“With Tier 1 and 2 the model is, except for larger implementations, to deliver through a partner model. The advantage of this is that you have choice. If the partner you are working with does not have the specific industry knowledge you need, or you simply do not get on with the other party, then you can find someone else and not have to ditch the current ERP project.
“On the other hand, it is more likely going to be a more expensive option and you will have very little, if any influence on the vendor. This doesn’t necessarily matter as the software should be expansive enough to meet your needs – and if you do require something unique or bespoke, you’ll likely be able to find a partner that can develop a custom solution that will work within your ERP system.”
Cloud software and computing have experienced a great boom over the last few years. The flexibility provided by the Cloud, gives users more options in how to utilise and make the most of this specific type of software. Of course, this applies to ERP too. But how can on-premise or Cloud ERP systems help a business? Martin explains:
“Traditionally, businesses had to invest in lots of hardware and an environment to keep their systems within. This is an example of an ‘on premise’ system. The software would sit in this hardware, while being patched and maintained by your own people. When software upgrades come along, you have to consider the customisations your system may have had. Sometimes these customisations might prevent you from moving to a better version. There are some businesses that are still running software from 20 years ago because they are stuck in a customisation cul-de-sac.
“Nowadays the preferred provision model is to deliver ‘in the cloud’ systems. What this means is that someone else provides the servers and the environment they live in – you are simply renting it from them.
“The implications of this are varied. In the ‘traditional’ model you’d buy your hardware and licences up front, through capital expenditure. You’d then be charged an annual maintenance fee, usually in the region of 20% of the licence cost, which would give you support and access to future releases. The benefit is that you would fix your costs for the next three to five years.
“Some downsides were that if you wanted to downscale you’d still own kit and licences for the original implementation size. If you decided to upscale, you’d have to make another investment. It is worth noting that in this model the ability to look after your computer environment is critical. Interestingly, for single site organisations, connectivity was not a major concern – if you couldn’t connect to the internet, you could probably still run your business – you still had access internally to your systems.
“With the Cloud ERP model, licencing typically means that you pay a single monthly fee per user. This allows the model to be scalable – you can increase the number of users and decrease the number of users, and the pricing will alter accordingly. For businesses that are ambitious, the ability to add users as they grow is excellent, while for those that work in volatile economic environments, as many are doing nowadays, the opportunity to scale down could prove to be useful.