Brett Mundell, Leverage Technologies, weighs up the benefits of SAP Business One Cloud for SMEs.
Everyone is talking cloud – small companies, SMEs and large corporates. Initially the focus was mostly based on email, MS Office and CRM applications in the cloud but more recently, everyone is asking the question – “should I put my business management solution into the cloud?”. Speaking to hundreds of potential and current customers, over the past three years our team has noticed a huge increase in the number of customers asking about cloud. Three years ago, approximately 5 per cent of prospective customers asked if cloud was an option for their business management solutions. Today that number has grown to approximately 50 per cent.
So what are the options available to an Australian SME for SAP Business One in the Cloud? SAP released SAP Business One OnDemand in Q1 2012 and the response has been fantastic. The great thing about SAP is that it gives you choice – on-premise (the traditional business model for business management solutions where you have a server and required licences paid for upfront, and using your own in-house IT skills or a third party to support them) or a cloud-based solution – SAP Business One Cloud. You decide how many licenses you require and your SAP partner takes care of the rest – hardware, back-up, infrastructure and more. The best part is that all of this is included in a monthly fee, so no need to pay for the software upfront, no need for a server or back-up solution. SAP takes on the hassle out of the administration of your business management solution.
So how do I decide which is the right option for my business?
There are a number of factors to consider when deciding between on-premise or cloud for your business management solution including:
- Current IT infrastructure: Do you have the necessary IT skills in place to manage a server, back-up and infrastructure? For most SMEs, this role is an outsourced role or an additional level of responsibility given to the financial manager. With a cloud-based solution, a lot of the hardware and infrastructure headache is taken away, as your solution provider takes care of hardware and infrastructure. But let’s not forget that you are still paying a monthly fee for this infrastructure.
- Growth plans: Cloud-based pricing avoids the need for upfront investment in software licenses. The advantage is that you can add users as your business grows. This will however increase your monthly costs as your business grows and you add new licenses.
- Functional requirements: If your functional requirements are relatively simple, then cloud makes sense – turn on the software licences, configure the system and do some training. But what if your requirements include integration to third party applications, development work or an industry-specific solution? This might be more challenging to achieve in a cloud-based environment.
- Cashflow: Quite simply put, you can save on your cashflow by paying the monthly cloud-based fee rather than making an upfront investment in software. The potential downside is that you will be required to add to that monthly fee each time you purchase new software.
- Tax: Best to talk to your tax adviser/accountant about this. There are different tax treatments for upfront software investment vs monthly payments.
- Internet access: What sort of connection speeds can you get, what guaranteed uptime and at what cost? Some remote areas in Australia still struggle for reliable, fast internet. If the connection lacks speed or reliability, then cloud is not an option.
- Distributed vs central business model: A distributed business model lends itself to the cloud-based options – add new users in any location and you can simply get them connected to the internet and start processing. No need to set-up expensive IT infrastructure in each location.
So what’s the answer – cloud or on-premise? As you can see there is no one answer. Review your requirements as a business and your unique circumstances before deciding. What is clear is that SAP has you covered either way – SAP Business One for the traditional on premise solution or SAP Business One Cloud.
Brett Mundell is managing director of Leverage Technologies.
This article was originally published in Inside SAP Winter 2013.
