Before cloud technology became ubiquitous, enterprise computing was characterized by heavy capital investments, multifaceted IT departments, and extremely complex deployments. This has gradually given way to maintenance-free, flexible, and scalable services which can be turned on/off depending on the requirements.
There are many start-ups that offer cloud native and mobile first enterprise solutions that compete with legacy vendors who used to sell on-site systems. Companies whose business model consisted largely of licensing software and charging for maintenance contracts are now adding cloud capabilities in order to retain or attract clients who no longer see the necessity for on premise software.
Organizations that are looking to purchase ERP solutions face a dilemma: Implement ERP solutions from trusted vendors with a proven track record or go with newer vendors whose systems are built for the cloud? The question essentially boils down to this – does adding cloud capabilities to on-premise software make it equal to cloud native applications?
Even for those companies that are trying to make their applications “cloud ready,” the process is not easy and sometimes, not feasible. The biggest and most obvious obstacle is the fact that on-premise systems generally expect some sort of local network capability in the form of LAN/WAN. The software is not designed to be bandwidth light; in fact features are often added just to take advantage of the fat bandwidth pipe available. Naturally, such applications will not perform as smoothly when they have to run over the Internet.
Another aspect that legacy vendors fail to take into account is the increasing prevalence of mobile devices in the workplace. Since cloud applications are designed to be light on resources on the client side, they can be modified to work on small screen phones and tablets (even cloud native applications may require significant redesigns/UI overhauls to work effectively on mobile). Mobility becomes even more of a herculean task for on-premise systems where the software is designed to run on computers with input devices (with mouse and keyboard at the minimum).
Software security is another issue that has to be addressed properly. On-site systems have different security considerations when compared to services delivered over the cloud and legacy ERP vendors often run into issues when they try to retrofit older applications onto the new cloud landscape. Considering that they generally lack expertise in this area, it is very possible that the cloud ready versions of their software may not be as secure as they thought.
Many vendors also struggle to break out of the old mindset where profits can be booked immediately after the sale and substantial revenues can be made from maintenance/service contracts. In the cloud world, profits trickle in on an ongoing basis and clients are likely to leave if innovation does not align with their expectations. Add privacy and interoperability issues to the mix and you get the present situation where legacy vendors are losing out to cloud native providers.
At the end of the day, there is no reason for enterprises to select ERP software from legacy vendors because of their past record. Considering the millions of dollars that can be saved, ERP clients may be better off purchasing solutions that were built for the cloud.