Businesses are always under pressure to manage costs and improve efficiency. Looking at your systems is sometimes overlooked as a way to better manage costs. It’s seen as hassle to change systems and requires investment to implement changes.
However, your old system may be less efficient for your business. Sticking with your old systems can embed inefficiency. For example, let’s take the analogy of a car.
According to the International Energy Agency the average global fuel economy has improved from 8.8 Lge/100km in 2005 to 7.2 Lge/100km in 2017. Although small it is a significant improvement and can help motorists reduce fuel costs.
Translating this into the company environment, many companies still use systems and processes that may not have changed in the last 10 years.
Consequently, they are inefficient compared to modern systems. This is especially true for businesses running On-Premise solutions versus those on the Cloud.
Many business leaders will cite the adage, ‘if it ain’t broke don’t fix it’. On the surface it doesn’t seem broken. But, delve a little deeper and you can see the true costs to your business. Many of these costs are hidden, as they are regarded as business as usual costs.
Let’s take the example of a company that uses an On-Premise solution. This company has a tailored system for their exact needs. It was implemented with a large upfront capital cost and licences for users purchased up front whether they use them or not.
It also requires regular maintenance which the company needs to do on site. All of these are costs that need to factored in.
Compare this to a company using a cloud-based platform. Rather than paying for user licences like in an On-Premise solution, the Cloud solution uses a subscription model that allows greater flexibility in scaling up or down.
Costs are more evenly spread as it is an operational expenditure (OPEX) rather than capital expenditure (CAPEX).
SAP handles maintenance of the cloud system; this takes away a lot of the cost and hassle of having your own teams update the system. This means your teams can focus on other tasks that can add value to your business.
Implementation is much faster using cloud-based systems than On Premise as there is less flexibility. This trade off is worthwhile as the cloud-based system utilises best practice systems and processes.
Implementing cloud based systems like our FastTrack payroll solution can be done in as little as 12 weeks.
The reason why, is that industry wide best practice in the set up of the processes. This dramatically reduces the implementation time compared to a fully bespoke On Premise solution.
Cloud solutions have the added benefit of on-boarding new hires faster. If new employees have experience of the cloud system in a previous company, they can quickly get up to speed on the new system.
With regards to employee engagement, this is important to many businesses in retaining staff. Cloud systems can offer a superior user experience compared to traditional On-Premise solutions.
This is especially the case if the On-Premise solution hasn’t kept pace with developments in the wider world.
Cloud solutions are able to offer functions like self-service apps to employees means employees can enjoy greater convenience in accessing systems as well as an enhanced user experience.
By improving system user experience, then employee engagement can improve. This in turn can help to reduce your staff turnover, which can help to reduce your recruitment costs.
Many companies are reluctant to move to the Cloud due to the perceived risks involved of transferring data over the internet. However, limiting access by user on the latest version of SAP ECP, these fears can be allayed.
Moving to the Cloud can save your company money in the long run. Demonstrating reduced staff and development costs can help you build a business case to move to the Cloud.
If you need still convincing, you don’t have to move everything to the Cloud in one go. This blog post highlights the fact that taking small steps to the Cloud can be a wise move for those reluctant to move lock stock and barrel.