Upgrading Dynamics GP and Maintaining Costs

A perpetual problem exists: how to keep your ERP system current. When you upgrade your ERP environment, which happens every couple of years or more, there is always another version that follows right in its footsteps with better functionality that you are missing out on. There is no way to justify the cost of upgrading software so soon after the last upgrade and once again you are using an outdated system.

Consider this scenario with Cloud ERP: With Cloud ERP, your business will always be current with the newest version of ERP as well as benefitting from the reduced costs and other advantages which Cloud Computing brings. Using Dynamics GP as an example, let’s find out how changes in technology lead to reduced costs and efficiency which also means your business practices can stay current.

In my last blog post, I described how Cloud Computing allows your business to reduce the initial cost of ERP by using Cloud as opposed to Traditional models. Let’s review in more detail how costs are reduced in a cloud application deployment and demonstrate the cost savings. As we can see below, a lower Total Cost of Ownership (TCO) is the main driver in moving business applications to the Cloud but where do those cost savings come from?


With Cloud Computing there is no Hardware to buy, no additional software to purchase and no maintenance payable annually. By reducing these costs, you cut the majority of the costs associated with ERP software. Additional costs for IT Management are not included but are significant as well.

By using Cloud technology, your TCO will decrease because you won’t have hardware to purchase, maintain and refresh or additional software licenses to buy. Instead, you budget and pay a low monthly fee per user. Let’s review the chart below and examine the traditional on premise GP lifecycle compared to deploying GP in the Cloud.


As we break down the graph above, we see an initial spike in costs for both on premise and cloud deployments. The cloud costs level out after the second quarter while the on premise costs continue to spike every year and a half for software upgrades, maintenance and a server refresh after three years. In the cloud, the initial spike is just for implementation and training while on premise includes implementation, training, hardware and software costs.

Notice that there is approximately a $50,000 cost difference between the two deployment methods over a three year period. Imagine being able to reallocate these cost savings to another area of your business like sales which will help drive business growth. Clearly, by breaking this information down, it is smarter to use the Cloud model as opposed to traditional software purchases to implement business applications. Now imagine the cost savings if your business sent everything to the Cloud including Microsoft Office 365, Dynamics CRM and Dynamics ERP.

Next week, we will look at a how to reduce implementation and training costs when deploying ERP in the Cloud.