Using Cloud ERP to Seed Growth

September 10, 2012
By guest blogger - Karin Wilson

Cloud computing is not the be all and end all, but it does offer opportunities to take advantage of the ever-interconnected world. And as this world becomes more and more technologically savvy, cloud computing offers ERP businesses a way to work more efficiently and productively, while concurrently saving you money.

Yes, there are still concerns over the security of cloud solutions, the potential downtime, and the level of service you are getting in comparison to your on-premise solution. But with the amount of money you can save by shifting to the cloud, it might all just be worth it.

Here are four ways you can save money if you move your business to the cloud.

Increased Efficiencies With Cloud ERP

With cloud computing, internal efficiency is improved. Organizations will no longer need to buy or maintain expensive servers. As such, IT departments will no longer be required to act as data center managers – IT administration, licensing issues, software updates and security management will all be taken care of by the cloud service provider. What does this mean for your IT department? It means two things. Firstly, you will not need to employ as many IT staff.

Secondly, IT staff will have more time to focus on innovation and other organizational differentiators, rather than on time-consuming IT management issues. For example, if you work in the aerospace or automotive industry, you know that attention to detail is critical to ensure product quality and that demands are met. With a cloud-based solution that supports this demand, your IT department will have more time to focus on developing vertical IPs that will help you gain a competitive advantage.

Pay For Only What You Use With SaaS

Before the cloud, companies would purchase long-term licensing deals (lasting a year or more) for a large number of users. If the company did not use all the licenses it purchased for that year it would eat that cost. With cloud services, these days are over. Companies are now able to add new users without purchasing new software, paying only for what they use in a pay per user model; or, if they are a larger organization, purchasing an “enterprise” license which covers a nearly unlimited number of users at a reduced cost. In both cases, this moves a bulk of IT expenses from capital to operating, as companies would now be paying for monthly user fees. Some vendors have even broken traditional ERP pricing models and allow for unlimited user licenses without the associated premium for “enterprise” licenses.

Reduced Labor Costs

By moving to a cloud platform companies require less time to administer, maintain and upgrade the technologies. For example, if an IT administrator is responsible for 100 servers under a traditional model, that same administrator will be capable of effectively managing thousands of cloud-based servers. In other words, IT staff’s efficiency is improved in the cloud, so staffing numbers are reduced.

Additionally, with cloud computing employees can work from anywhere at any time they wish. Fewer employees on site means less resources are being used, thereby leading to cost savings.

A Smaller Footprint

A study last year by research firm Verdanix, estimated that cloud computing could save companies $12 billion, the equivalent of a carbon emissions savings of 86 million metric tons, by 2020. A virtual cloud system has a smaller global footprint than a standard in-house data center as it does not take up physical office space. Fewer servers on-site, producing less heat means you not only save money on energy costs but you reduce your environmental footprint.

Huge multinational organizations have already moved to the cloud because they understand the benefit in terms of increased efficiencies, reduced costs and agility in comparison to onsite systems. If cloud computing works for these businesses, what’s to say it won’t work for yours?

About the Author: Karin Wilson is the Managing Editor for Software ThinkTank, an online resource that keeps you up-to-date with the latest technology innovations and business solutions, while also helping organizations make the right decisions when it comes to selecting business management software.

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