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ERP OPTIONS: On-Premise vs. Cloud ERP

ERP Options?

If you are considering a new or upgraded ERP system for your company, chances are you are being faced with many choices. As you consider your ERP options, one of the decisions you will make is whether to select a locally-installed ERP solution or one that is cloud-based. Traditionally, software is purchased and installed on computers in your company, also known as an “on-premise” system. With this type of ERP, you are responsible for managing all servers, software upgrades, and workstation upgrades, backup, etc..

However, Software-as-a-Service (SaaS) or “cloud computing” has become more prevalent as an option to upgrade your software or when purchasing new. With this type of deployment, the ERP software and its associated data are centrally managed on the Internet “cloud” by the ERP vendor, and customers access the system via a web browser.

While the difference between on-premise and cloud ERP system is clear, the type of deployment model you should choose might not be as obvious. The ERP system can significantly impact all areas of your business. It is important to consider the following key factors when weighing whether to use on-premise or cloud-based ERP software:

Ownership Costs

Cloud-based ERP systems involve much lower initial start-up costs than on-premise, mainly because you simply implement the software based on your requirements and then access it through your Internet connection. The cloud ERP provider maintains and hosts all of the IT infrastructures for you, ensures that the data is secure and that the system is always running, and painlessly rolls out product enhancements without breaking your previously implemented customizations. All of this allows your IT resources to focus on helping to grow your business rather than spending time on managing and maintaining the on-premise system.  The ongoing costs for cloud may exceed the ongoing costs for on-premise in year 3-5 or more.

On the other hand, on-premise ERP systems typically require larger upfront but lower ongoing investments to purchase and manage the software as well as the related facilities, servers, and hardware necessary to run it. If your company does not have an experienced or any IT staff, you may also find yourself investing more money and time in additional personnel and training them or outsourcing your IT services. More importantly, on-premise systems require your team to spend a large chunk of their budgets and time to make sure your system is up and running when you need it, including upgrading the software periodically, maintenance of server rooms, hardware and workstation operating systems, and more.

System Enhancements and Upgrades

Cloud ERP solutions such as; Acumatica, Intacct, and Netsuite are continually upgraded by the provider, so companies can be sure they are always using the most advanced, latest version of their ERP software. Due to the cloud platform on which leading cloud applications are built, your previously implemented integrations and customizations automatically carry forward whenever the solution is updated without a headache or hassle.

Although on-site ERP software is customizable, those customizations are directly linked to your current software and can be difficult to re-implement with future versions. As the ERP vendor releases new enhancements and product updates, your previous customizations will need to be upgraded or redone as well. For this reason, many highly customized businesses avoid upgrading on-premise software and instead settle for running their companies on out-of-date technology.

System Performance and Accessibility

Compared to on-premise solutions, cloud ERP systems typically deliver better performance since the software architecture is designed from the bottom up to gain maximum network performance. Cloud-based ERP also offers optimized system performance that quickly adapts to the needs of your company. For instance, if there is a spike in your business, cloud ERP systems automatically adjust and provide additional resources to handle the surge. A local IT department may not achieve these results and might not routinely report their system uptime results to management. Cloud-based ERP solutions also provide real-time data that you can access anywhere at any time, meaning your staff can see accurate information on tablet devices, smartphones, and laptops while they telecommute or travel — all without ongoing costs or extra setup fees.

On-Premise or Cloud or . . . .?

If you feel that neither on-premise nor cloud ERP systems are right for you, another option is to have a third party host (called Hosted Solutions) your software on their computers. With this deployment model, you still own the software and are responsible for the updates, upgrades, and maintenance. However, someone else has the IT infrastructure to perform backup and manage your server thus eliminating the need for an internal IT services team that supports the traditional on-premise solution but gives you remote access capabilities for multiple locations or remote employees

So, which is the best deployment model for your company? It all depends on your business needs, company culture, and existing information technology infrastructure. Chortek LLP’s Technology Consulting Group can help you wade through all of the options available for your business. The bottom line is this: Cloud solutions are not a fad, and after years of anticipation of marketplace domination, they are finally beginning to gain a greater percentage of the market and should be considered when selecting or upgrading an ERP system for your business.

accounting system selection

How to Select a New Accounting/ERP System – Part 4

ACCOUNTING SYSTEM SELECTION

In Part 3, we discussed how to prepare for and conduct software demonstrations. In Part 4, we will look at how to finalize the selection of the ERP system and suggestions for a successful implementation of the new solution.

Finalize Your System Selection

After you wrap up all the ERP demos, your job isn’t quite finished. The future of your company’s technology assets, level of success, and performance now lies in the hands of you and your software selection team. Take your time and avoid feeling pressured into making a fast decision. Read More >

holiday tax deductions

When holiday gifts and parties are deductible or taxable

Holiday Tax Deduction

The holiday season is a great time for businesses to show their appreciation for employees and customers by giving them gifts or hosting holiday parties. Before you begin shopping or sending out invitations, though, it’s a good idea to find out whether you qualify for a holiday tax deduction; whether the expense is tax deductible and whether it’s taxable to the recipient. Here’s a brief review of the rules: Read More >

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How to Select a New Accounting/ERP System – Part 3

In Part 2, we discussed how to research possible ERP solutions and how to create a request for information (RFI). In Part 3, we will look at preparing for and conducting software demonstrations.

The software demonstration is a crucial component of choosing a new ERP system. When handled properly, the demonstration will provide you with critical information on whether the system will best fit your needs allowing you the opportunity to compare different ERP software systems in order to make the best decision possible. If handled incorrectly, the demonstration will turn into a cheerleading exercise for the vendor, nearly devoid of all useful information. Read More >

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How to Select a New Accounting/ERP System – Part 2

RFI (Request For Information)

In Part 1, we discussed creating a selection committee and document your company’s ERP needs. In Part 2, we will look at researching various ERP solutions as well as developing the request for information.

Researching Possible Solutions

Currently, there are a number of software products that are dominating the general marketplace such as:

  • Intuit (QuickBooks)
  • Microsoft Business Solutions (Dynamics AX, NV, and GP)
  • Sage 100 (MAS 90/200)
  • Sage X3
  • Sage 300 (ACCPAC)
  • Sage 50 (Peachtree)

However, you may need to look at specific, or vertical, solutions for services, retail, manufacturing, and construction from Epicor, Infor, Viewpoint, etc. Keep in mind that SaaS/Cloud solutions such as NetSuite, Intacct, and Acumatica should also be included as ERP solutions to evaluate. If you are bewildered by the claims flooding the market and every company touting itself as the most reliable, the most trusted, and the best in the industry, there are five keywords to keep in mind that will help you separate the real from the pretenders: Read More >

erp selection committee

Selecting a New Enterprise Resource Planning (ERP) System – Part 1

The Importance of Building an ERP Selection Committee and Identifying Your Needs

First and foremost, it is imperative to create a selection committee made up of individuals throughout the organization. This committee will be responsible for moving the company through a successful selection by representing its functional area, defining the software requirements, evaluating and comparing different products based on those requirements, and advocating for the product chosen. Building a selection committee has been shown to be more successful than one person in IT services, finance, or production running the project themselves.

Selecting a new ERP system can be a humbling challenge and defining proper roles and responsibilities for your internal team cannot be stressed enough. While ERP implementation teams can vary in terms of size (number of people), there are several main roles that are needed no matter the size of the company. Read More >

financial budgeting web

The Real Cost of Doing Nothing

ERP Solutions

When considering a particular plan of action for your business and its operations, you may be concerned about issues of the cost of implementing ERP solutions and related integrations. While the return on your investment is an important component in your decision-making process, other factors can be just as important. In some cases, failure to act could cost you far more than the expenses involved in putting your business plans into action. Chortek LLP’s Technology Consulting Group can provide you with a clear picture of the costs of implementing or failing to implement strategies for your business enterprises. Read More >

business plan in a file cabinet

Dig out your business plan to plan for the year ahead

The Business Plan

Like many business owners, you probably created a business plan when you launched your company. But, as is also often the case, you may not have looked at it much since then. Now that fall has arrived and year end is coming soon, why not dig it out? Reviewing and revising a business plan can be a great way to plan for the year ahead.

6 sections to scrutinize

Comprehensive business plans traditionally are composed of six sections. When revisiting yours, look for insights in each one: Read More >

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Prepare For Valuation Issues in Your Buy-sell Agreement

Valuation in Buy-sell Agreement

Every business with more than one owner needs a buy-sell agreement to handle both expected and unexpected ownership changes. When creating or updating yours, be sure you’re prepared for the valuation issues that will come into play.

Issues, what issues?

Emotions tend to run high when owners face a “triggering event” that activates the buy-sell. Such events include the death of an owner, the divorce of married owners or an owner dispute. Read More >

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An FLP can save tax in a family business succession

Succession Planning

One of the biggest concerns for family business owners is Succession Planning — transferring ownership and control of the company to the next generation. Often, the best time tax-wise to start transferring ownership is long before the owner is ready to give up control of the business.

A family limited partnership (FLP) can help owners enjoy the tax benefits of gradually transferring ownership yet allow them to retain control of the business.
Read More >