True Confession: Moving ERP to the Cloud is Not Right For Every Company

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By now, we have all gotten used to the term "cloud." This is the name given to the technologies that allow computer systems to be operated from places that are irrelevant to the final users of those systems.  The idea is that, in some unknown place, a specialized company provides the necessary hardware systems to store and process your company's data. Such as emails, files, and even accounting and billing systems. Then, your employees can use these data, documents, and systems through their favorite browser anytime, anyplace.  It is the latest rave of the computing world, and with reason, but read along and discover why moving ERP to the cloud is not right for every company.

The Cloud
Will you save money by moving to the cloud?

The proposed benefit is that your company can save the investment in hardware and software required to store all the data and systems locally. This includes servers and appliances that you need to maintain and replace from time to time. It is a reality that hardware requires qualified babysitters to constantly look out for it, apply the latest patches, update security, and troubleshoot any issues that may arise from day-to-day operations.

Additionally, your company can save on licensing costs for tools such as Microsoft Office, which you can lease instead of purchase. You also have the added flexibility of being able to change the number of licenses on a month-to-month basis to optimize their cost based on true usage.

This all sounds good, but it is not the whole story. Companies should still do their own research and ask, "will I really save money by moving to the cloud?"

If you scour the internet about this topic, you will find yourself inundated with differing opinions. It is hard to tell the sales pitch from the truly unbiased comments.

My intention here is to add fuel to the fire by giving my own opinion on the matter.

On one end, there are the cloud proponents.  This includes practically every major IT player out there, notably Google, Amazon, and Microsoft.  All these vendors aim to replace your local email, file storage and operational systems and move them to the cloud at a reasonable cost.

On the other end, there are the critics that point out the cons of the cloud. Just search for "the problem with the cloud" in your favorite browser and you will see what I mean.  As was the case with other technologies in the past, many people think that the cloud is a solution looking for a problem.

Which systems do you want to move?

The cloud offers several advantages to on premises implementations. In many cases, its adoption makes a lot of sense. For example, when we talk about email and CRM systems, where the value of the flexibility to operate these systems from different places is very high.  However, other cases, such as ERP systems, pose different challenges, and the proposal to migrate these to the cloud may be less valuable.  Certainly, today's definition of ERP is so broad that in many cases justifying cloud deployment is easy.  Yet if we think about the core of ERP being accounting and financial information, then the value of having these systems in the cloud is less obvious. Here are a few points to consider:


Operating the most valuable data for your company, such as inventories, prices, cash information, employee, customer, and vendor data, does not require the mobility that email or CRM comparatively require. Accessibility and security of the data, however, is paramount.  This is where the new technology risks are most obvious, especially in less developed countries that may be limited in the quality and strength of their communications infrastructure.

Can you imagine not being able to run your billing or pay your employees because "the cloud" is unavailable?

We all hear about service outages every so often from the largest cloud players, and even if these never failed, you need to remember that issues can happen in any of the communication links (such as your local ISP provider).  Then it is easy to imagine a scenario where a glitch somewhere in the world can leave you out of your systems locally.


Security is another palpable problem that we see in the news when it affects a high-profile player since there is no common consensus on how security needs to be managed from the supplier side.  Arguably, the smaller players, like you, are at the most risk of losing their data because they typically lack the security appliances, policies, and measures that the best hosting providers have.  So the security issue may be interpreted both as a liability and as an advantage of the cloud.  However, the larger players are frequently the most attractive targets for cyberattacks, and simple local security measures could go a long way to make your on-premises data secure enough.


Then there is the cost.  Over time, the total cost of ownership will always be higher in the cloud versus on-premises.  This is even more so in less developed countries where labor is cheaper, and hardware life is extended by necessity.  The cloud's biggest benefit is the security of the data, but this is also the hardest to sell to the end customer because of its intangible and hard to corroborate nature.

The cloud is here to stay.

Many software systems designed today are built as cloud-only systems, and for the most part, they work very well, and there are no on-premises alternatives. This is proof that the cloud is here to stay, like it or not.  There are definitive advantages to these systems and the cloud in general. Still, I wanted to point out the inherent limitations of the cloud, given the longevity of ERP solutions and other systems that run most of the companies out there today.

Moving your ERP systems to the cloud should not just be done because "everyone else is doing it." Each situation needs to be evaluated separately. The team at ICON has been consulting with companies for more than 30 years.  We want to help you make the right decision in a software selection and get the most out of your systems, on-premises or in the cloud.

Contact ICON at (954) 804-2140

By Thomas Garcia, ICON,

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