Do You Want Out of the ERP Business? Top Ten Reasons to Host

By Liz Dietz, Vice President, CedarCrestone Higher Education

As most of you know, I have always been a big proponent of focusing on your academic mission and outsourcing the things that are not core to the mission of your institution. In fact, I have been preaching that for a long, long time.  Now it looks to me like people are finally ready for this message.

I am fortunate in that I get out a lot – I talk with CIOs on their campuses, hear their problems, attend conferences, read a number of CIO blogs, and stay plugged in to EDUCAUSE, the HEUG and other associations. In the last 12 months, I have been surprised by how many CIOs have told me very candidly: “I want out of the ERP business.”

The first time I heard this – about a year ago – I thought: Well that was interesting. The second time someone said it I thought: I just heard that again; that was REALLY interesting. I have now heard it at least a half dozen times in recent months.

Invariably I ask them: What do you mean by that? And the response is always the same: CIOs need to have their attention on teaching and learning technology for faculty and students, supporting the research mission, their web presence, and a host of other activities more germane to their mission than keeping their ERP software running.

Making the Business Case: 10 Compelling Reasons
I interviewed our hosting and managed services clients, as well as several CIOs who are looking to outsource, and here are the Top Ten Reasons they gave me for making the switch:

1. You are freed up to focus your time and energy on what is core to your mission.
ERP is not your core competency. Let someone whose core competency is ERP do it for you. You can hire a company to host your ERP in their data center while you maintain it remotely, or better yet, hire them to manage, support, and maintain it all.

2. Associated staffing issues disappear.
Technology is getting more and more complex. Consequently, you need staff with a large and ever-expanding set of complex skills that are becoming increasingly difficult to recruit, retain and afford. In addition, there are roles that don’t need to be staffed 100% of the time yet are critical to your operation. Outsourcing gives you access to world-class application support capabilities when you need them and at a fraction of the cost. I like to call it on-demand resources.

3. Your staff can focus on high value initiatives, not on maintaining your ERP.
With managed services, your outsourcer essentially becomes both your data center and your ERP developer. The developers on your campus, who know your institution, are available to work on high value projects that make a tangible and lasting difference to the college or university’s core mission.

4. IT becomes a “utility.”
Our electricity, water, and dial tone services all consistently flow at the flick of a switch. Why not ERP that operates like a utility? With hosting and managed services, ERP becomes just that: a predictable, budgeted item, rather than an unpredictable expense, where funding may disappear in a budget crisis. And most importantly, you always know what your service level is going to be.

5. You gain elasticity and best in class resources for peak processing.
Capacity demands for both technology and people occur in waves with significant peaks and valleys over time. Planning for peak demands on your system often results in inefficiencies during non-peak periods. Likewise, technology capacity requirements, necessary to mitigate the risk of a system failure, spike during intense system usage, necessitating the purchase of expensive hardware that is then underutilized at non-peak times. In servicing multiple client systems simultaneously, an outsourcer can maximize utilization, evenly distributing peak technology demands across its hardware array, resulting in both a lower cost base and higher service quality.

6. “Just in Time” staffing saves you money.
An outsourcer can achieve significant staffing efficiencies and economies of scale. In this one-to-many model, processes become repeatable and are constantly being improved and streamlined. Talented, experienced, and specialized staff are efficiently utilized and more easily retained. With a dedicated pipeline of talent, a hosting outsourcer can leverage a particular skill set across multiple clients, passing on a lower cost for technical resources that are only needed by each client a small percentage of the time.
Repeatability = Efficiency = Reduced Cost to You

7. With the right partner, you will receive an unparalleled level of service at a predictable fee.
You want reliable services. Shopping for the best in industry service level agreement can put your mind at rest and your budget in check. Wondering who has the best agreement? Why it’s CedarCrestone, of course. We promise to hit the highest standards in the industry – in writing. If we don’t meet all of our metrics in a given month, the next month is free.

8. Reduce your carbon footprint.
A CIO at a private research institution in the Midwest recently told me that 20% of the energy used on campus goes towards running their ERP. When you think of all the activities on a campus that require power, 20% just to run ERP is a lot. Research is an important mission for this university, yet they don’t have room on their data center floor to bring in the necessary computers to meet their research needs. Want to meet your sustainability goals and free up hardware space? Give away your carbon footprint. (Send it over to us!)

9. Avoid hardware upgrades and free up data center investments for your academic mission.
Ever expanding performance requirements, application architecture, disaster recovery needs, numbers, types and geographic dispersion of users – all call for seemingly endless hardware upgrades and expansions. An outsourcer already has massive capacities for performance in its servers, network, and data storage solutions. It specializes in these extraordinarily complex services, allowing for more efficient and affordable acquisition, deployment and scaling of equipment. In addition, a smart outsourcer will modernize equipment more frequently than you could ever afford. Why wouldn’t you house your ERP on their array?

Look for an outsourcer who specializes in your ERP system – like CedarCrestone does with Oracle software – and be sure that they have built their data center to meet the unique demands of that particular software system. The result will be state-of-the-art ERP hardware at a lower cost that frees up your data center for mission critical uses.

10. The reliability, accessibility and recoverability of your ERP will be ensured.
One of my favorite examples comes from Cindy Bixler, the CIO at Embry-Riddle Aeronautical University. One weekend a tornado hit the Daytona campus, hurtling a small plane into the side of their data center, taking out the power generator and resulting in a two-day outage. Another university CIO recently told me that he still keeps backup disks in his trunk. If a disaster struck, it could easily affect both his car and his data center. Why not offload potential risks such as security and disaster recovery on someone else? If an accident or natural disaster were to occur at the CedarCrestone Data Center – where Embry-Riddle Aeronautical University is now hosted – all of our hosting clients would be safe. We have redundancies in multiple sites and back up power sources for our back up power sources. We also have every known physical and technological security issue covered.

Those are my Top Ten Reasons. I think they are pretty compelling.  And perhaps you have thought of a few more reasons of your own. If so, I’d love to hear them.

End Your ERP Pain for Good
At CedarCrestone, we have been helping institutions move from in-house ERP to hosting and managed services for a long time. Ten years ago, when the Kentucky Community and Technical College System (KCTCS) was created, they had no central IT infrastructure. KCTS bought PeopleSoft, immediately hosted it with CedarCrestone, and never looked back. For them, the cloud offers no long-term commitments or investment, a relatively easy way to forecast cost structure, and the scalability they didn’t want to provide on their own. The technology that their people support is focused on their core mission:  teaching, learning, and educating their workforce. KCTCS was fortunate to start out with this model, but making the switch at any point is completely feasible, relatively quick, and can end your ERP pain for good.

A Deeper Examination
If you’re looking to become more educated on this topic, I recommend downloading CedarCrestone’s 5-part series on outsourcing. This white paper series focuses on Oracle-PeopleSoft ERP hosting, providing an in-depth examination of five questions:

In each paper, we take a “client needs” approach, using feedback from our clients, our direct experience (metrics achieved with our hosting and managed services clients), and relevant market research to address the question at hand.

How Can I Help?
If you’re ready to get out of the ERP business, let me know. I’ll help you to make an informed decision and find the perfect hosting partner.

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About Liz Dietz

Liz Dietz, VP Higher Education for CedarCrestone, blogs about innovative software solutions, cloud computing, ERP best practices, and other industry trends for the Higher Education market. CedarCrestone has completed over 1000 implementation and upgrades projects for more than 300 colleges and universities. CedarCrestone is an Oracle Education and Research Industry Specialized Platinum Partner.

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First posted to CedarCrestone blog on: August 31, 2011

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