On-Premise vs. On Cloud: Weighing the Pros & Cons

Technology is changing fast. What seemed to be an episode of a science fiction just a few years back now is common practice and finds its way into our daily lives.

Last year, I was at KSCOPE when a group of us started talking about Enterprise Performance Management and whether on-premise or cloud was the best method.  With the expanded availability of high-capacity networks, low-cost computing power and storage devices, cloud computing paradigm became more acceptable and slowly started appearing as an alternative infrastructure option in EPM-based solutions.  Before deciding on a solution, companies should conduct a thorough analysis of system needs and understand each solution in depth, including its capabilities and limitations. Once all pros and cons are carefully considered, it becomes much easier to choose the right solution which aligns to your organizational needs and does not result in unpleasant surprises down the road. 

In this article, I’ll compare on-premise (Hyperion Planning) versus on cloud offerings PBCS (Planning and Budgeting Cloud Service) the way they are now.

The advantages of on-premise Hyperion Planning

  • Having control over your own environment. One of the biggest advantages of Hyperion Planning is the ability to have control over your own environment, which includes flexibility in choosing your own upgrade and patch timeline. Customers do not need to deploy every single new EPM patch released by Oracle, following the rule “if it isn’t broken, there’s no need to patch it.” Control also includes access to administer and being able to tweak your own Essbase settings in EAS, which is something I appreciate – most users would prefer not to look under the hood!
  • Better data integration with other EPM modules. This is a big one, since having your system deployed on-premise allows for a much tighter integration with other systems within your company network. It is much easier to interact with other Essbase, HFM, or even DRM applications while being in one environment versus integrating with other cloud services located outside of PBCS. You can also choose a variety of ETL tools to work with along with custom data integration solutions with internal GL or CRM systems while staging and loading data in real time. No need to jump through firewalls or deal with EPM Automate utility to upload your data to the cloud.
  • Virtually no limit on number of environments, applications and storage. With on-premise based systems, it is much easier to install and deploy multiple environments per your company’s policies without having to deal with multiple subscriptions and pods. Customers are not really restricted on number of Planning applications where PBCS still gives you only two environments per subscription with one application each.

The downsides to on-premise Planning and Budgeting solution

  • High initial investment to purchase software licenses, hardware, installation, and maintenance. This can feel like a massive investment, especially if customers are starting from scratch. Building EPM system on-premise usually requires at least two servers per environment with installations and configurations tasks spanning multiple days amid your careful coordination with your internal IT and DBA personnel.
  • More time will be spent on dealing with bugs, though the latest release of 11.1.2.4 is relatively bug free. I feel like nowadays there will be less time involved dealing with system bugs with on-premise systems. Nevertheless, there will be time spent for contacting Oracle support, looking for logs, troubleshooting and repeating whereas with on cloud-based solution, it is basically all outsourced.
  • Future innovation and improvements for on-premise solutions are in jeopardy. By analyzing where Oracle sales people concentrate their efforts, it is evident that Oracle’s financial returns with cloud-based solutions are significantly higher than with on-premise solutions. This means that we will see more development thrown to cloud-based services where eventually features and functionality of PBCS will surpass those of on-premise counterpart offerings.

The advantages of cloud-based systems

  • Immediate cost savings. Given a low complexity scenario with 25 users PBCS will run you about $200K in license fees over a three-year period. On-premise deployment will cost you a one-time license fee of about $100K and annual software maintenance costs of about $25K/year all totaling about $175K. Of course, you will have to add up all hardware, IT, and other operating expenses which will exceed PBCS three-year costs. But again, I have seen clients seating on the same release for 6+ years.
  • Stay on top of the latest features with weekly patching taken care of by Oracle. This advantage makes it a worry-free endeavor when it comes to new patch and release deployment. Downtime is minimal and all patches are (supposedly) tested in Development environment before they are applied to Production.
  • Low entry barriers for first time users. PBCS is a perfect match for companies which never had Hyperion products previously and do not have any foundation to build upon. Initial costs are low with investments in new hardware and software being close to none.

The downsides of PBCS

  • May not be as cost-effective as originally advertised. When customer requirements call for multiple environments (DEV, QA, TEST, and PROD) and applications, costs can quickly rise. The ability to consolidate applications will be the key to save money.
  • Data integration is still confusing. It seems like Data Management and EPM Automate utilities are the only options for integrating with your existing on-premise systems or other cloud-based services. These tools still lag behind their on-premise counterparts and other custom options available for on-premise only development.
  • Even though Oracle introduces more featured and functionality onto its cloud based offerings, the overall feeling is it is still little behind. Well, this point may become obsolete very soon when next major release of PBCS hits the market.

As consumers become more mature and knowledgeable about cloud offerings and asking more thorough questions on the subject matter, the future of Enterprise Performance Management will be determined by which solution can give the best results to the customer.

 

If any of the readers had situations where they were pushed too quickly into implementing one or another solution or have their own pros and cons they’d like to add, please do so in the comments below.  

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