Cloud vs On-Premise – Answers to the Top Questions
Over the last few of years the provision of cloud infrastructure for ERP systems in Singapore shifted from “exceptional” to mainstream. More and more of our customers approach us with the intention to move their existing hardware onto the cloud for various reasons. The decision to move your ERP solution from an on-premise hosting to a cloud hosting is not an easy one. To help you understand the implications and to evaluate whether cloud hosting might be a better option for you, we put together some interesting resources and articles from all over the net.
First, let’s address a couple of initial questions:
1. What about security?
So you are concerned about security when moving to the cloud? You are not alone – “49% of IT decision makers admit they are “very or extremely anxious” about the security implications of cloud services”. (It’s a myth – but read the complete article here)
Security for IT systems has 2 aspects: physical security and digital security.
a) Physical Security
Physical security is the ability to safeguard your ERP system from on-site security and / or safety breaches. All activities that could potentially damage your system through on-site activities will fall under this category. Examples:
- Somebody stumbles over your server with a cup of coffee and spills the content all over your server
- A non-friendly employee copies the content of your server to a USB drive and walks away with your files
- Another non-friendly employee plugs a USB drive into your server and uploads a virus
- The aircon in your server room breaks down over the weekend, the servers heat up and get damaged
- A fire in the building destroys your server room and the entire content
As you can see, there are a number of considerations to take into account to ensure your data is safe from physical breaches. Moving your system into a datacenter, and accessing your SAP solutions via the internet helps to prevent all those breaches from happening. A professional datacenter is securely managed, with multiple layers of security to prevent accidental or intentional data breach on the physical level,.
- If you are planning to build your own data centre, check out “How to build physical security into a data center”
- Not sure what is a Tier1, 2, 3, or 4 data center? Here is a primer: “Data center tiers explained”
b) Logical Security
Logical security covers all aspects of remotely gaining access to your system. These are issues such as DDOS attacks (denial of service), Hacking, or any other form of data breach that does not require having physical access to your server. To secure your server from unauthorised access, there a number of initiatives that need to be taken:
- Set up a firewall
- Secure your SAP system
- Install comprehensive anti-virus software
- Manage your user access
Here are some articles going deeper into this topic:
- A general guide from Malware Labs looking at this aspect from a more personal perspective: 10 ways to prevent against hackers
- A very interesting article from Virtualforge about how to protect your SAP system against hackers and industrial espionage
- How to hack any SAP system within 3 minutes: A video from Layer seven security
- Options on how you can improve security of your SAP systems by Trendmicro in “Example of deep security protect of SAP systems“
The most important point to note is that logical security is to a large extent a joint responsibility. Irrespective of where your SAP system is hosted, you need to ensure that proper actions are taken (and relevant software is installed) to prevent unauthorised access. While a cloud hosted environment may come with some initial prevention software and hardware, the onus to secure your SAP system is still on the IT team of the customer – irrespective of whether your SAP software is hosted on-premise or in the cloud.
2. What about the cost?
If you compare the cost for having your own server at your premise with moving to a cloud hosted SAP environment, you need to take a few steps to enable an apple-to-apple comparison. In order to have a fair comparison, you need to take all the relevant cost for having your system on-premise into consideration: Again we have to separate between tangible and intangible cost components.
a) Tangible Cost
These are cost components that can be (fairly) easily calculated). The basis for these cost components are hard numbers that directly impact your bottom line. However, most of those cost components might be considered sunk cost, specifically if you already built your own data center. Moving forward you will have to decide on the weight you put on
- Cost for the IT personnel required to manage the hardware
- Electricity (power to run the servers as well as aircon on 24/7 basis)
- Rental cost (for the room occupied by the servers)
and here are some related articles you might want to consider reading:
- What are the components to take into consideration when calculating TCO: Understanding the total cost of ownership for cloud economics
- an interesting article from Infoworld: “The high cost and risk of On-Premise vs. Cloud”
b) Intangible Cost
Besides the clearly measurable cost components that are mentioned above, there are a number of other factors to be considered. While not necessarily measurable as clearly as tangible cost, those components still have to be taken into consideration when deciding upon a on-cloud vs on-premise hosting:
- Flexibility of the organisation to move location
- Hardware scaleability
- externally managed backup / disaster and recovery activities
additional reading materials:
- Network World put together a blog on “How to calculate the true cost of migration to the cloud”
- An interesting presentation from AWS about the total cost of ownership in the cloud
3. Where are we headed?
We believe that in the future companies will not own hardware anymore, in the same fashion as we currently don’t own power plants or water desalination plants, or grow our own food for that matter. Economics require that there will be companies that provide compute power to users, who will just consume as much compute power as they need or want, and pay accordingly. Compute Power will be as ubiquitous as electricity or water, and will be available on tap via the internet. Companies will focus away from managing hardware infrastructure to running their core business, and eventually will take the availability of their (say, SAP system) software required to run their business as a given. Cost will completely move from Capex to Opex, and we will just pay for having software accessible to us in a similar fashion as we currently pay for electricity.
We believe that eventually the notion of “owning a software license” will go away, as all software access will be based on demand, and cost will be based on actual usage. We are still a few years away from this, but if this is where we headed it really makes sense to contemplate at your next hardware refresh cycle on whether you want to invest in buying another server, and continue on your existing on-premise path, or whether you might want to move your SAP environment to the cloud and take the burden of managing the hardware, security, backup etc of your business solution away from you.
Some other interesting articles that help you to get a better understanding in your decision:
- In a recent Gartner report, they mentioned that “By 2019, more than 30 percent of the 100 largest vendors’ new software investments will have shifted from cloud-first to cloud-only.” (link to report here)
- Making a business case: Forrester Research wrote an in-depth article about how to “justify your hybrid cloud future with a solid business case”, as part of which they also provide different options for cloud deployment
- For the future of cloud computing, you might want to consider checking out this Forbes article on: “Google providing a glimpse into the future of cloud computing”
If you are considering whether you should move your SAP system in the cloud, give us a call. Our experts are happy to sit down with you to discuss various possibilities. We can then find out together with you what options are available, and whether moving to the cloud makes sense for your environment. We are an SAP Gold Partner, and work together with both hardware companies for on-premise options, as well as data centers in Singapore for hosting and cloud options.
We are also part of the AWS standard partner network and currently support a number of customers on AWS as well. We have long since realised that every customer is unique, and a one-size fits all approach simply won’t work for an SAP environment – and that is why we provide a range of options to our customers for their SAP Deployment – whether on premise or in the cloud.