ERP in the cloud, or on premise?

NATIONAL HARBOR, MD. — Moving business operations to the cloud may not fit for all organizations, but many are increasingly dipping a tentative toe into hosted and on-demand services, increasing the importance of seamless integration between on-premise and on-demand computing models.

At Sage Summit, business software Sage Group PLC’s annual user and partner conference, customers across a variety of the company’s mid-market enterprise resource planning, customer relationship management and accounting software platforms indicated a high level of awareness and understanding of cloud models. Some have moved some or all of their platforms to their cloud-based alternatives, while others have decided on-premise remains the right choice for their business.

Critical factors often include the size of the company and their industry. Carson Home Accents is in the manufacturing and distribution industry as a Pennsylvania-based wholesale manufacturer and distributor of gift, garden and home decor products in the U.S. and Canada. Carson has deployed Sage ERP X3 in an on-premise deployment and John Hill, vice-president of administration, said for them it was all about control.

“We have that manufacturing operations background, and we work hard at squeezing the keystrokes out of every operation to make it as efficient as we can, and the control factor is always important for us,” said Hill, explaining the decision to stay on-premise. “We want to have complete control over our operational systems to make them as efficient.” While he likes the configurability, flexibility and control he gets with X3 in an on-premise deployment, Hill said he wouldn’t rule-out embracing the cloud in the future.

“Could I see Carson going to the cloud? Yes. We’re not the biggest company in the world; I’m the IT guy,” said Hill, confessing the worry-free nature of the on-demand model is compelling from that perspective. “We’ve chosen this direction for now, but business needs change and we’ll evaluate it regularly and see how it goes.”
At the other end of the scale from Carson Home Accents is Wisconsin Housing Preservation (WHC), a not-for-profit manager of affordable housing in Wisconsin and longtime customer of Sage’s AccPac accounting software.

Shannon Brown, controller with WHC, said theorganization had been an on-premise AccPac customer but a variety of factors led them to move to the cloud. It’s a small organization, butspread out across two different offices with a number of additional remote workers. The small staff also means Brown doubles as the IT manager, and was tasked with maintaining the on-premise solution.

“Computers are accountants, and therefore I was IT manager,” joked Brown. “Our servers were coming to the end of their lifespans and we were moving offices, so a lot of things were happening at once and we started looking seriously at the online version.” Other on-demand offerings were considered, but staff’s existing success and familiarity with AccPac made it a logical online choice, allowing Sage to “have all the hardware problems,” said Brown.

“I wouldn’t have to go in on the weekend when the server goes down, letting me have a bit of a normal life,” said Brown. “We wanted a stable platform with the reports we’re used to, and to not have to worry about access.” Since moving to the cloud, Brown said, WHP hasn’t looked back. Already, the organization has moved its document storage and e-mail to cloud-based providers. All that remains on-premise is the network infrastructure. Still, she said, they stepped cautiously into the cloud.

“We baby-stepped our way into it. We kept our network in place as we were going online and I kept our old (Sage) server with all the old data in a closet for a year,” said Brown. “But it’s really made things a lot easier, and I can’t see us going back.”
And even if a business isn’t going to the cloud entirely, many will adopt a hybrid model by using select online services to complement their on-premise offerings. That’s the case for Carson Home Accents, which uses Sage Payment Solutions, an online credit card processing tool that syncs with the on-premise ERP X3 deployment. Hill said the automated process has allowed the company to substantially increase credit card orders, enabling a recent large sales increase without adding headcount.

Laurie Schultz, senior vice-president and general manager of mid-market ERP solutions for Sage North America, said rather than a large “app store” model of connected services, she’s looking for more “killer apps” like Sage Payment Solutions that will make a difference for users of Sage’s core products, whether on-premise or in the cloud.

“My focus on Connected Services is finding a few game-changers. We actually make more from a Sage Payment Solutions customer using MAS90 than we do on a MAS90 renewal,” said Schultz. “The day could come when we change the licence model to focus on services. Customers are demanding more pay-as-you-go.”
Follow Jeff Jedras on Twitter: @JeffJedrasCDN.

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