlessly available on multiple devices to support a mobile workforce.
Choosing the right deployment option for your company
Cloud/SaaS deployment offers an attractive alternative for many companies. For many others, a hosted solution is the ideal way to go, while a few organizations prize the control of on-premise installations. Companies should consider all available deployment options in conjunction with selecting the right mix of software and service provider(s). The ultimate decision will come down to system functionality and fit, supplier reputation and financial strength, the support team, and other “due diligence” investigations to confirm that you have chosen the right solution.