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ECM On Premise or in the Cloud? Which Should You Focus On?

September 29, 2017

Cloud computing is one of the hottest buzzes in the IT industry. According to a recent survey from ITCloud, 62% of organizations expect to be running 100% of their IT in the cloud by 2020. According to Forrester, global (software as a service) revenues are forecasted to reach $106 billion in 2016, an increase of 21% over projected 2015 spending levels. According to Raritan DCIM, the projected CAGR for content management software delivered through a SaaS model from 2011 to 2016 is 25.9%. Clearly, the future for cloud-hosted software applications is bright.

That said, currently the majority of document imaging implementations are installed on premise. And document capture is almost always done on premise, even though there are viable cloud options emerging. The question is, as a value-added reseller (VAR), should you focus on on-premise or cloud-based document imaging solutions? The answer is both.

The fact is, many end users today are not quite ready to the transition to the cloud, but they want to know that they have the option. So, the best thing you can do is offer them either a cloud-based or on-premise solution. That way, they have confidence that when they are ready to make the move to the cloud, you will be able to seamlessly take them there—even if that day never comes.

The market landscape

Many document management software vendors offer both cloud and on-premise versions of their software, so there are plenty of potential partners for you. Because of its nature, capture software is not as mature as a cloud application. Capture software typically needs to connect to a scanner driver, which resides on a PC, so it’s usually more straightforward just to install capture on the same PC. In addition, the processing heavy nature of capture often means it will run faster on premise.

That said, viable cloud-based capture services are starting to emerge. They typically can connect to scanner drivers through a one-time download. And faster Internet connections are making latency less of an issue when it comes to data entry.

Security, of course, is always a concern with the cloud, but becoming less so every day. Most well-publicized data hacks, such as those at Sony and the IRS, have come on private servers. Cloud application vendors typically make security a priority, and the one-to-many nature of their business enables them to put comparatively more resources into security than an on-premise operation supporting a single user application.

Some users may be hesitant about having their application hosted on the same server as other users’ applications. To satisfy their concerns, many vendors will offer a “private cloud” option for a premium. There are several ways a private cloud can be configured, but one is operating it behind a customer’s firewalls.

Adjusting your business

Pricing, of course, is a concern if you are going to offer a cloud option for customers. A typical pricing model for the cloud is through a subscription. This means that instead of purchasing the software up front, the customer pays for it monthly, typically as part of a yearly or multi-year contract. This can force a VAR to change their business model, as many have traditionally based their finances on revenue from larger capital expenditures versus a steady stream of annuities. In the long term, the annuity stream should pay off, but making the initial adjustment can cause some headaches.

A VAR also has to consider changes to their sales and professional services models when offering cloud software. Because of their nature, cloud applications can be sold, installed, configured, and serviced through an Internet connection more readily than traditional on-premise software.

The bottom line is that cloud computing is coming, and you can’t bury your head in the sand and ignore it. No, it’s not necessarily going to be an easy transition, but the sooner you start to make it, the better off you will be in the long term and probably the short term, as customers are already starting to realize that there are a lot of advantages to going with cloud-based document imaging versus traditional on-premise solutions.