Application and Hosting Delivery Specialists
Ideas and solutions that can be or could be hosted. C24 are a specialist application hosting and delivery business that currently works with some of Europes leading companies delivering applications to over 107 countries.
C24 is pleased to announce that it is publishing a case study for its work with Manchester and Stockport based accountants, Hurst Accountants.
A leading north west accountancy practice, Hurst Accountants have worked with C24 for a number of years, with their central systems all running on HP technology, delivered by C24.
Download the full case study here.
I recently posted about “The Wider Value of Marketing – Relationship Equity”, and how through marketing we try, as a company, to add value back to our clients’ businesses, rather than just furthering our own business development interests. This, to us, creates relationship equity.
I now want to take that idea further, and think about how B2B companies can continue to add value to their clients, over and above the product or service they offer.
How can they truly add value? Not the type of value you read about in marketing material, or the type of ‘partnership’ that gets thrown around in every corporate brochure.
But true value that adds something to them personally or to the business as a whole.
What is value?
Firstly, what is value? It can mean different things to different businesses. For some, it might only ever mean money. For others, it could be furthering personal career prospects through the completion of successful projects; an area that suppliers can assist in. At C24, we like to think of value in terms of adding value to a client’s business. In effect, helping them to grow their business by working with C24. Because, as they grow: we grow.
Why attempt to add value?
The old way of selling was all about features. Then the new way focused on cost reduction. Our way believes that cost saving alone is not enough. If something isn’t going to save you money or grow your business to compensate for that elevated purchase price, then you would be mad to buy it!
We try to look for ways in which working together with a client can bring about revenue generation for their business.
This strengthens the relationship equity we discussed in our last article; as put up against another supplier who just wants to collect a PO, we feel we can hope to truly differentiate by looking for ways to increase business generation.
Technology is an enabler to business growth
We are lucky to operate in the technology sector. There are very few industries that deliver products which can contribute to business growth or significant cost savings as radically as technology can do. For instance, a hardware refresh can often reduce operating costs and pay for itself within a year. Or a new software solution can improve staff productivity to such an extent that you don’t need to add to your headcount.
Aligning businesses
When we start to work with a new client, we like to understand their business goals. Not so that we can align our product set to those business goals, but so that we can align our businesses and look for ways to achieve both of our business goals.
This has worked well when we have partnered with one of the UK’s leading accountancy firms, and we sponsor some of their key annual events. This helps them to continue putting on successful business generation events, and we become a business partner rather than just a supplier. We don’t just sponsor, we also attend the events, speak at the events and interact with their existing clients who are in need of hosting or analytics support. We can support them by bringing engaging topics to their client base for events and marketing activities, so we can add value over and above the IT services we deliver to them.
New ideas, new business models
We also look for ways to craft new business services between ourselves and our clients. We are fortunate to work with some of the UK’s leading law firms, and through our data analytics tool we have been able to investigate ways we could partner with key firms to roll out new data services, in conjunction with those firms. It’s still early days, but it demonstrates the way in which we view partnering. It isn’t just a word we use, we really see it as a business partnership between two companies.
Many times we have engaged with a client and then gone on to launch a joint solution to take to their customers, especially on the software vendor side where we work with software vendor clients to deliver software as a service solutions out to their customer base. Some hosters see ISVs as customers. We don’t – we partner with them and see them as close business partners, and we work alongside them on individual customer opportunities, from design, to meetings to implementation and support calls.
Thinking outside of the box
Outsourcers have got the right idea when it comes to adding value. An article from Raconteur named “Revealing the added value of outsourcing” discusses how outsourcing companies have become sophisticated in their sales approach, to try and add value in many different ways.
They look for opportunities to grow the client’s business, through offering new services or finding potential new revenue streams to attract. They can’t just outsource and deliver the same service as before; they have to show growth and progress.
For instance, in the past we have provided marketing services to our ISV partners, creating specific content for them to take out to their clients. Rather like providing them with our tech support services, we extend it to our business services to help them grow their (and our) revenues.
Some of the ways outsourcers try to add value is through helping companies to improve their corporate and social responsibility, employee engagement and risk management. Often these aren’t the core services the outsourcer was originally brought on board to tackle. These are complimentary ‘free’ extras to make their service as attractive (and sticky) as possible.
One of the questions they ask when positioning a solution with a client is: “How can we make this solution realise significant commercial benefits for the client?”
So for your next customer project, why not keep that question in mind:
How can we make this solution realise significant commercial benefits for the client?
When designing a solution for the client, we often fall into the trap of looking inward, and only hinting at the superficial benefits to the client, such as reduced costs etc.
But if we try to expand our solution to look at the client’s entire business and think about how we can realise significant commercial benefits for the client then it’s a win-win scenario for us as the supplier and the client too.
How do you add value in customer engagements? Do you offer services that go above and beyond what the client is paying for?
Image provided courtesy of Courtney Carmody.
There are so many different cloud models available to software vendors today. Whether that’s public cloud (Azure, AWS, etc) or private cloud in your own datacentre – plus a world in between.
In a bid to offer a software-as-a-service solution to clients, many software vendors rush to market with an ill-fitting cloud service that doesn’t work for the long term. It can be tempting to look at public cloud services to deliver the solution, however how does that model work when you want to add new functionality or change how users consume your service (maybe you want to sell through an app store to some customers, directly for others, and offer on premise integration for other clients)?
Public cloud makes sense for certain apps, but for many legacy software solutions that have been developed for on-premise IT, it can be a painful process to get ‘cloud ready’.
The complexity of cloud models often pushes developers to look at how they can build their own cloud, but this is costly and the security requirements are radically different when developing on premise to in the cloud.
But, the reason most of our ISVs choose to work with C24 to deliver their underlying hosting and as-a-service solution is rarely anything to do with discussions about the most suitable cloud or infrastructure.
It’s usually to do with partnering.
Everyone talks about partnering. But we actually do it.
That’s in part down to some of the fantastic Independent Software Vendors (ISVs) that we work with, however the main differentiator that makes the partnership work are the peripheral business services that are jointly wrapped around each solution sale:
The main factor we find when partnering is that the timescales are long. Nothing is quick when it comes to partnering, and rightly so. Neither us, nor our partners, want to engage and work together on a new client immediately with no background or time spent together developing relationships – only to find the partnership doesn’t ‘fit’ in the middle of a project.
Instead, we take our time to build trust and credibility with our partners – as it is a hugely impactful activity to move your on-premise traditional licenced software product to a software-as-a-service solution.
If you are an ISV or software integrator who is looking at different ways to expand your cloud –as-a-service portfolio out to clients, or to even launch your on-premise solution to the cloud, then have a read of our whitepaper on “How an effective channel hosting strategy can increase your software sales” or visit the Partner section of our site.
Image courtesy of Drew Leavy.
I thought it might be interesting for contacts in the retail, EPOS, analytics and hospitality sectors to learn about how C24 work with an industry leading EPOS vendor and has helped them to move away from purely EPOS offerings to a holistic, analytics-integrated service for clients.
We can’t reveal the name at this stage but the outcomes and challenges resonate with other partners and customers who we work with.
Background
Prior to engaging with us, our EPOS partner was facing a number of challenges when engaging with their retail clients. Although they were already offering a market-leading EPOS solution, they were keen to move into other areas and expand the value they delivered to clients. This is what their EPOS analytics looked like prior to engaging with C24:
From a technology point of view, each till point required various pieces of hardware to be installed – creating service headaches if there were any hardware malfunctions, and increasing support costs for the client as any faults would require onsite IT assistance.
Strong partnership
By engaging with the EPOS vendor, we have built a strong partnership in which we combine our business analytics solution with their EPOS application to deliver a service that is holistically bigger than its parts. Working hand in hand, we have helped to change the conversation from being EPOS-focused, to being centred instead on how the EPOS vendor can help to generate more revenue for the client.
The partnership between the EPOS vendor and C24 has enabled their customers’ EPOS reporting to be:
Business outcomes
The EPOS vendor has experienced a number of commercial benefits as a result of the close partnership with C24. They have been able to grow their share of wallet in each account by expanding their sale through the addition of our analytics solution. This has given their sales teams a new message to take out to customers; away from the traditional EPOS sale, to looking at how EPOS technology can maximise revenues for the retailer.
The hosted nature of the new solution means that new customer deployments have much lower timescales to deliver, as installation does not now require the many days onsite work to deploy the hardware and set the systems up, making it a more profitable service to deliver. Furthermore, this hosted approach has meant that the vendor can move from a CapEx payment structure to a monthly recurring revenue model, which is commercially more sustainable for their business.
This story demonstrates how partnering closely to deliver a combined solution (rather than reselling a bolt-on product) can deliver huge commercial benefits for both parties involved in the partnership – helping each other to reach new markets and offer a more compelling and valuable message for clients.
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Find out more about C24’s partnerships with EPOS vendors at http://www.c24.co.uk/sectors/epos-partnerships/ or follow C24 on LinkedIn.
About C24 Ltd
C24 is a specialist applications hosting provider, with particular expertise in hosting and analytics for the manufacturing, legal and hospitality sector.
C24 helps retailers and hospitality providers to take their EPOS, and other hospitality applications, to a new level; integrating apps with insightful business analytics and tailored cloud hosting services for a seamless, customer experience.
Find out more about our EPOS hosting and analytics solutions at: http://www.c24.co.uk/sectors/epos-partnerships/
Image provided courtesy of Kai Schreiber.
As a specialist in EPOS (electronic point of sale/tills) and hospitality application hosting and analytics, C24 has
worked with EPOS vendors to take their solution from an onsite, hardware-based proposition to a cloud-enabled, agile service for retail and hospitality clients – keen to make the most out of their investment through business analytics and seamless delivery.
We have seen EPOS vendors move from offering 
straightforward EPOS solutions to retail clients that facilitate payment, through to offering a more holistic, analytics-driven solution that provides organisations with visibility across their organisation.
So how can retailers look to harness their EPOS technology to increase customer spend in-store?
Powerful analytics can give you more control over data, enabling you to collate information across your operations that is more visual and easy to digest. Through data maps, word clouds and graphical representations of complex data, EPOS users can quickly gain insights from their information in real-time.
This enables stores to potentially make changes on the fly, rather than waiting for reports to be produced. For instance, if certain products are selling more rapidly over a period of time (rather than stock levels just running low), then that could trigger an order for more inventory and increased marketing.
In-store offers could be suggested on the day through recommendation analytics, based on certain factors (i.e. weather, day, trends from previous year, number of customers in-store). The casinos sector is seen as the market leader in this respect, constantly combining data feeds about their customers from all of their till points across the hotel, restaurants, casino and gambling machines, to build a picture of their customers’ behaviour.
The true value comes when analytics services don’t just focus on EPOS, but instead incorporate all of the applications across the business; combining data from multiple feeds for maximum visibility of how end consumers are interacting through EPOS tills and other points of contact across clients’ businesses.
This helps retailers to start looking at the entire customer experience and interaction points that consumers have with their brand. Being able to understand how they acquired customers, what marketing worked, what offers failed to impress and who spent what on which day, helps the retailer to build a more accurate picture of where to focus their efforts.
I will be publishing a series of articles focused on how EPOS technology can help drive revenues fo
r retailers and hospitality providers through analytics, so please follow me to read more.
Also, find out more about C24’s partnerships with EPOS vendors at http://www.c24.co.uk/sectors/epos-partnerships/ or follow C24 on LinkedIn.
About C24 Ltd
C24 is a specialist applications hosting provider, with particular expertise in hosting and analytics for the manufacturing, legal and hospitality sector.
C24 helps retailers and hospitality providers to take their EPOS, and other hospitality applications, to a new level; integrating apps with insightful business analytics and tailored cloud hosting services for a seamless, customer experience.
Find out more about our EPOS hosting and analytics solutions at: http://www.c24.co.uk/sectors/epos-partnerships/
Image courtesy of Nate Grigg
The advent of cloud ERP solutions means that organisations have more choice than ever about how and where they deploy their ERP system, whether that’s on-premise, privately hosted or on a cloud platform.
A report from PWC has looked at how to assess which model is the right fit for your ERP deployment, based on complexity and project size.
Typically, on-premise deployments for ERP have the following attributes:
And Cloud based ERP deployments tend to take pretty much the opposite position:
So for solutions that are relatively low in complexity, it often makes perfect sense for organisations to consider the cloud, even just for elements of the overall ERP requirement (such as payroll, or workforce management systems) – especially if timescales are tight.
Cloud based ERP solutions often take into account all of the backend services and processes that an organisation would usually have to complete themselves in an on-premise ERP deployment, a fact that is often overlooked when assessing costs. Many companies do their due diligence about subtracting hardware and infrastructure management costs when selecting a cloud service, but many SAAS solutions also come with backup, upgrades, patching and ongoing development services built into the product, which would be an additional outlay for an IT team deploying an on-premise ERP solution.
This is in part why PWC have calculated that over a 10 year period, the total cost of ownership of a cloud-based ERP solution can be 50 to 60% less expensive than a traditional on-premise system.
However, there are compromises that have to be made.
Cloud-based ERP solutions and SAAS applications usually have reduced capabilities for customisation across the platform; it is a model that works at scale and if you fit into the 80% of businesses who probably have a standardised ERP requirement then cloud based ERP can be a great cost-saving solution. If, however, you regularly need to customise your ERP tools to suit your organisation’s processes, then a cloud based ERP system is probably not going to be able to solve all of your problems. A hybrid approach, where standardised systems are deployed in the cloud for simpler applications whilst the more complex, central ERP tool is deployed on-premise or within a private hosting environment can be a way to overcome the cost challenges of a complex ERP deployment.
Another point to consider when choosing the right model for your organisation, is how an ERP application will integrate with other applications and tools across your business.
An on-premise deployment could mean that your IT team is responsible for linking applications together, whereas for many cloud-based services, applications are built on standardised platforms that often have pre-built APIs to plug different apps together and integrate solutions. An example of this is how Twitter or Facebook can be used as a login tool to other applications or websites.
PWC also use a simple, yet effective, framework to assess the likelihood of success for deploying your ERP onto a cloud platform or on-premise.
For a cloud-based SAAS ERP deployment the likelihood of success is high if:
Size of implementation is small + complexity of solution is low.
The solution is estimated to be relatively successful still if:
Size of implementation is large + complexity of solution is low.
The likelihood of success drops dramatically once complex ERP solutions are being considered that require in-depth customisation.
The critical factor is the complexity and ability to scale a standardised solution across many different users, locations and processes. For complex deployments that don’t fit the standardised model, yet where an organisation could still reap cost and efficiency benefits of cloud, then a private, dedicated hosting environment could be the perfect solution that marries the benefits of both ERP models.
We also highlighted in a recent article how Hybrid ERP is becoming a popular solution for businesses who need the flexibility of cloud in some areas, combined with traditional, centralised ERP infrastructures for business critical processes.
Image courtesy of Tim Parkinson.
A recent article from Forbes highlighted some interesting research from Gartner on organisations choosing the cloud for their ERP.
Gartner is predicting that 47% of organisations are planning to move their ERP systems to the cloud within the next 5 years, and 26% of those surveyed said they plan to do it much sooner; within the next 3 years.
This is a big change for a business critical software application that has traditionally been the bread and butter on on-premise IT. Yet despite the large numbers being expected to move to cloud ERP, 30% of organisations are expecting the majority of their ERP infrastructure to remain onsite for the foreseeable future.
One of the reasons Gartner cites for the proliferation of cloud ERP services is the wide range of potential SAAS offerings on the administrative side of ERP (financial, HR), yet ERP manufacturing cloud products are scarcer due to their intrinsic complexity. However this is also set to change as software vendors start to develop products primarily in the cloud.
Forbes contributor Louis Columbus responds in his recent article that in fact cloud ERP adoption is expected to grow at a faster rate than even Gartner is predicting, due to the rise of two-tier ERP systems within larger organisations.
Two tier ERP is usually the result of a complex ERP structure that is too inflexible to bend and flex to serve smaller subsidiaries or new acquisitions. Large sunken costs in an existing, central ERP system often mean it is too complex and costly to roll out the same instances of the application to all subsidiaries, plus many subs have localization and geography requirements that may not fit the central ERP system.
That’s when a more cost-effective, streamlined ERP solution can work at the local level, and be integrated into a legacy ERP environment for minimal disruption and fuss. This is predicted to be one of the main contributing factors to the growth in cloud ERP adoption rates.
Some of the key reasons behind the high growth predictions for two tier ERP from Forbes’ article are:
This comes at a time when even vendors in the ERP space are recognising that the legacy, one-size-fits-all approach doesn’t work.
Microsoft has a two tier ERP system in place, with SAP deployed centrally and Microsoft’s own Dynamics AX platform delivered locally. This gives country operations teams the ability to adjust the ERP tool to fit systems locally and comply with local regulations.
Sage has even gone as far to drop the term “ERP”, saying that it now stands for “Expense, Pain, Regret” (although hopefully not in that order), for many customers today – and has come out to say to customers that Sage will not be pushing users to move to the cloud, instead just letting them move their accounting systems over if they wish. This is another example of two tier approach in practice, where individual functions are siloed out and delivered from different platforms to suit the application and users.
Sage’s decision is in direct opposition to SAP’s decision to adopt a ‘cloud-first’ policy when taking their products to market with customers.
This is an insight into how the industry to changing and flexing to respond to perceived customer demand across cloud and on-premise ERP delivery. ERP providers are choosing their sides and getting off the fence in a bid to differentiate their offerings, however it may just end up causing more confusion for customers who want to choose the solution that fits their current business model best, not based on a vendor-led trend.
Image provided courtesy of Karl Baron.
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If you liked this post then please read our other posts on ERP in the cloud:
Can the cloud deliver for large scale ERP deployments?
Read the original article published on LinkedIn.
Deciding on the right approach early on for your business is critical when it comes to cloud, as one mistake now can have organisation-wide consequences if data is lost or if IT teams are restructured to accommodate a new cloud service.
The UK Cloud Industry Forum reported in 2015 that 79% of organisations already consider cloud as part of their IT strategy, so most businesses are not questioning whether cloud is right for them, but in fact what’s next for their cloud strategy. The Cloud Industry Forum predicts that by the end of 2015, 90% of UK businesses will be using at least one cloud service.
Cloud is permeating throughout the layers of businesses; where it was once used for testing activities or standalone applications, it is now being fully integrated and seen as an integral part of any company’s IT infrastructure.
A cloud is called a “public cloud” when the services are rendered over a network that is open for public use. Technically there may be little or no difference between public and private cloud architecture at the hardware/software layer, however, security considerations may be substantially different for services (applications, storage, and other resources) that are made available by a service provider for a public audience and when communication is effected over a non-trusted network.
Private cloud is cloud infrastructure operated solely for a single organization, whether managed internally or by a third-party, and hosted either internally or externally. Undertaking a private cloud project requires a significant level and degree of engagement to virtualize the business environment, and requires the organisation to re-evaluate decisions about existing resources.
Between these definitions of Public and Private cloud, there exists a world of cloud scenarios, whether that is privately hosted multi-tenant cloud environments or onsite managed service offerings.
If you use the public cloud, your data and its security will be in the hands of the public cloud providers and although it may be safe and they can be very persuasive around this point, it still demands a leap of faith. Ensure early on that your public cloud provider can guarantee where data will be held; will it be within the UK, the EU or worldwide? Some organisations may not be able to compromise on where their data is kept.
The private cloud model puts security and the data location in the hands of the data owners and real world enterprises, clients and legal bodies do demand this level of control.
Before you roll out further cloud services, it is important to spend some time reviewing your applications. Not all applications are cloud-ready; some have been developed in house, some have been developed many years ago before multi-tenant environments were the norm and some are not able to run on standardised cloud hardware. Cloud is often an instigator for organisations undertaking an application rationalisation program to understand how their applications are utilised and whether they can be ported to the cloud.
Standalone applications in the cloud look attractive and appear simple to deliver. However, in the real-world, your business runs on many types of applications. And some of those are mission critical applications that require specialist infrastructure and management to run effectively. Can your public cloud provider deliver this level of bespoke service to ensure the smooth running of your most business critical applications?
With private cloud, the real-world enterprise owns the cloud and owns the decision of which language(s) to support. With the right technology, multilingual cloud app support becomes a reality.
Another issue that you may find with larger public cloud players is that support of the applications which maybe key for you is not a major consideration for them as they are only providing the platform. When a problem does arise, it can be difficult to resolve if the software vendor and public cloud provider only look after their respective areas and do not engage.
Organisations with multiple locations, whether Europe, Asia, US or global need to address many a number of issues, including connectivity, time zones, languages and potentially very sensitive data. Yet, no public cloud model is currently flexible enough to accommodate the moving myriad of different government’s regulatory red tape around the world, especially as most providers can be US led and focused. Private cloud architectures empower the real-world enterprise to accommodate the compliance requirements for clients.
Private cloud solutions enable the real-world enterprise to position its own cloud to support its international business objectives as private clouds providers can be more flexible in tailoring and managing individual solutions.
Public cloud architectures can deliver shared-resource efficiencies, utility computing and flexible scalability. Those benefits are seductive, but at times illusory. With the right technology, private clouds deliver on those promises; yet provide better security, better control and greater flexibility than public cloud alternatives.
For businesses that are expecting to grow their use of cloud services, their IT teams should critically assess the costs of growth with each of their potential cloud providers.
Most businesses do not like hidden costs; especially the Financial Director. There are numerous examples of how hidden costs can occur when working with a public cloud provider. The difficult pricing models mean that even the most financially astute individuals can have issues and be caught out with ‘hidden’ costs. This is due to how pricing models are set out – letting organisations access public cloud services at low costs. However each additional component or service usually incurs a charge, resulting in sometimes unexpectedly high costs at the end of the month.
Costs to be aware of include bandwidth, licencing, storage and processing all are variable and can be extreme in nature if the solutions are used ineffectively.
With cloud adoption rates at 80% for large businesses and 75% for SMB organisations, successful integration of multiple cloud services will be one of the most important considerations for IT leaders. Managing multiple public cloud providers is not an optimum position for IT teams, so it will be central to the success of any business to choose a trusted partner for their cloud services, who can aggregate multiple cloud solutions whilst offering an array of cloud ‘types’, from Public, to Private to managed hosting.
Images provided courtesy of theaucitron (https://www.flickr.com/photos/theaucitron), Texas A&M University (https://www.flickr.com/photos/tamuc), Torkild Retvedt (https://www.flickr.com/photos/torkildr) r2hox (https://www.flickr.com/photos/rh2ox), Intel Free Press (https://www.flickr.com/photos/intelfreepress), and Nic McPhee (https://www.flickr.com/photos/nicmcphee).
Nucleus Research publishes its Leader Quadrant for ERP vendors, and C24 delivers hosting for many of the top right providers deemed as “Leaders” and “Experts” in their field.
C24 is a specialist applications hosting provider, based in the West Midlands. They provide hosting for business critical applications from their two enterprise-grade data centres in the Midlands. C24 specialises in ERP hosting, due to the complexities involved in designing, implementing and delivering hosted ERP solutions.
Nucleus Research highlighted a handful of vendors to be in the top right of their Value Matrix Quadrant for ERP, showing the brightest and best of the ERP vendor world.
C24 is specialised in hosting many of these vendors for clients across the globe, including, Microsoft Dynamics AX, Oracle JD Edwards, Oracle ERP and Epicor. C24 delivers this hosting in partnership with specialist ERP consultancies who are expert in delivering the software layer.
The report from Nucleus Research showed that C24 is at the forefront of the ERP hosting industry, working with Leaders and Experts in the ERP arena to deliver secure, business-critical ERP hosting to clients of all sizes.
Head of Sales and Marketing at C24, David Ricketts, commented, “It is great to see so many of the vendors we work closely with to deliver specialised ERP hosting solutions are recognised as Leaders and Experts in their field. This goes to show that C24’s strategy of working with a small number of focused ERP specialist partners to deliver bespoke ERP hosting is the right approach and recognised by the industry”.
About C24
C24 Ltd is a specialist managed service and hosting provider, with a focus on big data and business analytics. We tailor our solutions primarily to sectors deploying complex ERP systems where we have particular experience and expertise. C24 designs, manages and delivers critical business applications to over 100 countries for our global customer base.
Our focus on Enterprise Resource Planning (ERP) solutions means we partner with some of the world’s leading ERP vendors, across Microsoft Dynamics AX and JD Edwards, to deliver bespoke hosting solutions within our enterprise Midlands based datacentres.
After reading a recent report from Accenture on considerations for Cloud ERP projects, we collected a few key points from the paper that are particularly pertinent to SMB and Mid-Market customers who are considering putting their ERP into the cloud.
Here is the link to the original paper.
Software companies are leading the change, not just consumers
The report identifies that software companies are often the instigators of change when it comes to how ERP is delivered. Rather than consumers pushing for more choice in ERP delivery, it appears that software vendors are moving funding away from on premise services and directing investment towards the development of SAAS products. This has a two-fold benefit for SAAS vendors: they get to sell more of the solution (not just the licences), and, as more organisations purchase from them on a multi-tenant platform, the cost per tenant goes down – resulting in higher profits or the ability to offer more competitive pricing.
Accenture highlights two types of Cloud ERP models that are emerging from suppliers:
Cost is still a motivator for the cloud
As more Cloud ERP solutions are implemented, we see further information being produced about the true costs of cloud services. Accenture’s study shows that Cloud ERP solutions don’t just affect the hardware layer, but have financial repercussions across the entire platform.
Costs which are typically lower within a Cloud ERP model, compared to a traditional on-premise ERP deployment:
In fact, the study found that software licencing costs were actually higher in a SAAS model, but this takes into account the underlying hardware hosting so works out significantly cheaper overall.
Most companies will end up with a 2 tier ERP solution
Due to the complexities of existing ERP operations, the acquisition of multiple companies or subsidiaries and the sunken costs of legacy ERP systems, Accenture predicts that many businesses will end up with a 2 tier approach to their ERP platforms.
This will likely encompass existing ERP platforms for the core business location, and Cloud ERP for smaller subsidiaries or acquisitions that may not require, or be able to cope with, the complexities of an enterprise, legacy ERP system. This is good news for Cloud ERP vendors as it helps companies to transition in their own time to an ERP model which works for them, without losing out on significant investments already made to their existing ERP platforms.
Cloud ERP suits SMB and Mid-Market perfectly
Accenture found that companies operating with a turnover of less than $750m (to put that into perspective there are over 5000 companies worldwide with over $1bn turnover according to Bloomberg) are best suited to Cloud ERP platforms, as their general business processes should be relatively simple and their IT departments are usually more affected by IT cost pressures than their larger counterparts.
SMB companies who are looking to make savings across their IT can generate savings through implementing their ERP in the cloud according to Accenture’s findings, especially as SMBs have limited scope for finding economies of scale within their IT systems compared to larger multinational corporations.
But what about the risks?
Accenture highlights a few key risks that should be investigated before jumping headfirst into a Cloud ERP service:
Governance: Which parts of the ERP system should be ‘locked down’ for certain users across the business to reduce risk? If a solution doesn’t allow for tailoring access for certain users, then it may not have the flexibility and scalability required when extending access out to branches and subsidiaries.
Vendor Lock-In: With such an important bank of information, it is critical for businesses to understand how they could migrate their ERP data to a new vendor, should the time and requirement arise. If you find yourself in a situation where data can’t be extracted easily at the end of a contract, then that would be an incredibly painful and disruptive exercise for the organisation.
Integration Risk: Should you require a 2 tier approach to your ERP strategy, then how well can your new Cloud ERP solution integrate with your existing ERP platform and other IT operations?
The ‘cloud community effect’
Accenture predicts that multi-tenant Cloud ERP services will bring about wider benefits than purely financial savings.
It sees multi-tenant environments fostering a ‘cloud community effect’ where tenants can work collaboratively with each other, or where suppliers can offer more services, spread across existing platforms. Additionally, updates or changes that affect a large number of tenants can be implemented quickly, such as mass updates following industry or country regulation changes.
This shared approach to working extends even further, and Accenture sees that, in the future, ERP software vendors and service providers will form “collaborative commercial relationships” in order to deliver higher quality services to their joint clients.
The original paper from Accenture can be accessed in full here.
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