Companies large and small now understand that they are not in the business of IT, nor can they rival the economies of scale and expertise delivered by cloud computing and Infrastructure as a Service (IaaS) providers. Even at the basic infrastructure layer, cloud computing cuts hardware, storage, network and IT labor costs by more than half—all while improving system performance, availability, and security and reducing risk to the business.
Cost reductions in the platform and software layers are typically harder to calculate. According to a report from Radar Ecosystem Specialists, a Nordic analyst research firm, Nordic companies, on average, upgrade their ERP systems 1.7 times over the life of an ERP system. Upgrades keep the system current, refreshing the technology and delivering incremental value from newly available functionality. But most systems aren’t easy to upgrade, especially once they’ve been customized. In fact, research shows that most upgrades cost more than half the initial system investment. So, upgrading even twice means paying for your system all over again.Another Radar report, entitled How Cloud Empowers ERP Solutions, states that the best-practice solution for ERP is a virtual private cloud deployment that will: