Implementing ERP is an important step in the evolution of many businesses. And today’s market for ERP can be more confusing than ever with new deployment models and ways to manage your data and IT portfolio in the cloud. We’ve collected some tips together to help you in the evaluation process.
3 important ERP cost factors to consider:
Like a car that keeps breaking down or begins falling behind the feature curve, an ERP implementation can become too costly and risky over time if it isn’t handled the right way:
- A traditional ERP solution has to be continually maintained, or else it becomes outdated and less useful, much like a car that lacks airbags or power windows. If the ERP platform itself isn’t flexible enough to evolve in lockstep with changing IT systems and business apps, you could suffer strategically as your goals and IT strategy change. Be sure to select a flexible ERP based on the most up-to-date technology and positioned for future innovations.
- Expenses for hardware, licenses and contracts, while negotiable in many cases, can add up with on-premises solutions. Depending on your data requirements, a hosted (cloud-based) ERP may be the wise option in terms of cost and additional staff.
- Many businesses require customization and integration with their critical line-of-business solutions. This can require support from both your trusted ERP partner and your internal IT team. Consider the out-of-the-box flexibility and customizability of your ERP solution, and select a solution designed to easily configure and adapt to industry needs. The more difficult it is to customize to your business, the faster your costs can add up.
All of these common issues create plenty of anxiety about ERP pricing. Plus, they up the ante for knowing how to pick an implementation partner who can provide a considerable the full scope of services when it comes to planning your ERP strategy and implementation.
“ERP systems that run in the cloud are an increasingly popular option.”
The road to cost-effective ERP starts with figuring out what type of ERP – on-premises or cloud – is best for your organization in particular. ERP implementation usually offers a great opportunity to evaluate not only your business processes, but the future direction and goals for your IT model.
Choosing cloud ERP: What you need to know
Tapping into ERP systems that run off-premises, in the cloud (i.e., on someone else’s infrastructure), is an increasingly popular option for businesses of all sizes. Forbes contributor Louis Columbus noted in 2015 that this category was growing rapidly due to its cost-effectiveness and speed of deployment. There are indeed several fundamental advantages to taking this route for ERP:
- Say you work with a partner who provides cloud hosting services, whether on Azure or in a private datacenter. This frees you from the grind of the hardware upgrade cycle and the need to sink so much money into ongoing maintenance. Pricing for your Dynamics implementation can be made much more appealing under this model.
- More specifically, large upfront purchases can mostly be avoided. Expenses on equipment, databases and licenses can be trimmed or eliminated altogether depending on the specific solution being put in place. Hosted Dynamics can be especially cost-effective when it comes to hardware-related expenses.
- Configuration and integration of your business processes across applications can be made simpler in the cloud. Integrating and provisioning resources is not the drawn-out process that it can sometimes turn into when you’re working directly with hardware and licenses yourself.
A cloud ERP solution implemented with the help of a Cloud Solution Provider can be stood up relatively quickly, allowing for accelerated time-to-value for businesses. Be sure to assess what you are getting with a cloud solution, namely what (if any) resources you will have to procure yourself, how your data is being managed and what cost structure that provider is offering.
Some industries deal with sensitive data and thus enforce strong data security regulations, making on-premise deployment a safer and more compliant option. However, Microsoft understands the importance of data security and continues to build community clouds that are compliant for specific industries, as well as private hosting through key Microsoft partners.
On-prem ERP: options and considerations
On-premise deployment remains a common option for many companies who face specific data security regulations, or prefer to maintain control of their data and need the freedom to perform customizations that make the ERP system a close fit to their needs. Close to 60 percent of firms choose on-prem, according to numbers from Panorama Consulting.
With on-prem ERP, consider working with an implementation partner to assess:
- Requirements planning: What growth trajectory are you expecting, and how will your solution respond to it?
- Implementation and maintenance plans: How much time and money would you spend implementing and maintaining software and infrastructure that you own?
- Consulting and customizations: What add-ons, custom developments, etc., might be of the greatest value to your business process?
Buying and implementing an ERP solution is not a process you want to enter into unprepared. Contact us today to find out more about Microsoft Dynamics pricing and options for your ERP deployment.