In the ERP space, we hear a lot of talk about ‘the cloud’ as if it’s one singular approach to data storage. It’s not that simple. There are two cloud deployment models - private cloud and public cloud - and each one comes with its own list of pros and cons.
Many companies jump to the conclusion that ‘true public cloud’ or SaaS (Software as a Service) ERP is a must-have. But choosing a cloud ERP solution isn’t one-size-fits-all. When you’re evaluating ERP solutions, the delivery model deserves the same consideration as the software itself.
You need to consider factors beyond the technology, like your business workflows and how much control you want to have over your data.
With that in mind, let’s explore the differences between public and private cloud ERP and how they influence the decision for small businesses.
What most people think of when they hear ‘cloud’ is public cloud, where a third party provides application hosting, storage and other resources to users through a web browser. Public cloud is a multi-tenant model, where the infrastructure is shared by many businesses.
You don’t own your ERP software and your data is stored in a public cloud, available to you with a monthly fee for each user. You pay for the resources you use on a subscription basis, and the provider is responsible for maintaining and updating the system.
One of the main advantages of public cloud ERP is the ability to offload the IT infrastructure and maintenance from your internal team. You don’t have the capital costs related to hardware purchases or the ongoing cost of server maintenance and dedicated IT resources to manage your ERP environment. This can be particularly beneficial for small and medium-sized businesses that don’t have the internal expertise or budget to manage their own private cloud ERP system.
Private cloud ERP also offers application hosting, storage and resources to users, but the technical environment is dedicated to a single organization. Users access the system through a remote app with the addition of a virtual private network (VPN) for added security if required.
Either way, they still have easy access with an internet connection. In this case, you have the option to purchase a license for each user, so you own your software, or operate on a subscription basis as you would with public cloud.
One of the main advantages of private cloud ERP is that you have more control over the infrastructure and more flexibility to customize the system for your specific needs.
Another benefit of private cloud ERP is that it can be more secure than public cloud ERP, since the environment is specifically dedicated to only your organization.
A hybrid cloud ERP solution is precisely what the name suggests – a combination of public and private cloud, and in some cases, on-premise components.
In a hybrid cloud ERP system, some processes and applications are hosted in a private cloud environment, while others are provided by a SaaS (public cloud) solution.
The advantage of a hybrid cloud ERP solution is that it allows you to leverage functionality in both a desktop and web environment, based on the needs of your users. For example, your heavy financial users might prefer a richer desktop application hosted in a private cloud for added security, while sales uses a browser-based, public cloud interface to manage their activities.
Considering the right deployment model is a key factor in defining your ERP requirements.
The pros and cons we’ve outlined above for each cloud model should give you a better understanding of the options. But how do you know which one is best for your business? We recommend discussing these questions among your ERP project team.
As you can see, moving to the cloud isn’t a simple, straightforward decision. The best fit ERP solution for your business will be heavily influenced by your business workflows and requirements. And while we’ve focused our discussion here on cloud ERP models, there are certainly cases where an on-premise ERP system makes sense.
For most companies, a hybrid approach will likely tick all the boxes. In fact, Gartner predicts that 90% of organizations will have adopted a hybrid IT approach by 2020.
ProjectLine is one of the few Canadian ERP partners that can offer all three deployment models - public cloud, private cloud or on-premise. If you'd like to discuss your options, book a consultation today– our team is here to help.