Why Enterprises are Transitioning from On-Premise ERP to Cloud ERP Solutions

Why Enterprises are Transitioning from On-Premise ERP to Cloud ERP Solutions

After years of supporting “graduations” from the likes of QuickBooks and desktop solutions, many larger, more well-established companies are transitioning to cloud ERP systems like NetSuite or Microsoft Dynamics 365 for wholescale replacement of on-premise Enterprise Resource Planning (ERP) solutions.
This transition comes at an opportune time as the demand for scalable solutions is escalating and the acceptance of the software as a service (SaaS) pricing model has become the norm. Microsoft Dynamics and NetSuite OneWorld’s cloud-based ERP; include support for global financial consolidation and embedded omnichannel commerce, along with a scalable platform that supports customization and extensibility – making them viable contenders to replace legacy ERP solutions.

Cloud ERP Solutions and SaaS, Not Just for the Little Guys

Many confuse the terms cloud-based and SaaS. In fact Mint Jutras has been guilty of using them interchangeably. But in fact they are not the same and this means not all “cloud” solutions should be viewed as equals.

  • Cloud refers to access to computing, software, storage of data over network (generally the Internet.) You may have purchased a license for the software and installed it on your own computers or those owned and managed by another company, but your access is through the Internet and therefore through the “cloud,” whether private or public.
  • SaaS is exactly what is implied by the acronym. Software is delivered only as a service. It is not delivered on a CD or other media to be loaded on your own (or another’s) computer. It generally is paid for on a subscription basis and does not reside on your computers at all.

All ERP SaaS solutions are cloud-based, but not all ERP cloud solutions are offered with a SaaS pricing model. Traditional on-premise systems, hosted solutions, or hybrid ERP platforms do not necessarily have to be offered as SaaS. However, Microsoft Dynamics and NetSuite ERP systems are real multi-tenant SaaS solutions, which puts it in a different class of applications than those that just deliver web-based access.

ERP Selection: Multi-tenant Versus Single-tenant SaaS

Not all SaaS offerings should be viewed as equals during your ERP selection process. Multi-tenant SaaS and single-tenant (multi-instance) SaaS solutions offer benefits and drawbacks based on your current and future ERP platform needs.

Multi-tenant SaaS: Multiple companies use the same instance of hosted software. The service provider maintains server resources, applications, and general security. This is a great option for companies that do not have a dedicated, digital security team. There’s less control over the environment, but sharing resources significantly reduces the overall cost of maintaining your ERP system.

Single-tenant (or Multi-instance) SaaS: The SaaS provider maintains (hosts) a dedicated server to run ERP applications, handles data, and offers businesses more server control. This level of service does come with a high price tag. It is useful if your business already has a robust digital security team, and you need to handle sensitive data.

For many years, there was an assumption that SaaS pricing was better suited for small companies. Today, there’s a growing preference for large and enterprise-level SaaS ERP systems.

An ERP Migration Success Story: Dent Wizard International

Dent Wizard International has been the leader in development of Paintless Dent Removal (PDR) technology since its establishment in 1983, and today is North America’s leading provider of SMART Repairs (Small to Medium Area Repair Techniques). In 2010, Dent Wizard was acquired by a private equity firm, and therefore needed to transition off its legacy IT environment, including an on-premise ERP system, and custom accounts receivables and payroll applications running on an IBM AS/400. With over 1,800 employees, 1,500 of which are service technicians in the field, Dent Wizard needed a cloud ERP software solution that allowed access to business data any time, from anywhere. Beyond that, Dent Wizard sought added scalability and the ability to automate labor-intensive processes. During their ERP selection process, Dent Wizard was specifically looking for a product with:

  • A broad range of functionality to run complex and mission-critical business processes across multiple subsidiaries on the same platform;
  • Speed of implementation and time to value;
  • A platform that removes the burden of having to manage upgrades and servers and dealing with version lock issues;
  • Real-time visibility into and control of its business across all business entities and subsidiaries through a single version of the truth;
  • The agility, scalability and flexibility to support business growth.

Prior to their ERP migration when they first selected NetSuite ERP, the majority of Dent Wizard’s invoices were entered manually, which necessitated a massive amount of data entry. Since then, the company’s revenue has grown by more than 60% and it now processes more than 1.8 million invoices per year; and has increased electronic invoice processing by 30%.

Many of those invoices are filed directly by field service technicians using its Wizard Pro mobile invoicing application running on mobile devices. This eliminates the need for the lion’s share of that manual data entry. The mobile application was developed using the NetSuite ERP platform and integrates directly with OneWorld. It gives technicians the ability to manage tools and equipment on-site through NetSuite inventory management.

Value and scalability were key elements of the decision to go with NetSuite OneWorld. “NetSuite gives us a platform for growth and scalability, and from an IT infrastructure standpoint – we don’t have to manage services,” said Tammy Conner, Dent Wizard Chief Information and Accounting Officer. “NetSuite has enabled us to run a very lean IT department, and that makes our organization much more efficient. Our people are happy with NetSuite and routinely evaluate how we can optimize the solution for our business.”

Now is the Time to Consider ERP Migration to the Cloud

We know the time is right to migrate to a cloud ERP system, but is the time right for you? If you are in the “undecided” camp, it may be helpful to understand what business challenges typically push organizations to replace an Enterprise’s ERP system.

What Prompts ERP System Migration

Interestingly enough these align quite well with what we find to be the appeal of SaaS. Quite often legacy ERP solutions fail to meet the functional needs of their owners. Early ERP systems lacked the depth and breadth of functionality available in newer ERP solutions that are based in the cloud and enabled by advanced technology.

Not only does a multi-tenant SaaS ERP lend itself to more frequent updates (the vendor has only a single line of code to maintain), but ERP platforms, such as NetSuite or Microsoft Dynamics 365, make extending the solution relatively easy. Dent Wizard’s Wizard Pro mobile invoicing application is the perfect example. This mobile process is quite unique to Dent Wizard and therefore not likely to be satisfied right out of the box. But in treating this as an extension to OneWorld the barriers traditionally built-in with invasive code changes are removed. Even as NetSuite delivers innovation, this type of extension simply moves forward as well. Nothing breaks.

A SaaS ERP system also is a key enabler of growth. No capital expenditure required; no need to build out a data center, or even put hardware or huge information technology (IT) staff in-country. The access any time, from anywhere nature of a cloud solution is conducive to supporting distributed users and bringing up remote sites rapidly and easily while conforming to and enforcing those corporate standards mentioned earlier.

Those saddled with outdated technology can rest assured they will never wind up in such a situation in the future. A good SaaS ERP solution also addresses the cost of obsolescence.

An old, outdated ERP solution can be costing you in terms of time, effort and real money to maintain it. The good news is that with a SaaS ERP solution such as Oracle NetSuite or Microsoft Dynamics 365 you don’t need capital investment.

On-Premise ERP Systems Are a Thing of the Past

Indeed, the time is right for NetSuite and Dynamics 365 to be coming upmarket, targeting not only those seeking their first-ever real ERP solution but also those who are hindered by older ERP systems that lack the functionality and the technology to keep pace with growth and change. Specifically, NetSuite’s ERP solution has been developed over its long history as a cloud-native ERP solution to address the needs of larger, global and distributed environments with financials and consolidation. Customers have proven the solution can handle massive transaction volumes while helping organizations like Dent Wizard run lean and efficiently.

Do your current ERP software solutions allow you to grow efficiently? If not, perhaps the time is right for you to migrate to a new ERP system. If so, Oracle NetSuite and Microsoft Dynamics 365 are definitely worth a look.

To find out which ERP solution is the best fit for your business, contact an ERP consultant online today.

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