When you're targeting the SaaS market and competing with web-native solutions, the amount of hardware resources required by your software becomes an extremely important component of the total cost of the solution. Let's consider this amount of resources to be the Hardware Enlargement needed to keep your ERP flying.

The heavier the aircraft, the greater the wingspan and the more fuel needed to carry passengers. This isn't necessarily a problem if you can accommodate hundreds of passengers on the same plane with affordable tickets.

Do you want to know more about the differences between local applications, cloud environment and SaaS for your ERP? Keep following our publication!

On-Premise Models versus Web Natives

In the ERP ( Enterprise Resource Planning ) world, a cloud-native solution is like a huge plane carrying thousands of passengers on the same commercial flight. The hardware range is large but it is a commercial flight with passengers from all over the world sharing the same plane. This results in a much smaller wingspan per passenger and therefore a much more affordable ticket.

On-Premise solutions are very different. The aircraft needed by your customers resembles a private jet assigned exclusively to a customer. The development team generally assumes that each passenger occupies a spacious seat with a huge overhead bin compared to a commercial flight. In this way, the scale per passenger becomes much larger, resulting in much higher costs. In addition, it is not about a more comfortable flight, since the plane is built with old material and outdated processes.  

To offer the equivalent of a competitive edge in this market, traditional ERP vendors must adopt an evolutionary path that allows them to reduce the hardware footprint of their solutions. According to Gartner's forecast, around 50% of ERP solutions will be in the cloud by the year 2023, although today more than 80% of this software works in local environments. There is a huge opportunity for today's software providers to forge their own paths to the cloud without needing to develop a cloud-native solution. Changing ERP, even within the same supplier, is an extremely arduous task that any organization prefers to avoid. However, the software provider must move quickly to embrace the benefits of the SaaS model that their customers expect.

Data base

One of the heaviest components of an ERP is its database. You cannot remove it from the solution but there are several alternatives to lighten it. The first is to work with some form of multi tenancy at the database layer. Sharing database services does not reduce the hardware footprint , but allows sharing expensive commercial database licenses that can consume up to 40% of the total infrastructure cost. This cost is even more relevant for SME market solutions with clients of up to 50 users, in which the cost of the database server is disproportionately high compared to the complete solution.

The second alternative to lighten the database burden is to move away from commercial database solutions. As a software provider you have the database vendor as a partner who receives a significant portion of the business every time you execute a sale of their product. Companies like SAP have already realized that a large part of the expenses that the customer has with their solution was ending up in the hands of Oracle and Microsoft in the form of database licenses. This model worked well for many years, but recent pressure from competitors delivering ERP as SaaS is changing the landscape. Cloud-native ERPs use a much more efficient infrastructure based on open source or at least highly shared over commercial databases. Today, solutions like AWS Aurora deliver high performance with unprecedented scalability at a fraction of the cost of a traditional commercial solution.

However, we know that abandoning solutions with Oracle and Microsoft can represent a huge development challenge. Some ERPs entrust a significant part of processing to databases and there is no easy way out except to develop this layer within the ERP itself. This can be a labor-intensive task, but it is performed on top of well-known technology and environments and can represent up to a 30% reduction in total infrastructure cost. It's a huge margin moving from the database vendor to the ERP vendor.

Fat Client

The client's user interface is also a point of attention. When migrating the client's software server to the cloud, we must run this interface within the cloud environment. The “ Fat Client which is used by most of these solutions, requires intense communication at the server layer, and a small delay in the process can be expected. It is not possible to separate the system and move only the server to the cloud. Migrating the entire system to the cloud means that the hardware specifications of the client application become extremely important in the infrastructure cost. Many ERP vendors never cared much about these specifications, and were used to creating the plan assuming that any given user would have a large amount of GB of RAM available at any given time. The cloud can certainly handle this, but the cost associated with this scale of hardware becomes a competitive disadvantage compared to cloud-native solutions.

The presentation layer of cloud-native solutions is simply a lightweight web browser with simple processes. The heaviest load process is carried out by the server in an optimized multi-tenant task sharing system. Process efficiency is much higher considering the high number of users sharing the same resources.

In order to improve the efficiency of these “ fat clients ”, the ISV should review assumptions about the user environment and adopt a leaner approach. Lighter libraries, modularization, “ garbage collection ”, optimization of memory usage and more efficient processes remain high in development priorities. Cloud-native features such as file storage, system caching and more efficient/larger file engines can easily be integrated into the system with better performance and cost-effectiveness compared to the traditional on-premise approach. We have seen a reduction in the size of these “ fat clients ” by more than 30%, with a direct impact on infrastructure costs, while improving the user experience.

Auto.Sky also handles the virtualization of “ fat Auto.Sky ”. Constant monitoring allows the platform to be able to scale the client application's resources up and down, reducing the average size of this layer of the solution. Cloud resources are billed on an hourly basis, so any hours saved on unused resources during nights and weekends have a positive impact on spending, which is automatically managed by Auto.Sky . More than 60% of the resources of “ fat clients ” can be optimized when using Auto.Sky , compared to a simple “ hosting ” approach making this platform a much more efficient solution to virtualize any ERP.

There are some challenges to bringing an original on-premise solution to the same level of hardware efficiency as a cloud-native ERP solution. However, the customer loyalty and value of the customized solutions these systems offer will keep these client-server solutions relevant for a long time to come. The first step in offering a one-way ticket to the cloud is finding the right hardware footprint so they can fly smoothly through this new environment.

Written by

Sky.One Team

This content was produced by SkyOne's team of cloud and digital transformation experts.