I like books. You know, the kind that are made out of paper and have words typed onto a page. You may remember them. That was before we had eReaders which I really don’t like. With a real book you can feel the pages and turn them with your fingers. I cannot remember a time when the battery on my book ran out, and if I drop my book on the beach by accident I don’t have to worry that its casing may be broken. In any case, I like my bookmark.
There must be someone out there who likes eReaders because you can buy these things in the shops. I guess it’s all about fashion and choice. You should have the same choice with your computer applications too. Some people just love having their applications installed on their own machines; the thought of allowing someone else to look after their applications and their data is just too horrible to contemplate.
But wait, I hear you say. Isn’t everyone telling you that cloud computing is the next best thing after Lady Gaga? Everyone is talking about how you don’t need IT infrastructure any more, and that somebody else can have the nasty job of looking after your applications and making sure that your data is secure. Does this mean that you should consider using the Internet to access all your data? Hey, to cut to the chase, that’s all that cloud computing really is!
I don’t think so. Or perhaps…yes. It’s really a matter of choice. Most companies run their critical business applications on computers installed in-house (on-premise, as it’s sometimes called). But running systems in-house costs money in terms of managing the IT infrastructure. Alternatively you could connect, using the Internet, to your favourite business application that is being hosted by someone else. Which is right for you? The answer lies in understanding the pros and cons of on-premise versus the cloud, and then making a wise choice based on your actual needs. It is not a one-size-fits-all scenario.
Here are some things to consider while mulling over your destiny.
- If the costs of your IT department and infrastructure are really scary, then moving to an Internet-based hosted solution would save you those costs. This is especially worth considering if you are on an old version of application software and the upgrade to the latest version may incur additional hardware upgrades. Perhaps an upgrade is best achieved by moving to a hosted solution.
- But a hosted solution won’t save you the costs of implementing some of the more complex systems, for example an enterprise resource planning system (you knew I meant ERP, right?). That still requires effort in terms of business process management whether you use an on-premise or a hosted solution. Then you need to consider integrating those pesky disparate systems to your core ERP system. This is tricky at the best of times, but even more so with a hosted solution.
- Before you jump one way or the other, make sure you really understand the true cost of ownership. A hosted solution is often licensed per user per month, whereas an on-premise version typically incurs an annual maintenance fee across all users. You should attempt to calculate the costs over at least a 5-year period to get a true comparison. If you are a fan of Japanese business practices then do the cost calculations over at least 100 years (at least that way you won’t be around to be the fall guy if the calculations are wrong).
- Finally, you might also want to take performance and usability into consideration. A business application running in a networked environment (aka on-premise) will typically outperform a web-based hosted application both in terms of responsiveness and in terms of sophisticated user interface capabilities.
On-premise versus the cloud? The choice is mostly related to managing costs, and has very little to do with whether your business will run more efficiently or productively either way.
On a final Luddite note, I would rather my bookcase remains just that, and won’t be renamed an eReadercase. There, I already feel better now that I’ve shared this with you.
Disclosure: I like my job. So to keep it I had better mention that we have a product called SYSPRO that will handle both on-premise and a hosted offering quite nicely. Click here to learn more about our cloud offering. It's called SYSPRO BusinessLive.