3 Signs That ERP System You’re Considering Is Hosted in a Fake Cloud

If you’ve been shopping around for a new ERP system, you’re well aware of the many, many options available to you. Even if you’re already leaning toward a cloud-based solution, finding the right fit involves diving deep into your existing IT environment to uncover your most pressing needs, as well as considering your budget and timeline, vetting vendors and implementation partners, and so much more–all while grappling with the underperforming existing system that’s leading you to replace your ERP technology in the first place.

There’s no doubt about it: Selecting a new ERP solution is an adventure—especially if your organization has been around long enough to have collected more than a few software systems and years’ (or even decades’) worth of data. And deciding to migrate your business data and processes into a cloud computing environment is a game-changer with the power to change the trajectory of your business for years to come. But to make sure your new cloud-based solution delivers the experience and value you expect, it’s imperative you know what you’re getting into.

You want to make sure that what you’re “getting into” is actually a true cloud ERP platform, not a solution that’s made to look like one. Let’s take a closer look. 

True Cloud vs. Fake Cloud

Some ERP vendors market their ERP product as being “in the cloud,” when they’re actually on-premise ERP systems hosted remotely by a third party. You’ve likely heard all the cloud computing terms used to describe how truly cloud-based ERP solutions develop and deliver software and tools to customers. There’s the cloud computing stack, composed of infrastructure-as-a-Service (IaaS), platform-as-a-service (PaaS) and software-as-a-service (SaaS).

A true cloud solution is built in this adaptable architectural framework using standard web technologies and development languages, and customers implement the technology through the SaaS deployment model. Whether their data is hosted in a public cloud, a private cloud or a hybrid cloud environment, they access their software and tools on the web using any connected computer or device. This is what brings us to the first point of differentiation between a true and fake cloud:

1. Fake cloud solutions aren’t built for the cloud. A fake cloud solution is based on legacy software built specifically for on-premise deployment, to “live” on customers’ hardware and servers. It was never meant to be web-based because cloud computing didn’t exist. To make these traditional offerings more cloud-like for today’s buyers, ERP vendors will host a customer’s version of their software offsite, in remote data centers. But just because the software isn’t located on-site, that doesn’t mean it’s in the cloud. It’s maintained and financed just like legacy software.

2. Fake cloud solutions don’t use shared resources. With a fake cloud solution—just like traditional on-premise software—customers remain on their own version of the software and are therefore required to pay for independent version support that can be costly and inefficient. One of the greatest advantages of a true cloud solution is that it leverages economies of scale. Multiple customers tap into the same software—the same version of the same code—so development and service costs are spread across them. “Version lock” isn’t an issue, as individual versions of software don’t exist; updates and bug fixes are automatic and seamless, making scaling for business growth and new business requirements easier, faster, and more cost-effective. 

3. Fake cloud solutions are not built to scale. Legacy software wasn’t built to accommodate the speed of evolution of today’s business. Its code needs custom (and costly) development each time new functionality is needed, or whenever a new system is added and integration is required. Customers of true cloud ERP solutions can easily add new functionality and users—that’s the nature of the SaaS delivery model. The flexibility of the cloud architecture, combined with the cost effectiveness of shared tenancy, makes it relatively easy and affordable to scale up and integrate new cloud-based apps without the development costs associated with on-premise (or fake cloud) software.

If you’re looking for true cloud benefits, you don’t want to end up implementing a fake cloud solution. You need a true cloud ERP to realize the powerful benefits of today’s business systems—flexibility, visibility, mobility and more. Learn more about cloud computing in Debunking 4 Popular Myths About the Cloud.

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