Deciding to make the switch to a fully integrated ERP system as a wholesale distribution company - whether you’re transitioning from existing software or manual processes - requires a lot of time and resources. It also involves making a choice between implementing a system on-premises or hosted through the cloud. So which method is better suited for your business? Although there is no single right answer to this question, there are certain elements that could make a strong case in favour of a cloud solution. Companies are increasingly opting for this method from the get-go, and others are switching from their current on-premises installation. To better understand why and when it would make sense for your company to seriously evaluate hosting software through the cloud, let’s first take a look at exactly what we mean by each implementation method.
On-premises software was historically the only option available to companies looking for wholesale ERP software which made it the only option for large and small companies. On-premises refers to software applications installed on-location on a client owned server. This requires up-to-date hardware and either internal or outsourced personnel for IT management. It also requires a bit of a larger initial investment when it comes to cost as companies buy the software licenses outright.
Cloud software, which is sometimes referred to as hosted or SaaS, is the implementation method of choice in today's world among businesses and consumers alike. With cloud software, the information is physically stored off-premises at the vendors’ data centre and accessed via the cloud (or internet). Users access the software through various methods (such as RDP connection or a web-browser) which communicates with the servers off-site. With this method, license fees are broken down and paid for on a monthly basis and server/hardware management and IT maintenance are the responsibility of the vendor.
Several factors influence which solution would be best for a company, such as; company size, infrastructure, available staff, number of users and budget, but for SMBs the cloud solution offers various benefits over on-premises, such as:
- Faster deployment times as the server and hardware infrastructure is already set up by the vendor
- Cost is based on number of user licenses which means that there is no limit to the number of devices the software can be set up on (this includes mobile and tablet devices)
- Ability to easily connect from home and other remote locations with an internet connection
- Reduced need for in-house IT personnel and server infrastructure
- Customers receive regular updates to the software which is taken care of by the vendor
Given the above examples, there are also certain times in a wholesale company’s life cycle, which would make the transition to cloud software easier and more appropriate. It is often when a company starts experiencing specific issues that they begin the search for a new software solution and spend the time learning about cloud based implementations. So when is a good time to start evaluating cloud systems?
- When you expand offices and grow your team. As you add multiple warehouse or office locations and hire people who require the ability to work remotely, it is a good time to consider switching to a cloud based solution. This allows remote access to the software from multiple locations around the world. When opening a new warehouse or office space, this means there is no need to purchase additional servers. It also gives your employees more flexibility to work from home, sales people the option to connect while working with customers or at trade-shows, and provides management the option to connect while travelling. This enables faster decision making for management and better insight into real-time data for your sales team.
- When your hardware is due to be replaced. Just like any piece of equipment, servers and hardware for on-premises software need to be maintained on a regular basis and replaced every few years. Running software on old equipment can result in system crashes, slow run times and data loss. People often forget about the costs included with managing infrastructure when looking at total cost of ownership of an on-premises solution. When your equipment is due for an upgrade, consider switching to the cloud and leaving infrastructure management to the vendor. If you chose the right vendor, this will also ensure that the software is running on the most efficient equipment available.
- As technology evolves and new features become available. As technology continues to advance it provides more and more opportunities to include additional features when it comes to software. Receiving upgrades and new features that take advantage of technology changes will mean you always have the latest and greatest functionality available. Examples include mobile functionality, eCommerce integration and wireless handheld picking. Find a cloud vendor that is consistently developing their solution to make sure you receive regular upgrades.
Even though some companies will still benefit from an on-premises based ERP solution, as discussed above, there are several reasons why making the switch to a cloud based solution is consistently the more popular option. According to a Gartner survey, 47% of organizations plan to move their core ERP systems to the cloud within 5 years. Cloud options have made ERP viable for smaller companies with fewer resources, allowing them to take advantage of features and functionality once only available to much larger companies. Whatever your decision, make sure you spend the time to learn about your options and accurately compare them based on all factors and not just costs.