In today’s rapidly evolving business environment, the ability to quickly adapt and change is critical. In the past ten years, 70% of the Fortune 1000 companies have vanished. These companies were not agile enough to adapt to change—be it new business opportunities or new, more efficient business processes that would bring them closer to their customers. On the flip side, companies that barely existed ten years ago are now industry leaders. Many of these new companies have taken advantage of the technology disruptions that have forever changed the business landscape. Disruptions that include:
• The ability to quickly scale and extend applications in a rapidly changing business environment
• Software that’s easy to use and configure, and will always be current without going through an upgrade process
• Continuous real-time visibility into operations
• Access to applications anywhere, anytime on any device
• Social tools that enhance collaboration with employees, customers, suppliers, and partners
The question to ask yourself is — can your current business applications take advantage of these disruptions? In the next three years, will you be in the driver’s seat as your market evolves, or will you be forever trying to catch up as others disrupt your market?
Change is hard, especially when it applies to an organization’s business applications. It’s easy to come up with reasons not to change — “We don’t think we have a problem we need to fix” or “We think we can patch our current solution” or “Changing the solution will cause even more pain or cost too much.” But can you afford to wait?
There are three essential reasons why you should move to the cloud now:
• Your competitors aren’t waiting
• You need to address today’s business challenges
• Waiting has real costs!
Your Competitors Aren’t Waiting
Research from a wide variety of sources documents the move to cloud ERP solutions. A recent Forrester research report (“Application Adoption Trends: The Rise of SaaS,” Forrester Research, Inc., May 5, 2014) documents the results of a survey of executives and technology decision makers from midmarket and large enterprise organizations. The response to the question “What are your firm’s plans to use software-as-a-service (SaaS) to complement or replace the following applications?” showed a strong movement to cloud ERP solutions. Twenty-four percent stated they planned to replace their current ERP system within two years and another 41% stated they planned to move to a hybrid solution within two years.
You Need to Address Today’s Business Challenges
Whether you’re a midmarket organization running your business on a combination of business applications, or a large enterprise running your business on a legacy ERP system, does your current solution allow you to compete with the best-of-breed companies? You need to ask yourself questions like:
- Can your current system scale as your business grows?
- How configurable is your current system?
- Does everyone find your system easy to use?
- How painful is it to upgrade?
Waiting Has Real Costs
An on-premise ERP system for 100 users for two years can easily cost up to $500,000, with an additional 20% for annual maintenance, for a total cost of $700,000. Implementation services can run around $250,000. Infrastructure usually represents 10% to 20% of the cost of an ERP system.
In comparison, for a cloud ERP solution, the approximate two-year cost of a similarly sized system would be about $480,000. Implementation services would run about $150,000, depending on various factors such as data migration and configurations.
All told, a cloud solution comes in at 40% less than a legacy solution. That’s real money! Implementations are faster and easier because the system is built on top of an easy-to-modify object model with a “click instead of code” philosophy. However, the most important reasons for moving to the cloud are, simply put, priceless. By using a cloud ERP system, you can respond quickly to the ever-changing demands of your business.
About the Author
Stewart Florsheim is the VP of Marketing Communications at Kenandy, Inc., and is responsible for all marketing and technical communications. Kenandy produces cloud ERP software for enterprises, built on the Salesforce1 Platform.
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