There is a lot of hype these days surrounding cloud-based ERP solutions for retail outlets. And a lot of the excitement is justified. In terms of convenience and upfront capital costs, it’s hard to beat.
However, before you jump on the cloud computing bandwagon and sign up for retail software solutions that offer a Cloud-Based model, it’s a good idea to consider some of the key points and compare them to a traditional local software installation (also known as on-premises software solutions).
Aside from how you access your retail software—on a cloud or a server—one of the biggest differences between on-premises and cloud-based variations is the initial startup cost. The former typically requires a significant upfront capital investment to purchase a local Server and upgrade older desktop computer, while the latter follows a pay-as-you-go scheme for your IT Platform (sometimes referred to as Platform as a Service or PaaS).
Many small business owners appreciate ERP solutions that follow the Cloud model because it doesn’t:
- Tie up cash flow
- Require hardware maintenance
- Need software updates (the cloud vendor sees to all maintenance)
- Require IT personnel
As an added bonus, you can usually treat your on-demand usage like a utility, which provides an ongoing opportunity for a write-off when doing your accounting.
In many ways, these approaches are similar to renting and owning a house. When you go to a Platform as a Service ERP solutions (i.e. PaaS), you never actually own the Server. You simply keep paying for as long as you want to use it. Similar to units in an apartment building, most cloud vendors host multiple clients, which allows for resource pooling and cost savings.
On the other hand, when you choose an onsite installation, you own the hardware and rights to use the software installed on it. Many business owners find peace of mind in that, but it also means you’re responsible for maintaining it and upgrading it.
One of the major concerns with cloud-based retail software solutions is security. Many business owners balk at the idea of placing sensitive company information in cyberspace.
Other security apprehensions stem from things like:
- Availability disruptions
- Loss of data
Cloud-based systems these days are fairly robust, but there is no way to guarantee they won’t fail. However, the same can be said about a local server. The difference is you have control over it.
If your retail company grows to a point where you require additional functionality for your ERP software, you can do it easily with cloud-based architecture. For instance, let’s say you decide to open another branch. You could easily upgrade your storage space, or add extra software features as needed on a cloud.
For an on-premises service, you would have to foot the bill for any extra hardware you need to install.
If you are considering opening another retail store, read our post: Why Inventory Control Software Is a Must for Multiple Locations.
Are you looking for flexible ERP solutions for your business? Windward Software offers both installed and cloud-based versions of its award-winning System Five platform. Call us to discuss which version is right for you.