Cloud ERP? Here are 5 pros and 5 (potential) downsides.

  • 21/01/2022
  • 3 minutes

The ERP solution of the future lives in the cloud. With Business Central, Microsoft is making every effort to make it attractive for small and medium-sized businesses to go cloud – and upgrade from XAL, C5 and NAV.

ERP in the cloud is all about competitiveness

Why does everyone talk about cloud? It is not just a question of technology, but a competitive advantage.

Digitalization, markets, globalization, competitors, customers, and everything else around your business is moving faster than ever. How do you keep up? For many companies, the answer will be 'cloud', which is the most effective way to adopt new technology that develops the business.

5 advantages of a cloud-based D365 Business Central

1. Readiness for change

In cloud, you have a simpler way to adopt new technology. Especially when you compare with older ERP solutions in your own server environment, or through a hosting center with no access to Microsoft's latest cloud services.

An ERP solution in the cloud — such as Dynamics 365 Business Central — keeps your solution up to date over time with automatic updates and improved features. Your next upgrade will be the last!

2. The SaaS solution on Microsoft cloud

The system is located in Microsoft's Azure Cloud with automatic updates. With this subscription you will have a fixed monthly price per user and you always have the latest version of the system.

3. Private cloud on own servers

The second solution is also in the Microsoft Azure cloud – but in your own servers. Here you are in control of when the system needs to be updated. You also choose whether you want to rent or own.

4. Data utilization

Cloud provides new, improved opportunities to collect data in real time. There are often great competitive advantages hidden in the company's data, which can be collected from installations, warehouses and from the CRM system.

In short, data via the cloud can, for example, help the company learn more about customer behavior, discover where the hidden costs are buried, or provide answers on how sales are maximized.

5. Business Intelligence

It is important to collect data. Of course, data utilization is even more important.

Business Intelligence supports all your data-driven decisions and with the built-in AI in Dynamics 365 Business Central, you will have the best base for making data-driven business decisions.

With cloud-based data you have instant access to insights and development opportunities to bring the company safelyinto the future.

6. Automatic Updates

When was the last time you added new features to your ERP solution?

With Dynamics 365 Business Central, your system is updated twice a year, however in a controlled way where you will have notifications and a "sandbox environment" where you can test out the new features before rolling them out into the company. After everything is validated, your administrator approves the new features, and Microsoft deploys the updates within 24 hours.

For example, the roll-out of updates can take place at night if you wish, and have the new features ready for your team in the morning.

7. Microsoft AppSource

So, is this the end of customizing the system to your demands? No, you can still make adjustments. The difference is simply that the changes don't happen inside your system (like new code) but are on the outside (like apps you can add or remove).

In this way you can continuously customize through Microsoft's AppSource, where you can find all the standard functionality to cover your business needs – and even without the extra costs of development, coding, testing and validation, as it is all ready to install.

Both AppSource and the annual updates, gives you the opportunity to adjust the functionalities of your system and still keep it running – compared to the previous major upgrades where almost everything seems new and is a major upheaval for users.

Capture the pros and cons of cloud

As you can see, a cloud-based ERP system like Dynamics 365 Business Central contains both pros and cons. The chart below summarizes both sides that we have just described.

Pros– these are some of the benefits for choosing the cloud:

  • Faster transition through a simpler way to adopt new technology
  • Improved ability to collect data in real time
  • Better use of Business Intelligence and Artificial Intelligence
  • Automatic updates added twice a year
  • New functionality can be added faster and at a lower price

Cons – for some, this can speak against going cloud:

  • Increased risk of data leakage and hacker attacks due to ease of access
  • Harder to incorporate complex customizations and processes
  • Limitations of the simple ERP foundation require new processes
  • No solution ownership - you rent and become more dependent on Microsoft
  • Availability requires maximum internet connection uptime

How many years do you have left in NAV?

Support for Dynamics NAV 2015 expired back in January 2020. In April 2021, support for NAV 2016 expires. This will continue in the coming years when support expires on the next NAV solutions.

What does it mean for your business if you have one of these NAV solutions?

This doesn't mean that your solution stops working overnight. However, when support expires, you are no longer able to receive important system improvements. In addition, problems often arise if, for example, you want to replace SQL Servera or get new Office suites.

If there are too many years between the ERP system and surrounding applications and servers, they no longer match. You avoid these challenges if your company upgrades to Dynamics 365 Business Central.

While Microsoft makes no secret of the fact that their future solutions are in the cloud, for some companies there will be several reasons to choose a hybrid cloud solution to minimize some of the changes in the cloud.

5 disadvantages of cloud-based ERP

Just as there are pros and cons with ERP on-premise, there may be opportunities and limitations of going cloud. At the same time, several drawbacks of the cloud could potentially prove to be advantages for certain types of businesses.So it all depends on your business.

1. Security

An upgrade to Dynamics 365 Business Central — like private cloud and SaaS — means that in the future you will access the ERP system through browser or app (instead of the Windows client).

O none hand, your employees can now access data and systems wherever you are. On the other hand, data leaks, and hacker attacks are becominga more real threat.At the same time, you should trust Microsoft to meet its data security requirements if you place your data inAzure Cloud.

Cloud is thus also a decision of who you think is best at protecting your data: your own IT department or Microsoft? If you want your data closer, instead of SaaS, you can choose a private cloud where data is located in Azure, however in your own servers.

2. Adaptations

If you go cloud with your ERP system, you no longer have the same opportunities to incorporate exactly the customizations that many solutions have if they are in Dynamics NAV, XAL orC5.

The complexity and functionality requirements often increase with the size of the business.For smaller companies it is relatively simple to move directly on to an on-cloud ERP foundation.

However, larger manufacturing or trading companies with complex processes may find that Microsoft Dynamics 365 Business Central on cloud, lacks individual features.

This is status right now. However, most companies are surprised of how many of the previous customizations that have now become built-in standard features of the Business Central cloud over the years. At the same time, for each update, there are more and more apps (in AppSource)that can be used to further configure your solution.

3. Simplicity

Simplicity isa main issue for most small businesses. And with the latest Dynamics 365on cloud, that is what you get, as the system is builds on a much simpler foundation than before.

For the small business, the simplicity of the cloud is a dream come true – especially, if you are about to implement your first ERP.

On the other hand, the established, medium-sized company with many customizations and complexity can see the simple cloud foundation as a limitation. At the same time, going cloud will impact your organization and processes ad you might not need your internal IT department to operate servers, as this is now a part of the Microsoft Azure Cloud.

It's all about how cloud ready your business is– in terms of systems, people and processes.

4. Ownership

Previously, you purchased both your ERP solution and your licenses. On cloud, these are both rental services with a fixed subscription.

There are pros and cons in having more freedom when renting, however there is a change of control in not owning your own system.

As a cloud tenant, you are part of a global 'community' where consistent updates are rolled out tousers, worldwide. The ERP system is therefore more standardised than tailored.This has obvious advantages, but also a loss of control when becoming more dependent of Microsoft's development roadmap.

5. Uptime

Dynamics 365 Business Central is accessed via app and browser. This means, of course, that you are more dependent on a (solid) internet connection.

Therefore, if you take the jump from on-premise to cloud, it may be a good idea to install an extra connection or e.g. 4G failover – i.e. a mobile data connection that can take over if the main connection is down.

Most business connections are now as reliable as power in the switch, so this should be a minor factor, especially if you have taken the right measures. However – you are more dependent on the Internet connection.

Cloud is therefore (not yet) the optimal choice if the company works with many heavy work files such as video or multi-layered 3D drawings.

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