Why Managed ERP Services May Be Right For You
Posted on: 9 January 2020
Enterprise resource planning (ERP) systems used to be reserved for large companies that can afford the software and consultants to customize and implement them. With the advent of cloud services and companies who can manage those services for you, ERPs are available to a much broader variety of companies, from small to enterprise. But how do you know when a managed service approach is right for you?
Lean IT versus Large IT
Does your organization have groups that focus upon each significant IT service or do you find yourself talking to the same person for multiple systems? If it is the latter, you may have a "lean IT" approach to supporting your systems and services.
Companies with smaller IT departments often need to leverage the expertise of outside companies to be able to offer the services that a company needs from initial setup to ongoing support. Using a cloud-based or managed service approach can extend your organization's capabilities to add critical enterprise software to expand and grow your business.
Security and Updates
Having enough resources to manage the IT software and operations is just a high-level view of why to use a managed, cloud service. Think about how many times you get updates to your laptop, whether personal or corporate. For each operating system and ERP application, a corporate IT department must decide what patches to apply, package them up to be rolled out, and manage the installation. This is a lot of work for a small IT group!
A cloud-based, managed ERP puts the burden of those security patches and software updates on the cloud provider. Part of what you pay for is the knowledge that your software will be protected against known threats and receive updates to fix issues or add functionality in a timely manner.
Capital versus Operational Expenses
Often, it is more difficult to budget for capital expenses (CAPEX) than operational expenses (OPEX). Capital expenses are typically assets that can be purchased, installed, and depreciated over a set accounting period. Operational expenses are ongoing expenses such as electricity, contract personnel, and so on.
Allocating capital expenses takes significant planning and budgeting. Operating expenses tend to be more fluid and easily available. Also, when reporting quarter-end and year-end financial numbers for tax purposes, OPEX provides a significant benefit in that it can be completely deducted in the same year and reduce the net income, thus reducing a company's taxes.
Industry Standard Approach
There are many different reasons in addition to the ones listed here to go with a managed, cloud-based ERP. One of the most compelling is that it allows you to be in line with your industry. Almost every industry is doing some mixture of managed, cloud, and on-premise software management. See what others in your industry are doing and take the time to assess the costs and benefits of moving to a full or partial managed approach to your software infrastructure. Reach out to ERP managed services now.
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