What is the right choice for you? Cloud, On Premise or a Hybrid Cloud?January 3, 2018 by Kim Haythornthwaite
Are you 100% cloud based or 100% on premise or do you have hybrid systems? Hybrid would mean that part of your system would be on premise and part might be in the cloud. You might be a manufacturing company with an on-premise manufacturing system, but your sales or marketing team are using a cloud based solution. Probably most cloud based companies have some on-premise and vice versa. There are good reasons why you would want a bit of both.
What type of companies are working well in the cloud?
Below are some situations or industries that lend naturally to the cloud.
eCommerce
Web stores and their financial systems are a natural candidate for cloud. eCommerce businesses have their hosted web-store already in the cloud so it is a natural fit to add the ERP system to the cloud. If they have retail stores, they can use a cloud based POS system that integrates into their cloud ERP system.
Technology Companies
Tech companies are often run by young professionals that have grown up with the cloud. They want the flexibility to login into their systems anywhere in the world. They want modern, fast paced systems. They are also new companies and don’t have to bear the cost of transitioning existing on-premise or legacy systems to the cloud.
Companies with remote teams or companies that span regions and countries
The cloud enables great collaboration across regions and territories. A company with headquarters in Silicon Valley, and with staff across the country, are able to all work together easily on the same system. With cloud systems, remote staff won’t experience the reduced speeds or connection issues that used to plague remote logins.
What type of companies are still on-premise?
Everyone conjures up a picture of the aging manufacturing owner that likes to hold up their finger to see which way the wind is blowing. The on-premise lover is some greying older patriarch or matriarch that doesn’t trust the cloud.
We hear often this example:
Our customer had a dad that was transitioning the business over to the kids. The kids wanted to go with hosting and Dad wanted the financial system in the company closet. Some people are afraid of the cloud and they have concerns about security. The reality is that the biggest security threat to your data is typically user error which includes erasing critical data or even sending an e-mail with private content to the wrong person.
When to consider Hybrid or On-Premise?
There are some very valid reasons for having a hybrid cloud or on-premise set-up, such as:
Unstable Internet
If you are a remote mine in Alaska or Northern Quebec, you may have an unstable internet connection. You might be using a satellite dish that gets impacted easily. You don’t want to run a cloud based solution on internet that is unreliable.
Heavy Regulation
Drug companies with mandatory government compliance may be ineligible to move to the cloud. The government agencies, as part of the regulation, want to see the server rooms where the data is stored. They want the software and the servers that the software sits on to be in-house. This is especially true for manufacturing software.
High Risk of Hacking
A lottery corporation, for example, might be a prime target for being hacked. It might be preferable to control the data in house with its own IT security team. A casino, may need an in-house server. Their charter may not allow the data to be held outside in the cloud. Their only option could be on-premise.
Down time is too expensive
Some on premise clients can’t afford any down-time. The internet goes down and a client can’t operate. For some clients, this could be a $1000 per hour they are losing. One solar flare could put the internet down for 2 weeks.
Huge volumes of data can impact speed with some cloud based solutions
Speed can be slow when you are on a shared server. You may not have a lot of control over who is on your shared server with you. It is not always obvious, once the contracts are signed, how to get moved to a different server.
Highly customized environments or solutions
One of the challenges customers face in moving from on premise to on-line is the number of customizations they have in place. When it is in house, systems can be customized at the client’s discretion. The customer can choose to upgrade their systems and take their time testing those upgraded customizations. Some cloud systems do not allow a client to opt out of an upgrade.
There are often strong software partners that have built extensions to on premise solutions. The on-premise systems tend to be mature and feature rich. You may be compromising or losing some of the functionality by moving into the cloud.
The arguments for having on premise systems must be weighed against the numerous benefits of cloud based systems. Cloud systems are modern and cutting edge and have a lot of wow factors.
When to consider the Cloud?
Modernization
Legacy systems can be clunky in the way they display, not render on high definition screens, or they can be customized beyond being usable. New cloud systems have been built from the ground up using best practices that include great layout, optimized user interfaces, superior integration technologies, and out of the box dashboards.
Cost Reduction
You don’t need a dedicated IT person for the servers and upgrades. They can be used to drive efficiency in other areas instead. Servers that would be running in house are now eliminated so you don’t have to be dealing with aging infrastructure, patches or updates.
Efficiency
Cloud applications tend to be easy and simple to use which drives efficiency. Modern systems eliminate extra steps and make clicking around the system very user friendly and intuitive.
Risk Reduction
For some, on-premise is the riskiest option of all. If you can’t afford the security that you need, you could be very exposed with your in-house systems. Who is more capable of keeping it secure? A large IT company with many levels of security or your IT guy or gal that manages the system in the closest?
Easily support expansion
With cloud it is easy to ramp up or ramp down. Add more licenses easily without having to add costly infrastructure. Down-sizing is easy too as you only pay for what you use.
Less Down-Time with confusing upgrades
You can have down time with your servers when they don’t work. Someone may need to reboot or add patches. Your server and software upgrades can be slow as the options can be confusing. Updates occur automatically in the cloud which makes for a clean transition to new versions.
Back-ups
Back-ups are done automatically when you are in the cloud. Your data is secured for you. Backing up data and keeping that backed up data secure is no longer your responsibility. Worrying about security certifications is now mostly the responsibility of your cloud application.
Ability for Entrepreneurs to work anywhere anytime
From airplane seats or from the waiting rooms of the world, owners and CFO’s can log into their systems and work. They can analyze their data from one division while working from another division.
Great for companies that span multiple regions
Accounting can be handled in Vancouver, support in Costa Rica and sales teams can span across America. All can log into a cloud platform and update information that is available real time to the other teams. This drives speed and efficiency.
Take the time to evaluate what works best for you. As cloud based solutions evolve, more functionality is available daily. The cloud continues to grow with connectivity options. Consider that cloud licences might be cheaper or more expensive for you and your company. Determine your ROI over a six year period. Each organization must weigh the pros and cons to get the best fit. Remember a hybrid cloud might be the right cloud for you.
Many of our clients work in a mix of environments and so we’ve built our solutions to accommodate their needs – whether they are on-premise or in the cloud. We invite you to ask us how we do it and how we help our customers deploy their solutions. All it take is an email: ussales@nolanbusinesssolutions.com or a phone call: (1) 303 665 9343.
By Kim Haythornthwaite, General Manager, Nolan Business Solutions, an international solution provider of automation tools for Microsoft Dynamics GP & NetSuite | including NetSuite implementations / consulting throughout North America.