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Hosted or SaaS ERP? Understanding the Differences

Hosted or SaaS ERP? Understanding the Differences

In the world of enterprise resource planning (ERP), companies spend a lot of time on the software selection cycle. Determining which application will best fit the needs of the business also brings deployment model questions to the table. Currently, many manufacturers and distributors are trying to understand the differences between hosted ERP and SaaS (software as a service) ERP. Whether you’ve already chosen your ERP or are in the process of selecting your software, understanding your on-premise and cloud deployment options is key to enterprise resource planning success.

Hosted or SaaS ERP Infrastructure with Cybersecurity Locks

An application’s functionality is understandably important. The best fit that a company can find with its ERP system will very likely lead to a better implementation, with lower costs and reduced risk surfacing as essential benefits. Ideally, you’ll build a solid foundation for all business activities that follow your ERP implementation. Your computing costs should go down, and time formerly spent on technology and software should shift into more time to spend on your business.

What is ERP deployment? 

A key consideration, one that I do not believe receives enough time and effort during the software selection phase, has to do with the deployment of the solution itself. The implications of such a deployment are life-changing for any company, and particularly influential in the manufacturing and distribution industries.

At the time of software selection, it’s important to understand how you intend to deploy your new ERP system. An application’s functionality is almost as important as the functionality itself. For this reason, you’ll want to ensure that the deployment model you choose successfully overlaps with the functionality that you need.

What is a deployment model?

By deployment model, I am not referring to the operating system or the underlying database management system, whether the system is Windows-or Linux based or whether it sits on top of an SQL server or Oracle database. Those are in themselves important considerations, but the deployment model has more to do with installation and accessibility. How will the application itself be installed and accessed by the customer?

What is cloud deployment?

There are two very general classifications of cloud ERP deployment models that you can make to try and understand your cloud options. I would classify these as SaaS (software as a service) and hosted deployments.

The Software as a Service Deployment Model

Software as a service, or SaaS, is the model in which the application lives somewhere in the vendor’s data center, and the consuming customer has no line of site to its deployment. The customer subscribes to the software and consumes the application on a client-only basis, often in the form of a web browser. There is no need to manage a complex installation or oversee the application’s administration. The SaaS deployment model limits your control by limiting your responsibility in regard to application management.

The Hosting Deployment Model

The other common deployment model you could classify broadly as hosting. In a hosted environment, the application is deployed to a known server architecture. This architecture could be an on-premise or a local host, or a colocation facility, but I’m seeing much less of that these days, except with larger organizations that are comfortable with large hardware investments. Most often, I find hosting to refer to some form of cloud data center hosting, where the resources are consumed over the cloud as a service. In this scenario, the software itself is purchased using a perpetual license model and deployed to and administered from a discrete platform.

Hosted & SaaS ERP: Two Roads Diverged

So SaaS and hosting are your two basic options for the underlying technology that will serve as the foundation for your ERP. If you are a customer in the midst of an ERP software selection journey, you need to understand what deployment options are available and how they differ, relative to the specific software you are evaluating. That said, I think some generalizations can be made regarding the two models.

SaaS itself can be divided into two categories. The first would be the family of applications that were built from the ground-up to be browser-based, web applications. Plex, NetSuite, and Salesforce are examples of purely web-based applications. 

Another class of applications would be vendors who are retrofitting their older, on-premise applications to be web-enabled and centrally installed and administered, like any other SaaS application.

In general, SaaS is a great option, especially for what I would consider lightweight applications. The software as a service deployment model provides the functionality you need with a costing model that your accountants will like, and it does this without a lot of administrative IT overhead. 

I say lightweight because I’ve found some challenges with some of the limitations of SaaS functionality. In my own efforts, working within various applications, I’ve found that SaaS applications provide a more limited functionality when it comes to the need for more robust capabilities. This is especially true in terms of reporting or administration, or in the construction of specialized business logic.

If you take a well-known software like Salesforce, for instance, and compare its capabilities to traditional on-premise enterprise systems, you’ll see some challenges or differences in the relative functionality of the two systems. An example might be the administrative tools provided to manage, load, and update data. The capabilities are somewhat comparable, but on-premise applications will almost always be more robust, easier to use, and more effective.

The Future of ERP Deployment Makes All the Difference

Currently, ERP software vendors understand this gap and are working to close it over time, but this process is years in the making. For vendors that offer both on-premise and SaaS versions of their applications, I’ve found that the functionality available in SaaS has a long way to go to catch up with their on-premise antecedents. If you were to purchase the SaaS version and the on-premise version of an ERP from the same vendor, you should expect the SaaS version to underperform compared to the on-premise version.

The resources on ERP deployment out there are not always very clear on what those differences actually are, especially when the information comes from the vendors themselves. 

For a hosted model, whether it is some form of self-hosting on top of an infrastructure as a service model, or a managed hosting situation, where a group is providing the entire platform, you can think of it as an on-premise installation without the risks and costs and overhead that come with an on-premise install. This is great from a functionality standpoint, as the control provides over the server architecture allows you to really leverage the full functionality available to you as a customer.

From my perspective, the difference between SaaS and hosted ERP really comes down to expectations with regard to functionality.

I have seen cases during the software selection cycle where the solutions engineers of various companies demonstrate the capabilities of their ERP systems using their full-bodied on-premise versions, only for the sales reps to actually sell the SaaS-based version of the application to the customer. 

This is done with the implicit assumption that the SaaS-based version contains all the rich features and functionality of its on-premise sibling. But as we’ve discussed, that this is not always the case, and I’ve known more than a few customers who express tremendous frustration over this experience—believing they are buying a luxury car, only to have the dealer deliver them the base model. 

How to Choose SaaS or Hosted ERP

If you are looking at a software that sprung from the web fully formed, like a NetSuite or a Plex, the question is a little more straightforward. There is no option to host the application, and from a functionality standpoint, what you see is what you get.

But if you’re working though the decision as to whether to purchase the SaaS subscription license or the perpetual license of an application, you really need to understand whether the functionality will be available in both versions. Essentially, you need to understand how the user experience might differ between the two versions, and then make your choice from there. 

Companies that need the robust functionality that comes with a perpetual license and an on-premise installation and can’t afford to lose that in moving to a pure SaaS or purely web-based architecture have hosting options. If you wish to avoid the liabilities and costs of an on-premise install, then you need explore some of the hosting alternatives available. There are plenty of benefits to be gained through leveraging the cloud:

  • the scalability
  • the dynamic consumption model
  • the benefits of adaptive computing

With these in mind, your cloud migration should also be done in a process that ensures that you are leveraging the full functionality of the software and not limiting yourself, your business, and your future in the process.

Cloud environments like hosted or SaaS ERP systems demand that your team is ready to handle everything from basic business processes to highly sensitive data. Cloud ERP is becoming the go-to jump, and a cloud based software solution could become a downfall without expert project management.

Software applications are becoming more complex, and your ERP solution will change regularly as your vendor adapts to changing technology. Are you looking for help understanding cloud infrastructure? Our cloud computing consultants have answers. Whether you’re trying to head out of community clouds or get lightning-strike level understanding of single tenant infrastructure, our EstesCloud team is here to help make your business run better.

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A Business Automation Nation – How AI Helps Us Connect

A Business Automation Nation – How AI Helps Us Connect

The 2020 shift to remote work forced small to medium companies to increase business automation. To quickly become touch-less and contactless, owners used technology solutions managed by third-party suppliers to guide the new network of online business communication, home offices, and third-party vendors. As the world reopens, AI continues to help businesses network for future growth, especially for organizations leveraging ERP (enterprise resource planning) software.

Business Automation Virtual AI Interface

Artificial intelligence (AI) is human, too

Do you trust your software? Do you trust the humans supporting your software? Consider everything that your ERP software and its underlying technology supports:

  • Internal and external communication
  • Supply chain management
  • Customer transactions and interactions
  • Software integrations
  • Sensitive data

Large companies and global enterprises shifted their cultures to automation long ago. Cloud-based solutions are not new. Successful management of company resources has depended on internal or external IT support since the dawn of the internet. Now it the time for small and medium-sized organizations to access the same business automation tools used by the world’s wealthiest companies.

“As a Service” Business Strategy: Automation as a Service

AI supports your company reputation and culture, so it’s often best to consider automation with experts guiding the process. Focus areas might include the following:

  • GENERAL: How to automate business processes
  • SPECIFIC: How to use data analysis to optimize insight
  • INTERNAL: How to support employees securely as they interact with one another and with your customer base
  • EXTERNAL: How to keep your customers happy, even when supplies are running low and shipping times are burdening relationships

AI, AI, O!: Create a Real-Time Data Window For Your Business

Business owners use tracking tools and data analysis software to understand everything from organization performance to customer behavior. Google tracks search quantity and quality. Amazon compiles endless data on customer purchase intent. Apple allows customers to use their fingerprints, their voice, and their app interactions to optimize device interactions. Microsoft creates data for every email click and innovates based on how clients are using the software. All of this data is useless if not organized and managed properly.

The Automation of Cybercrime – When Malware Uses AI Against You

Ransomware is in the daily news because cyber warfare leverages the same technological innovations that global companies are using to stay ahead of the competition. If malware gets into your backups, you might have a security breach that turns your own AI against you.

Software as a service platforms are especially vulnerability because you’re completely depending on the third-party to handle a large piece of your automation. A hosted environment often provides a more secure infrastructure, especially for companies on the move. An off-site data center can be regulated by compliance regulations. The IT team is required to abide by best practices for cybersecurity. As a result, your data is set up, monitored, and maintained according to the highest security standards. This keeps ransomware from troubling your servers or your software.

Automation for CRM (Customer Relationship Management)

A business wouldn’t be a business without a product or a service to market and sell. Customer data is key to streamlining your sales process. AI allows you to track, analyze, and save valuable information about your relationships:

  • Buyer behaviors
  • Market trends
  • Customer preferences
  • Budget concerns
  • Business direction / business strategy

A business process review can be a great way to get instant insight into how your employees are supporting your customer base.

Pricing Automation: The AI Will Bill You Now

Automated pricing and billing is everywhere in the virtual world, especially when it comes to e-commerce. When customers shop for something using the internet, pricing visibility is critical to buyer engagement. “See the price in cart” might work, but “contact us for pricing” can be a turnoff in this new world of instant gratification automation and digitization.

Pricing can get complicated if you’re offering custom products or complex services. Let’s look at medical billing as an example of a complex business service. HIPAA regulates all third-party interactions. So medical professionals need to ensure that any automation tools that are outsources are in compliance with these medical industry standards. In manufacturing and distributions, everything from shipping costs to supply chain management falls within similar, often less famous, compliance regulations. Pricing and billing can benefit from automation, but the AI software must be managed according to professional standards.

Outsourced Services: A Bot That Never Sleeps is Part Human

To use the medical industry as an example again, anyone offering professional health services needs 24/7 IT support. Why? In the off-hours, portals are still open, networks are still vulnerable, and emergency services are offered around the clock. Often, small and medium-sized businesses can’t afford an in-house employee to handle the 24/7 monitoring of sensitive information and infrastructure. Automation software can help monitor your system while sleeping. If your data is sensitive, your AI tools should come with a 24/7 IT help desk that is continually on watch for a potential or an attempted security breach.

Computer systems are nothing without people. AI systems are developed as a way for machine intelligence to supplement the problem solving skills of people. Strong AI is impressive: computer science continues to build automation systems that play chess or accomplish specific tasks that most humans want to avoid. AI development continues to reduce mundane tasks within a data management system, for example. AI research is focused on creating vast and intelligent artificial neural networks capable of driving cars. To control systems remotely is no longer science fiction. With an intelligent system, even small business owners can save time on routine tasks.

Automate Your Virtual Presence

Your virtual office makes your online presence paramount to the reputation of your business. Other online interactions create a complex representation of who you are as a business owner. Do you have a website or a virtual storefront? A strong web presence can bring you global success, or propagate mass reputation damage. With an internet culture of constant connectivity, automation can help you reach potential clients, even while you are sleeping, by promoting your brand, your ethics, your differentiators, and your value that only you can bring to your customers.

E-commerce comes with high risk, but with proper technology management, the virtual markets can only bring success to your business. You might be able to open new sales channels by offering direct supply to potential and current customers. Don’t be limited by your zip code: use AI to grow your business outside of your region, offering more people the services and products that you believe in as a business owner.

Using Business Automation to Scale While Lowering Costs

AI should help you streamline operations so that you can optimize your budget. However, poorly managed automation solutions can quickly overwhelm your staff, opening the doors to chaos. Fortunately, this loss of productivity is easily avoided when automation begins with expertise. EstesGroup’s staff includes ERP and IT experts that bring complete understanding to your business:

  • Project timing
  • Budgeting
  • Software selection
  • Infrastructure planning and deployment
  • Enterprise risk management
  • Enterprise resource planning
  • Business process improvement

Save time and money while focusing on the work you love. As a Managed Service Provider and ERP consultancy, we can help you choose the latest business solutions that can help you avoid time-consuming tasks by safely using business automation to gain wealth, health, and reputation.

Are you ready to automate success? Let our IT experts help you up your AI IQ.

Please fill out the form below or chat with us now to begin a network assessment today!

Prophet 21 Event: Servers, Financials & Supply Chains

Prophet 21 Event: Servers, Financials & Supply Chains

With summer in full swing, distributors are on the move, crossing docks, splitting shipments, and delivering goods by the truckload to a diverse array of customers. It is a time for expansion—of old trade routes of supply chains and of new opportunities as our reopening country rediscovers its possibilities.

Female Attending a Virtual Epicor Prophet 21 Event

Attend a 2021 Prophet 21 event in person or online

With user conferences back in the schedule for 2021, P21 users are highly anticipating the Prophet 21 user conference P21WWUG CONNECT in mid-August. This event serves as a focal point for the P21 user community and as a bookend for a busy summer. At the onset of the summer season, we thought it would be helpful to host our P21 summer summit as a prelude to the larger Prophet 21 community event. This also gives you the opportunity to open the summer with some new ideas for using your P21 application to its fullest capabilities.

Events like this are a great opportunity to review your application’s capabilities and find ways to improve internal processes, discover ways to reduce costs, and reveal methods to improve information flow and presentation. You’ll also surface steps you can take to better integrate Prophet 21 with suppliers and customers.

Our summer 2021 Prophet 21® event takes place on June 24, from 10:00 AM to 1:30 PM (Central Time). Three panelists will discuss topics pertinent to the P21® user community. The event is free, and all are welcome! This summit will also provide an insider’s view of the Epicor Prophet 21® solution for any distributor who is looking for growth opportunities that only a new software can provide.

Prophet 21 Event Itinerary

Server Best Practices for the Epicor P21 Environment

10 AM – 11 AM (CST)

Daryl Sirota, Executive Director of Technical Services at EstesGroup, will discuss server best practices for P21. Understanding the optimal means for deploying the Prophet 21 application has never been more important, especially with Epicor’s move to a new client-server architecture. Daryl will discuss some of the key considerations when deploying and maintaining your server stack. Daryl leverages 35+ years of IT experience to help customers develop server and cloud architectures that are robust, flexible and reliable. A veteran systems engineer and Microsoft expert, Daryl provides the stable technical foundations that allow customers to focus on their business. Attend this Prophet 21 event if you’d like to know how to create a private cloud for your ERP software.

Creating Financial Statements Using Financial Line Express

11 AM – Noon (CST)

Terri Gage, Senior Consultant at EstesGroup, will discuss the creation of Financial Statements. P21 customers express frustration in successfully creating financial statements, but the often forgotten Financial Line Express can bring ample help to your financial reporting needs. A longtime project manager, implementation consultant, and Prophet 21 specialist, Terri works with organizations to help them successfully implement and fully benefit from the P21 application, actualizing their goals of sustained profitability and business excellence.

Bridging the Gap Between Epicor and Suppliers for Distribution Companies

12:00 PM – 1:00 PM (CST)

Jim Frye, Enterprise Sales Director at SourceDay, will discuss how distribution companies bridge the gap between their Prophet 21 system and their supply chains. Distributors need to do many things to help secure their supply chains as the ground shifts beneath them, automating the mundane and improving collaboration, visibility, and accountability between them and their varied suppliers. Jim leverages 30+ years of experience working with Global Manufacturing Companies, big and small. His passion is to help organizations facilitate growth, reduce operating costs, and increase profitability through supply chain efficiency.

Our event concludes with an open Q&A session, allowing users to raise questions regarding the sessions themselves and the Prophet 21 application in general. Operations management strategies. Cloud server integration steps. Cloud hosting service risks. Prophet 21 cloud platform options. Global supply chain trends. Operation system updates. Dedicated servers, multiple servers, SaaS… from Prophet 21 consulting to server hosting, we have answers to your P21 ERP and IT questions.

Do you have questions you’ve been meaning to ask a consultant, but haven’t wanted to shell out the cash? 

Now is your chance to do it–on our time and our dime!

Epicor’s Prophet 21 user community is founded on collaboration.

Come collaborate with us on June 24.

This event can also help distributors who are considering a new enterprise resource planning (ERP) software.

Cyber Security

Don’t Avenge a Cyber Attack – Prevent It

Don’t Avenge a Cyber Attack – Prevent It

One cyber world story that captivated me as a youth was the character of “Ultron,” as depicted in comic books and in the movie adaptation of The Avengers. The character was a breed of artificial intelligence created with the intent of protecting the earth. But he turned against his creators, and against the earth itself, becoming a cyber super villain in the process. Origin story complete. Now queue the good guys.

Cyber Attack Encrypted Files Ransomware Attack

Such is the nexus of superhero narratives. A good intention turns violently wrong, necessitating radical intervention. Movies and comic books love to prey on fears of killer robots and cyber intelligence. It’s an archetype as old as the myth of Daedalus and Icarus: technology going too far and humanity in its arrogance flying too close to the sun, then landing on those old Led Zeppelin t-shirts instead.

Companies encounter similar, albeit less explosive, narratives when deploying cybersecurity solutions, in an attempt to lock down their networks. Often such solutions are deployed in the absence of a comprehensive infrastructure threat review. As such, they fail to provide comprehensive cyber protection.

This amounts to a technical placebo. The cybersecurity plan once implemented gives the impression of the cure without any real medicine provided. And while the attempt to paint over one’s data security problems is not itself an act of malice, it can nevertheless have deleterious effects to the organization in question. 

My own experience in the business world tells me that user oblivion is as dangerous as malice when it comes to cyber vulnerability. A corporate network with rudimentary cybersecurity and normal online hacking attempts, such as phishing scams or malvertising, can be more problematic than a secured network under a heavy cyber attack, such as ransomware.

A Cyber Attack from an ERP Perspective

While the tale of Ultron and the Avengers had itself a happy ending, the story of many businesses is not so optimistic. I once worked for a manufacturing organization that was on the cusp of an ERP (Enterprise Resource Planning) cutover. Painstaking work had been done to ensure that all steps were accomplished and that everyone was ready for a successful go-live.

Training, communication, data conversion—all of the pieces were in place. Cutover weekend went without a hitch; the steps in the go-live plan were executed without issue. The first day live went off without major problems. The normal hiccups associated with a new system surfaced, but nothing unexpected came the way of the ERP implementation team.

On the second day after the ERP go-live, users quite suddenly lost access to shared network drives. Soon after, they began receiving errors when trying to save ERP transactions to the database. Then they abruptly lost access to the application entirely. Amongst all of the communication, they hadn’t even realized yet that their email server had gone down and that they were therefore no longer sending nor receiving communication. Their network had been completely compromised. Chaos ensued.

When people think of the most common reasons for an ERP failure, they normally speak of over-customization, or a lack of management support. They rarely think of ransomware. But for the company in question, getting ransomed over cutover weekend was the first step to a cascading number of failures. In a panic, the company reached for paper-based manual processes while communicating to customers and suppliers over hotspot connections, using the employees’ own private email accounts. It was a cyber mess on all ends and resulted in late shipments, efficiency issues, unhappy customers, and months of work to resolve. Time and talents could have been spent on things other than cyber attack recovery—if only the company had been prepared through preventive measures.

Companies Running ERP Systems Can Avoid Ransomware

The moral of this story is less than heroic: there are no super powers that can save a network that is unprepared, or insufficiently prepared, for an attack. And there are no super heroes to jump in and avenge the wrongdoing.  

Avoiding a cyber attack entirely is always preferable to avenging it after it’s happened. Many companies believe they’ve taken the steps necessary to mitigate a cyber attack. Enterprise risk management needs to be an ongoing activity, however, with business owners and executives involved in designing, understanding, and implementing a cybersecurity plan customized to the vulnerabilities of the industry under attack—because every industry is ALWAYS under attack. 

A company’s greatest vulnerabilities are often the ones that they never realized they had. The greatest risks are the ones they believe they’ve already mitigated. The company in this tale of ERP implementation security chaos thought they had done everything internally to secure their network. But their efforts were done in a vacuum, without any impartial opinions or outside analysis. They weren’t out to create a monster, but their vulnerabilities created a monstrous problem. They didn’t feel they were walking on enemy ground because the villians were hidden and undetected by current cybersecurity measures.

The lesson to be learned here is that malice often masquerades as magnanimity. The most significant threats to an organization are often clothed in good intentions.

Is Your Business at Risk of a Cyber Attack?

Could cybersecurity be the biggest problem you didn’t know you had? I’ll spoil the plot—cyber vulnerability, particularly the risk of a ransomware attack, is the biggest problem currently lurking within most businesses. Manufacturers are at risk of complete shutdown. Distributors face supply chain attacks on a daily basis. And there is no type of business that isn’t under attack. Law offices, financial institutions, hotels, medical facilities—all are under the threat of a cyber attack.

Are you feeling the cyber risk and wondering what you can do to protect your business? Don’t avenge your problems—prevent them before they’ve occurred. Get a security assessment, identify your vulnerabilities, and assemble your future. Know the problems you had yesterday and predict the ones you might face in the future of cybercrime.

3 Signs It’s Time For a Server Upgrade

3 Signs It’s Time For a Server Upgrade

Is Your Server Seeing Stars?

Sometimes called a “super computer” or simply a “computer bigger than yours,” a server is a technological infrastructure that hosts a shared resource pool. Servers become more complicated as small businesses grow and require multiple pieces of hardware to support company software. A multi-site company might have multiple servers at each location to support various types of users, devices, and software interactions. Many of us never physically see the servers that support our personal devices, yet our data is available across phones, laptops, tablets, and desktops. Unfortunately, old servers put our data at risk. Is it time to take a good look at a server upgrade?

Server Upgrade IT Strategy Team

Sign #1: The Word “Outdated” Comes to Mind When You Think About Your Server

A timely server upgrade can increase profitability by giving you a competitive edge since a server upgrade is most often a “profit now, profit later” occasion. For example, Section 179 allows business owners to upgrade technology and write off purchases. Business growth is challenging, and investments can be risky, and there are programs in place that acknowledge and assist with this reality. Like you might replace an old furnace or broken window when the timing is right for tax deductions, you might replace old technology when your CFO or accountant sees an opportunity to take advantage of a tax break.

Sign #2: You Find Yourself Questioning the Security of Your Data

A handful of “S” words haunt the security issue, with servers as the first serve. When looking for signs of server insecurity, also inspect system assessment history, speed issues, storage requirements, and sensitivity of information handling.

Is your current server architecture safe from hackers? Ransomware is becoming an amateur hacker’s play now that Cybercrime as a Service is becoming a popular business exchange on the Dark Web. SaaS (Software as a Service) and BYOD (Bring Your Own Device) cultures increase the risk as they both allow more complex interactions with your network.

How much of your data is sensitive, and can your servers keep up with compliance regulations? If your office handles medical information, you’ll need technology solutions that comply with HIPAA. The acronyms of compliance are often industry-specific notations that change yearly to adapt to new threats.

Backup management and documentation strategies need to be supported by a network that can process information swiftly and without risk of data loss. Storage needs increase as devices become more interactive, and physical servers don’t offer the same flexibility as virtualized servers, so this is also something to take into consideration as you question data security. No room in the server means no data saved for your future. Inadequate or improper data storage can become a costly mistake that can lead to significant strain on your budget.

Sign #3: You Worry About Stability & Know a Server Upgrade Could Help

If you have a physical server to maintain, you know the burdens of cooling costs, fire alarms, and on-site security systems. Your server room is vulnerable to both physical and virtual attacks. Business owners rarely have time to analyze every file created, and every company click needs to be protected from malware and other threats. Ask yourself a few questions to see how much you know about the stability and accessibility of your backups:

  • How do you archive company information?
  • What are the greatest risks to your servers?
  • If you need to upgrade your technology every 5 – 10 years, when will your servers need to be replaced so that you can stay competitive amid advancements?
  • How long would it take to migrate your data to another physical server? Would it be more efficient to migrate data to the cloud? Is your data already somewhere in the cloud?

Now Is the Time To Take a Closer Look at Your Server

Unfortunately, on-premise servers fail, and routine assessments are necessary. EstesGroup can help. Our IT specialists are here 24/7 to provide recommendations for IT infrastructure, maintenance, testing, & more.

Wish to know more about server management?

On-Premise vs. Hosted vs. SaaS

On-Premise vs. Hosted vs. SaaS

Which is right for your business? On-Premise, Hosted or SaaS?

Technology changes at such a rapid pace that it can be hard to keep up. Today we are going to dive into the key differences of on-premise vs. hosted vs. SaaS (software as a service) and provide some great reference points that you can align best with your business.

On-Premise, Hosted, Cloud & SaaS Definitions

On-Premise Solutions

The best place is to start with a quick history lesson. Most businesses have some from of IT infrastructure that they leverage that allows them to operate efficiently and effectively. The traditional method that many businesses begin with is on-premise. In today’s world, on-prem deployment is considered a legacy approach. A legacy approach is not always wrong, as an on-premise solution does have its benefits.

Benefits of On-Premise Solutions

  • Increased security since control is controlled locally.
  • Performance can be important to users who have slower internet speeds and for when occasional software requires local installs for best performance.
  • On-premise software usually carries more features due to development cycles.

Weaknesses of On-Premise Solutions

  • Infrastructure: Average server life span is around 5 years and can be shorter depending on growth.
  • Cost: Considered a Cap-X expense and can be more expensive then SaaS counterparts.
  • Security: Endpoints, backups, patch management, etc. — all needs to be considered.
  • Future proofing: Many servers are more expensive upfront than required to account for future growth. If this is not applied correctly during initial purchase, it can lead to increases in long-term spending.
  • Remote access: Unless originally configured, users outside the office (remote workforces) will have a hard time accessing required resources.
  • Performance degradation: Over the course of time, hardware breaks down and will need to be replaced.

Hosted & SaaS Solutions

This is the future of where most businesses are heading. Hosted solutions generally come in two forms: hardware and software. A hosted server is very similar to on-premise as the main difference comes from the server physical location. This generally means that you get the same benefits as the on-premise solution but with far fewer of the weaknesses. SaaS generally refers to software without requiring the infrastructure to run the software but does not always have the same features.

Benefits of Hosting & SaaS

  • Time to deploy: SaaS-based solutions can be deployed almost immediately in most cases.
  • Expense: Upfront costs are low for SaaS.
  • Minimal Infrastructure: With SaaS solutions, hardware requirements are generally taken on by the company offering the SaaS solution. Hosted has the benefit of being able to right-size resources for the organization with the ability to scale on demand.
  • Flexibility: With both SaaS & hosted solutions, you can increase or decrease resources on the fly.
  • Security: Backups and updates are generally applied by the provider. This is not always the case and requires additional costs depending on the vendor.
  • Performance: Both solutions scale and are not affected by hardware degradation, as the underlying hardware is upgraded by either the data center or the SaaS vendor.

Weaknesses of Hosting & SaaS

  • Internet connection: Both solutions require decent bandwidth at location in order to function.
  • Transparency: Data storage with SaaS solution is beyond the control of the business owner. Hosted solutions will disclose where data is being stored.
  • Long-term costs: Upfront costs are generally lower and moved into an operating cost structure which can be higher, especially if on-prem hardware is owned.

Examples of Deployment Options

Scenario 1 – Startup / Small Engineering Consultancy

A small business with 5 people, you have 3 people working in one location, and 2 employees working remotely. You have minimal overhead, and you are expecting to grow quickly, so you need flexible and scalable systems.

What your key systems might look like:

Large Corporate Business Systems

In this example, a hosted, lightweight solution is totally appropriate. It allows you to focus on the business and not have to worry about managing an IT environment. New users can be added in minutes and can access information from anywhere with no specific hardware requirements other than an internet connection.

Scenario 2 – Established Mid-Size Engineering Consultancy

A mid-sized business with 50 people, you have 20 people working at one office location and users scattered throughout the states with no aspirations of any other offices at this stage. You have an established client base you work for and provide some specialist engineering design services which require some specific CAD software.

What your key systems might look like:

Key Small Business Systems

In this example, you probably have an existing investment in infrastructure and are probably already running a Windows network. You are probably also running an intranet and have appropriate network storage and data backup facilities. You have your own or regular IT support so you can manage your own environment. In this case, you may prefer the software to be installed on your network so you can control it. Hosting is less of a benefit for you, but you may still choose this option for convenience if your current environment is not appropriate for the software due to age or if it is already running at maximum capacity. Over the next few years, we will see a lot of businesses in this space start to run a hybrid model of on-premise and hosted software solutions.

Scenario 3 – Large International Corporate

As part of a global engineering consultancy, your systems are dictated by your owners. They are designed by an internal IT team to fit in with rules and processes as established by an internal governance team. They are very rigid and highly controlled, and most of your systems are on-premise where you have a team of internal IT technicians maintaining them.

What your key systems might look like:

Midsize Business Systems

In this example, the environment and the software are governed by internal policies. These are not agile systems, and they require a large investment in infrastructure. A massive amount of time and effort goes into establishing and maintaining these systems. Eventually, large corporates will start moving towards more agile hosted solution.

EstesGroup understands that not every business operates in the same manner. Some businesses require on-prem solutions while other businesses might be able to increase efficiency and reduce costs by moving to a hosted or SaaS-based solution.

If you are interested in finding out how you can make technology work better for your business, including which solution would fit best, we would love to help by setting up a 100% free business technology assessment. If you have any questions or are interested in find out how to make your business technology operate better, please email Chris Koplar at [email protected] or call 760-216-3452.