The Hidden Costs of IT Infrastructure: What Is Your ERP Really Costing You?

When organisations evaluate their finance or ERP system, the focus often falls on software costs.

However, for businesses running an on-premise ERP solution, whether that’s on servers in the office, in a hosted datacentre or in Microsoft Azure, software is only part of the picture.

There are often additional infrastructure, support and maintenance costs sitting behind the scenes. These costs can be spread across different budgets, making them easy to overlook when comparing your current system to a modern cloud ERP solution.

The question is simple: What is your ERP really costing you?

In this article, we’ll explore the hidden costs of running an on-premise ERP system and explain why businesses should assess the full Total Cost of Ownership (TCO), not just software licence fees, when comparing it to modern cloud ERP solutions.

More Than Just the Software

Your ERP system doesn’t run on its own.

Behind it sits a collection of technologies that all need to be purchased, managed and maintained. This could include servers, Microsoft SQL Server, Windows Server, backup solutions, security software and disaster recovery tools.

Whilst these costs may sit within the IT budget rather than the finance budget, they are still part of the overall cost of running the system. It’s easy to focus on the ERP licence and forget about everything required to keep the environment operational.

Technology ages. Servers eventually need replacing. Operating systems reach end of support. Databases need upgrading. Security patches need applying. The costs aren’t limited to technology either.

Some organisations rely on internal IT teams to manage and maintain their infrastructure. Others use managed service providers or external consultants. Either way, there is an ongoing investment of both time and money simply to keep the environment running. Large upgrade projects can often introduce additional costs, particularly if external expertise is required.

When calculating the true cost of your ERP system, it is important to consider not just the technology, but also the people required to support it.

Moving to Azure? The Costs Don’t Disappear

Many organisations have moved away from physical servers and into cloud hosting platforms such as Microsoft Azure.

This can bring a number of benefits, but it doesn’t remove infrastructure costs altogether.

Virtual servers still need to be provisioned. Databases still need to be licensed. Backups, security and monitoring still need to be managed. The infrastructure may no longer be sitting in your office, but it still exists.

Moving a traditional ERP system to Azure often changes how you pay for infrastructure rather than removing the need for it altogether.

Security is another area that is often overlooked when considering the cost of an ERP system. Many organisations assume that systems hosted internally are automatically more secure. In reality, maintaining a secure environment requires ongoing monitoring, patching, backup management and investment in security technology.

There is also the question of disaster recovery. If a server fails, how quickly can it be restored? If a site becomes unavailable, how long could the business operate without access to the finance system?

For many organisations, achieving enterprise-grade security and resilience can be both challenging and expensive. Modern cloud ERP solutions take a different approach, leveraging the infrastructure, security expertise and resilience of some of the world’s largest technology providers.

When comparing ERP solutions, many businesses focus on software costs alone.

A more meaningful comparison should include:

• Infrastructure and hosting costs
• SQL and operating system licences
• Ongoing maintenance and support
• Security and compliance requirements
• Backup and disaster recovery solutions
• Upgrade projects and consultancy
• Internal IT resource
• The potential cost of downtime

Only when these factors are included can you begin to understand the true Total Cost of Ownership (TCO).

A cloud ERP subscription may appear more expensive at first glance, but software is only one part of the equation. Once all supporting costs are considered, the difference is often much smaller than expected.

To help you understand what your ERP is really costing your business, we’ve created a FREE downloadable ERP True Cost Assessment Calculator. By entering a few figures relating to your existing on-premise system, our calculator will highlight the long-term financial impact of maintaining your current solution and will provide you with the projected 4-year Total Cost of Ownership of your current on-premise ERP.

The Cloud ERP Alternative

Cloud-native solutions such as Sage Intacct remove much of the infrastructure burden from the organisation.

There are no servers to maintain, no database upgrades to manage and no infrastructure refresh projects to plan for.

Security updates, backups and platform maintenance are delivered as part of the service, allowing organisations to focus less on managing technology and more on running their business.

That doesn’t necessarily mean cloud ERP is the right answer for every organisation. However, it does mean businesses should ensure they are comparing the full cost of ownership, rather than software costs alone.

Looking Beyond Licence Costs

When evaluating your current ERP system, it’s worth taking a step back and looking at the bigger picture.

What are you spending on infrastructure, support, maintenance, security and upgrades? How much internal resource is required to keep the environment running? What would it cost if the system experienced a prolonged outage?

These are all important parts of the ERP equation.