The Problem with Hosted Solutions

Every company wants to move to the cloud. Most notably, manufacturing firms want to realize the benefits of cloud-based ERP systems, including real-time access to critical business data, improved productivity, scalability, mobility, integration with other software, and greater return on investment. The cloud is now a critical path technology for manufacturers, and as a result, the cloud ERP market is being flooded with ERP “solutions” that either fail to deliver on all of their promises or don’t solve manufacturers’ problems at all.

Take hosted solutions. Eager to get into the cloud ERP market, some large software vendors are selling hosted solutions presented as real cloud solutions. However, these hosted solutions are at best fake cloud solutions and bring with them many disadvantages.

Many on-premise vendors like Microsoft now offer hosted versions of their software. So what’s the difference between Rootstock on Salesforce, a Software-as-a-Service (Saas) ERP solution that is designed to run in the cloud and integrated with an ecosystem of products, and a product that was originally designed to run on-premise but is now being offered as a hosted solution?

With a hosted solution, companies rely on an external services provider to manage their ERP system. The organization connects to a hosted service remotely to access a client-server software application and pays a monthly or annual subscription fee to the service provider. The service provider is responsible for providing the people, expertise and equipment.

Hosted solutions are expensive, and their durability, reliability, and scalability are limited by the hardware. For example, heavy search on a hosted solution is a data-intensive request that can act as a bottleneck, making hosted sites run slowly, because both the database and the web server run on the same machine.

The growing popularity of SaaS and the cloud are leading many vendors to rebrand their hosted solutions or application management capabilities as SaaS and claim that their solutions are available in the cloud. Manufacturers need to be very careful when considering these hosted solutions. Industry analysts agree that “hosting and application management are not synonymous with SaaS, nor do they necessarily comply with the definition of cloud computing.”

There are many aspects of a true cloud solution that Microsoft’s hosted Dynamics ERP cannot match. IDC provides a simple comparison below of a public cloud solution (like Rootstock), compared to a hosted solution (like Microsoft Dynamics ERP). It clearly identifies areas such as scaling, self-service, integration, and flexibility that are important advantages of a public cloud solution.

hosted-solutions-chart
Source: IDC

Hosted solutions rebranded as cloud solutions are more expensive, inefficient, and not nearly as scalable. Some specific drawbacks include:

  • Delayed and painful product upgrades;
  • Costly, unstable integrations and customizations;
  • Too much downtime and inadequate security and support;
  • Need to overbuy/overprovision capacity;
  • Concern about financial viability of hosting firm.

Then there are the hosted ERP systems sold as cloud solutions that were actually designed as on-premise systems. These vendors typically do not host, manage, or maintain these so-called cloud ERP solutions. Rather, they use local value-added resellers (VAR) or other service providers.

Here’s what actual customers who have purchased hosted solutions like Microsoft Dynamics ERP have to say about their experiences:

“Customization is not as straightforward and required quite a bit of assistance from outside consultants.”

“Legacy look-and-feel to some of the functionality.”

“I would definitely recommend looking closely at other options in the ERP solution space. Do not rely solely on the Microsoft imprimatur as a seal of quality. This product, due to licensing restrictions, will also make you very reliant on your MS Dynamics Solutions Partner.”

“The user interface is old and somewhat clunky. Some operations are very slow. It is weak in manufacturing, and can be difficult to integrate with other software.”

True Cloud ERP Solutions from Rootstock on Salesforce

Only a true cloud ERP solution can bring all of your business processes together in an integrated ecosystem of products. Rootstock Software on the Salesforce platform offers such a solution. Rootstock provides an ERP backbone that can be extended with other applications on Salesforce, comprising a comprehensive ecosystem of products tailored to each manufacturing firm’s specific needs.

Manufacturers can build this true cloud solution on the Salesforce Cloud Platform by combining Salesforce CRM (Sales Cloud) and Salesforce Service Cloud, Rootstock ERP and other partner solutions that, when seamlessly integrated, extend a manufacturing ERP system to support many business processes.

Rootstock on Salesforce also allows you to not only customize your application on their platform, but also ensures that all of your customizations continue to work when a new product enhancement is rolled out. For example, apps are so seamlessly integrated on the Salesforce platform that you not only get to use the latest features immediately, but you don’t have to constantly re-implement previous customizations and integrations every time a new software version is released.

As always, let the buyer beware. A hosted solution is not the same thing as a true cloud ERP solution.