You know as well as anybody that the idea of reducing your I.T. expenditure is a daunting one. It can feel like entering a dark cave full of risky steps, with forks in the path leading to nothing but suboptimal routes. Unfortunately for many companies spelunking in that cave, they’ve reached a critical juncture with their old software and systems: on one hand, they face massive expenditure in upgrades and new implementation fees, and on the other hand they run the risk of bogging down their business with inefficiencies, redundancies, and customer affecting performance issues.

            A tight budget can feel like a noose around the neck of your IT department, because while you are striving to deliver the best possible experience for your users, little is left for reinvestment in your business, with many looking to cut IT costs for this reinvestment. Reducing your costs helps free up funds for reinvestment, but many business owners fear the potential risks that a reduction in costs means for their IT performance. Fortunately for these companies, there is a saving grace for improving your IT—and by extension, your business—performance while still reducing costs. So what’s the pièce de résistance for this seemingly oxymoronic statement? Technology.

            Go ahead and take a figurative step back in order to take a comprehensive look at the core IT of your operation, as well as the needs of your business. It's not unlikely that, as you consider it more carefully, some potential holes in the capabilities and performance of your core IT process will become evident. Today, one of the most potentially beneficial places you could look for this cost-effective performance is your software. The software you choose and the method through which it is implemented can have a colossal impact on not only the daily performance of your business, but also budget stability and reduced expenditure, primarily through efficiency, performance, and availability.

            As the software they use becomes ever more critical to the daily operation of their business, many companies look towards greater investment in their enterprise IT, bringing on more software and more hardware. This is a major drain on your budget and resources and will hinder your company’s performance. Thus, companies are faced with a situation in which a lack of investment means potentially damaging complications, while simultaneously, investment in IT means added complexity to their central IT structure.

This is the juncture where enterprise-wide business software solutions come into play, providing business owners with the opportunity to keep all of their employees and processes contained and working within a single environment—at a fraction of the costs of the numerous disparate systems they had been running previously. Enterprise Resource Planning software (ERP) has quickly become the ubiquitous solution for those seeking an enterprise-wide unified software experience, and for good reason. While unnerving at first, a company’s first ERP implantation can be magical, with the potential to help you cut down the budget while improving your software performance; and, by extension, your service. Let’s dive in.

The True Cost of Outdated Hardware

Despite on-premises server-based ERP solutions having been the standard for business software solutions for the better part of two decades, they carry with them a high total cost of ownership (TCO) and a slew of challenges to boot. Some of the primary challenges faced by those laggards stuck on their legacy system include:

  • The Cost of Maintenance
  • The Cost of Replacement
  • Lagging Performance
  • Reduced Productivity

From exorbitant upfront capital expenditure to internal IT staff and frequent updates, the cost to own these dinosaurs of IT can make it feel like you’re paying for Jurassic Park. Even beyond these daily costs, when it comes to these lagging, obsolete systems it's, unfortunately, true that a problem—be it through unstable performance, decreased response time, or massive data loss—will have a lasting effect on the success of your business and it isn’t a matter of if; it’s a matter of when.

            Things aren’t likely to start looking up by simply replacing your on-site solution with another either, as those same upfront server costs which ate budget when you implemented the original on-site solution are unlikely to be mitigated by the hardware you already have. It's simply the case that you are unlikely to mitigate many of these problems without also replacing the hardware your software is loaded on. This all adds up to a steep price tag for those who ultimately began the upgrade process with ambitions towards reducing their required IT budget. This leaves many decision-makers feeling like upgrading their systems is simply too much money, choosing instead to ignore the problem. One would do well to remember that what they are actually choosing to do is wait for a mission-critical failure.

Downtime as a result of system failure is an unacceptable pothole for any business, and as business owners struggle to navigate the oxymoronic task of both lowering costs and improving performance, outdated onsite solutions can and will be a barrier to your company’s success, even when that solution is an ERP.

The Innumerable Benefits of Software as a Service (SaaS)

Regardless of your industry and the scale of your embrace of technology, the software you use to operate your business needs to be hosted somewhere. In the recent history of enterprise technology, these key aspects of your operation have been hosted on outdated onsite hardware like we’ve discussed. The trouble with this is that beyond the huge capital expenditure required to establish an onsite IT solution, what you need out of your IT solution will expand alongside your business, and the updated level of service required is going to run your business big bucks as you look to update or replace your onsite server.

Shifts in the landscape of business IT, accompanied by concerns regarding costs, shifts towards at-home employees or contractors, and increased digital reliance has led to the development of an alternative to these expensive onsite solutions. This solution, known as software as a service, or SaaS for short, has been making its way to the mainstream of business intelligence solutions in the last few years, experiencing a steady climb in prominence. These new technologies and their associated enhanced features can be massively beneficial to countless modern businesses, helping them to attain higher performance levels than previously possible on less advanced solutions. Missing opportunities due to poor performance on your software side can seriously impede your employees’ ability to perform optimally and can be a serious hindrance to team morale.  

Cloud-based technologies like SaaS allow you to dramatically benefit your business and your day-to-day performance. Those best situated to benefit from an upgrade of this kind are those looking towards expanding their share of the market, pursue budget savings, or prevent revenue loss through a poor customer experience. That may sound like most businesses, but that’s because it kind of is. This is reflected in a recent Gartner study of SaaS finding that nearly 90% of businesses asked expected to either maintain or expand their usage of SaaS, with another question finding that one third of businesses have a plan to make the transition from onsite solutions to SaaS in the coming years.

A SaaS ERP hosted in the cloud breaks down previous barriers to excellence your business may have faced on an outdated software/hardware combination by providing a viable solution that not only improves performance but also has the very real potential to save you money. So rather than spend a ton of money buying the latest and greatest hardware for your software, just get the software that handles it for you, thus overcoming the challenge of technological obsolescence.

Let's Talk Cyber Security

Ensuring that your service provider is offering you with the security you need is vital to the success of your ERP system implementation. Regardless of whether you’ve opted to go with a SaaS provider, or have shelled out big time for a suite of onsite security hardware, ensuring the security of your platform can ultimately save you big time. From helping to protect your network from access by unauthorized individuals to stopping massive data breach and leaks, your software security serves as the gate house to your data. Ensuring that it is reinforced will provide you not only with peace of mind, it will also limit the need for a servicing technician, onsite or otherwise.

            So how do you know your software is secured through SaaS? The important thing is asking questions and doing thorough research, as is the key to a properly secured on-site solution for one with little experience. To save you some time, though, we have put together of a rundown ofthe security of ERPs in the cloud, focusing on how it relates to on-site security. The article features a section elaborating on the extensive security one can expect when their software is delivered through the Microsoft Azure cloud platform on which a SaaS ERP service can be located.

Downtime: Business Closed, Wallet Open

When discussing which software a company should use, the vendor is nearly as important to the success of your business as a solid marketing plan is. This is vital because, unplanned outages, which may be the problem of your IT staff to solve, are at their core business issues, with an impact on day to day performance. After all, your software solution plays a major role in providing your staff with the ability to work effectively and efficiently, meaning that the loss thereof will have an effect on your staff, which is bound to trickle down into your customer experience in some capacity, likely preventing you from providing them with information and services quickly.

Thus, downtime costs can be considered to include loss of customer time, diverted employee time to system maintenance, and the potential for overtime expenses if the problem persists long enough. Downtime is further accompanied by the potential for lost data, whether it's limited to recent data or backups; even after service is restored, if you’ve lost data, there is still more time wasting to be had before it's business as usual again.

As made evident by the findings of the Ponemon Institute white paper on “Understanding the Cost of Data Center Downtime: An Analysis of the Financial Impact on Infrastructure Vulnerability,” even a single event resulting in downtime can have catastrophic results for businesses and their owners. This pattern of catastrophic downtime can be attributed to several trends, including the emergence of a number of business models entirely dependent on the reliability of its IT systems. A failure in your IT systems could range from potential temporary loss of service from at the application layer all the way to serious data loss with the potential for massive fiscal and legal implications.

            A key part of any thorough investigation of a business' IT systems and the potential for fiscal savings and performance boosts is to calculate the amount of money your business losses for each hour that your company is without its key IT software or data. An Article by Evolven discussed the simplest way to calculate potential revenue losses during an outage; with the following equation:

 LOST REVENUE

 

 =

(GR/TH) x I x H

GR

 

 =

gross yearly revenue

TH

 

 =

total yearly business hours

I

 

 =

percentage impact

H

 

 =

number of hours of outage

Yearly Cost Metrics

Best in Class

Industry Average

Laggards

Business interruption events

.9

3

3.5

Time per business interruption

1.3

4.7

8.4

Total disruption (hours)

1.2

14.1

29.4

Average cost per hour of interruption

$60,000

$110,000

$98,000

Total cost of business interruptions

$72,000

$1,550,000

$2,880,000

                                                                                                                                      Source: Aberdeen Group, 2010

Business? Efficiency is Key. Efficiency? Software is Key.

So, it should be clear that keeping abreast of developments in IT can help ensure that your company is making the most of the latest technological advancements in efficient operations. Beyond keeping one ear to the grapevine for technological advancements, many companies could benefit greatly from doing a comprehensive audit of their IT. How many programs, hardware, and services have you accumulated over years of operation that are looking at future of little to no use? How could you cut down on these services and software to streamline your IT and IT budget?

One trick is to look at your processes from the point of view of an externally interested party, like a potential investor. Examine how the overall goal and vision for your business is being met by the various aspects of your IT and how you could better serve your vision. It may help you to draw out a detailed map of each of your processes of informational and material flow. This can dramatically improve your ability to understand the connecting lines between the various aspects of your workflow and your internal IT, allowing you to better equip yourself for success through waste elimination. These are questions to consider, and as we’ve mentioned, a managed service provider through SaaS is a great way to eliminate exactly this kind of waste.

            Time and time again, we see IT budgets struggling to keep pace with the constant expansion of your business’s scale and exponential data growth. This increase in workload and traffic can often lead legacy systems on dated servers to run inefficiently, resulting in costly impacts on the business in the long run. So, if you want a system that meets or even exceeds your IT needs without breaking the budget, then you need an enterprise solution which delivers a superior working experience, with improved performance, storage efficiency, increased performance, and reduced risk—all, as I say, at an affordable cost.

A sandbox ERP solution that is engineered for your business from the ground up offers all the benefits. Optimizing your performance and efficiency, sandbox solutions (like our own PBE3) offer extensive module based configuration, delivering an experience entirely unique to your business. With a flexible ERP designed to function as a unique software solution for your business, you can confidently consolidate your business’s key IT elements into one robust platform while boosting performance cost-effectively.