Advice and Information for Finance Professionals
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Finance Topics & Trends
July 28, 2016
From On-Premise to Cloud ERP: Five (Expensive) Tasks that Go Away Forever
Rudy Lukez, Director, ERP Product Marketing, Oracle
There are still companies out there that continue to drag their feet when it comes to moving into the Enterprise Resource Planning (ERP) cloud. They know there’s work to be done (as I noted in Part I of this discussion), but what they’re not focusing on are the enormous cost savings that come with such a transition.
As you will see, there are myriad expenses that come with having your ERP solution on-premise. Fortunately, with an experienced and sophisticated cloud provider so many of those costs either vanish or are cut significantly.
Consider these tasks and costs that disappear:
Hardware Acquisition
Any business that has gone through the process of buying, running, and maintaining server hardware for their ERP system knows just how expensive this can be in terms of equipment and personnel. By going to cloud, where all hardware is off-premise, the cost of running those systems – including the time to plan and acquire – is zeroed out. From big dollars to zero, a lot of money is saved. The only thing you lose is the occasional free lunches from your favorite hardware vendors.
Software Licenses
The need to capitalize software licenses and then pay for their maintenance each year to get security fixes, bug repairs, and functionality updates (that you then have to install at an added cost) goes away.
With the cloud all of that activity is covered, including the cost of doing the work, by experienced cloud professionals who keep your software not just maintained but secure and patched.
Data Center Management
Internal IT professionals tend to be very protective of their private data centers. After all, many of their jobs depend on maintaining such data centers.
With the cloud, though, the vendor handles all the data center activity including disaster recovery, backups, physical security and utilities.
Let me tell you how “valuable” a private data center is to an organization. Through my daughter’s charter school, last year I acquired an office building with an eight year old 5,000 square foot raised floor data center. We converted the data center into a gym and sold all its contents as metal scrap with a net gain of $350!
Shelfware Justification
All on-premise systems owners share the same problem: software is overbought to get better discounts, accommodate potential user expansion over a 3 to 5 year period, and plan for functional expansion.
Such over-buying practices are expensive for the organization and consumes countless hours of IT management time justifying such software purchases. All too often, the original reasons for the extravagant purchases are later forgotten.
With the cloud this just doesn’t occur. You use what you need when you need it. You add more when you need more. Nothing more, nothing less.
Database Management
Running an enterprise ERP system on-premise requires significant database expertise. The critical importance of maintaining patches, protecting security and tuning performance nearly every day requires top-dollar staff. Like ERP software, database software also gets upgraded periodically.
Moving to the cloud not only eliminates this cost, but brings to you a large, diversified team of experienced database administrators who work seven days a week, 24 hours a day and 365 days a year to keep the software tuned, secure and patched.
This frees up your IT team to do more creative, innovative and revenue-generating work for your company. It also frees up more of your weekends and holidays!
Using the Cloud to Accelerate Innovation and Growth
With this and my prior blog post, I have covered 10 important points about moving from traditional on-premise 1.0 to modern cloud 2.0 ERP systems.
In short, if you are smart in your planning and take the time to ensure your cloud implementation is best for your company’s needs, you will have a system that not only serves the needs of your business much better than outdated systems, it will also save you a fortune and free you to do what you do best- innovate and grow!
For more information on cost savings through Oracle ERP Cloud migration, read this eBook:
