Reduce total cost of ownership and improve cashflow

In a series of articles we have been telling you about the advantages of the cloud version of Dynamics 365 Business Central which will be available for Bulgaria from the beginning of October 2021.

When you need to make a decision about the choice of a cloud-based ERP system, what is crucial, however, is the economic impact that this choice will have on your company.

Take a look at the TCO (total cost of ownership) image below, which graphically compares the different types of costs related to the use and maintenance of an ERP system – in the cloud or on-premise. This graphical assessment looks at 6 cost groups that need to be considered in the decision-making process of switching to / choosing a cloud solution. These appear at first glance to be identical, but in fact not all costs are apparent.

Software

The cost of software includes the cost of the software application itself, as well as the cost of other related applications – vertical solutions, add-ons, specific developments and integrations, i.e. everything that makes a solution complete for an organization.

A comparison of the two options shows the following:

• with the cloud solution – the cost of licenses are paid monthly / annually based on consumption and they are categorized as an operating expense (OpEx).
• with the on-premise solution – the cost of licenses is high and is paid in advance. Costs are categorized as a capital expenditure (CapEx) that is depreciated over a given period of time.

Implementation, customization and training

The cost of implementation, customization and training are identical for both the cloud and on-premise solution. Such costs are costs for software installation and software configuration suitable for the company. And also customization, testing, training and data migration. Costs vary depending on the complexity and specifics of the business of an organization. Such activities typically involve certified and experienced specialists – Microsoft partners like FTS.

Further to the above costs, however, we should not forget also adding costs that are often categorized as internal for the organization – such as costs for reengineering and change management.

Hardware

The on-premise option goes along with a large initial infrastructure costs – purchase of servers, network hardware, operating system, databases. Periodic operating costs are also needed – such as electricity costs and extra costs in the case of a breakdown.

With the cloud version, you do not have direct costs for server ownership and maintenance, as well as costs for other related infrastructure.

IT team

With the on-premise solution, a significant part of the costs are IT staff-related – various types of specialists are needed to maintain in working order and up-to-date all the servers, databases and different types of technologies behind the chosen software solution.

With the cloud solution, these costs virtually fall off or are related to specifically requested single services.

Maintenance

With the on-premise option, there is an annual maintenance fee payable, which is a percentage of the licenses purchased. When you pay for maintenance, you are entitled to use released fixes, patches and new software versions and updates.

With the cloud version, you have all this included in the cost of the license.

Updates/Upgrades

With the cloud solution, the application of new versions of the product is done automatically. Upgrades/Updates are prearranged to take place on a day and at a time most convenient for the company. They are applied automatically in both testing and real environment (see more on the topic in the series of articles on Business Central here).

With the on-premise option, the deployment of a new version in a testing and real environment would require that IT specialists with the necessary competencies are involved.

As we have seen, by choosing Dynamics 365 Business Central Online you can reduce the overall cost of acquiring ERP software and improve your cash flow with predictable monthly costs.

If you still have questions regarding the cost of a cloud solution that need clarification, do not hesitate to contact us.

In the coming weeks we are going to publish a series of articles on the advantages of Dynamics 365 Business Central Online, which you can follow HERE: https://bit.ly/3yUgbDm

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