Now, more than ever, companies are transitioning many of their critical business operations to cloud-based solutions—and ERP systems are not exempt. Because of aging infrastructure and high rates of failure, businesses will continue to switch from legacy platforms to cloud-based systems. With this change, it becomes more important for businesses to carefully evaluate their cloud solutions options to ensure they can continue to access company data and that the project overall is successful and relatively seamless.
As companies shop for a cloud-based solution, it’s critical to understand that there are some major differences in business practices among cloud software vendors. Some of these practices could have deep impact on the company’s overall business operations—costing more time, money, and resources in the end. For companies considering a commitment to a cloud-based business application vendor, there are a few key considerations to be aware of that will help them shop smarter and ultimately save time, avoid headaches, and get the most value for their money.
Misleading Practices
Unfortunately, it’s fairly common for cloud-based business application vendors to carry out business practices and offer end-user license agreements that are misleading and border on the unscrupulous. Watch out for the following situations when evaluating vendors:
- Hidden costs. To draw in customers and position themselves as “affordable,” a number of vendors offer large discounts or low introductory rates which end after 2 or 3 years. Price increases are not clearly detailed up-front, and the customer is made to think that they’re getting a good deal for the life of their agreement. Or, the vendor may hide their inability to integrate seamlessly with a customer’s business management applications or with third-party applications that are critical for companies to effectively run their business. Inevitably, it costs more to enact these integrations.
- Implementation challenges. The promise of a fast, easy ERP implementation may seem to be an attractive offer, but it can actually be a glaring red flag. Not because it’s impossible for an implementation to be fast and easy, but because every business is unique and has different requirements and vendors don’t always accurately represent this during the sales process. Companies should know that the implementation process is dynamic, and often difficult, and thus takes time and careful planning. Part of the chaos often comes when businesses realize that training was not part of what they paid for, and that the vendor charges extra to train users on the new system. Bottom line: Talk with the vendor to see what its approach to ERP implementation really is, and confirm with the vendor whether training is included.
- Compliance bullying. The SaaS end-user license agreement is often a multi-page document that vendors intentionally design to be complex and hard to understand. Vendors then contact the business (long after the sale, of course) to ensure they’re adhering to the end-user license agreement. Because the end-user license agreement isn’t simple and clear, users become concerned that they’re out of compliance. And even though they may not be, they also may not be able to prove it. To compensate, customers often buy more licenses than they need—adding unnecessary expense to their budget. Even worse, some vendors provide license agreements as a link to a web-based document that can—and often does—change at any point of the vendor’s choosing.
- Misconceptions about data ownership. Of the various unscrupulous practices among cloud business application vendors, procedures involving data ownership are perhaps the most worrisome. Businesses may logically assume they own their own data and have some level of control over it, but that’s not always true. In many cases, companies struggle to access their data quickly—a critical part of making informed, data-driven business decisions. Further, companies may be in for a legal tug-of-war to get control of their data in a usable format if they decide to leave their software vendor for any number of reasons such as a merger or acquisition, rapid growth, or simply a desire to switch vendors.
- No deployment flexibility. Industry-specific regulations can change and may require that businesses deploy their cloud solution in specific ways to adhere to those new regulations. But, due to the end-user license agreement that is also subject to change, businesses may find out that their software deployment options are limited or inflexible.
- Holding back on enhancements. As companies are expected to shift, evolve, and adapt to stay relevant, it’s reasonable to expect that software should too. But some ERP vendors don’t even bother to invest in their own products and instead choose not to enhance or update them—sticking their customers with an outdated product that’s not really a solution. As a result, the company suffers and is held back by the vendor’s lack of ability or interest in delivering dynamic ERP software.
What to Look For in a Cloud Software Vendor
Despite the unfortunate existence of vendors who follow some of these bad business practices, there are many that aim to disrupt the norm and offer an approach that serves customers’ interests.
For businesses that want a more customer-centric cloud vendor that helps them achieve success they should look for business practices and end-user license agreements that offer the following elements or ones that are not materially dissimilar:
- A readily comprehensible and unchanging SaaS end-user license agreement
- A flexible, open platform for rapid integrations
- Consumption-based licensing that does not inhibit business growth
- Sustainable pricing with annual increases of no more than 3%
- ERP implementations without hidden fees
- Deployment flexibility
- Access to their data, anytime
- Consistent, 24/7 customer service
- Local business expertise
- Dual layers of support
It is imperative for businesses continuing their migration to the cloud to do their due diligence and research software vendor data practices and end-user license agreements to ensure that the transition won’t cause unexpected costs, major disruptions, or loss of control. Company data continues to be among a business’s most valuable assets for making informed choices, spurring advancements, and ensuring relevance in the market—and organizations must make it a priority to find a vendor who can help, not hinder, their success.