Oracle Cloud vs. On-Premises: Which Is Right for Your Budget?
Are you concerned about the costs of implementing Oracle Cloud? Learn how managing on-premises HRMS can impact your budget.
Oracle is making strides in making the Oracle Cloud HCM suite accessible and budget-friendly for businesses of all sizes. Their “rent-a-flexible” service and pay-as-you-grow model allow organizations to start with minimal investments and gradually scale as their enterprise expands, adopting cloud solutions step by step.
Introducing Business Super users and integrating modern best practices and processes enhance the scalability, reliability, and flexibility of Oracle’s Cloud Human Capital Management solution. These initiatives promise optimal returns on investment. With Oracle’s commitment to frequent updates and upgrades, organizations can swiftly access new features and functionalities, minimizing time and resource investments.
However, it’s essential to acknowledge that even with these benefits, implementing Oracle Cloud comes with a significant IT budget requirement and the need to hire Oracle Cloud HCM experts. Meticulous planning, dedication, and financial resources may still cause apprehension among decision-makers and delay the transition.
Nevertheless, sticking with on-premises solutions brings its own set of financial challenges. Operating an on-premise HR management system incurs costs to which one should pay attention.
Precisely comparing the Total Cost of Ownership (TCO) of cloud and on-premises solutions can be complex. Many models solely compare the upfront hardware and software costs of an on-premises solution to the subscription fees of a cloud solution, overlooking ongoing operational costs, maintenance expenses, and personnel costs associated with on-premise systems. Decision-makers need a comprehensive view of the costs involved to make informed choices and enable their companies to thrive through innovation and growth.
In this article, we provide organizations with insights into the additional costs they can avoid by transitioning to Oracle Cloud HCM.
Customization Costs:
In an evolving market, industries must adapt their IT infrastructure to incorporate changes swiftly. A prime example is the recent shift in Human Capital Management during the Covid-19 pandemic.
Organizations with on-premises HRMS often face high customization expenses to keep their systems current. Furthermore, the organization requires a substantial team to perform system maintenance to maintain network security and access, especially in the face of increasing cyber threats.
Upgrades and Patch Integration Costs:
Oracle regularly updates its solutions to stay relevant and aligned with market trends. It includes these updates as part of the implementation package without imposing any additional charges.
Conversely, updating an on-premises system demands hiring an IT team, incurring extra costs. Organizations may need to hire dedicated IT personnel or outsource the workforce necessary for these updates. Some enterprises fear frequent updates can lead to system downtime or disrupt HRMS functionality, potentially affecting business productivity. Additionally, regular user experience (UX) changes can confuse users.
Despite these concerns, many organizations opt to avoid updates, but in the long term, using outdated software can lead to missed growth opportunities and system obsolescence.
Data Center Maintenance and Hardware Costs:
On-premises Human Resource Management solutions necessitate dedicated data centers managed and maintained by the organization. These data centers require robust security measures, an IT team, extensive infrastructure, and machinery to ensure uninterrupted functionality.
Maintenance involves fixed salaries, variable costs such as electricity, equipment upkeep, cleaning expenses, and repair and replacement costs. Data center environments carry the risk of system downtime, resulting in operational expenses and lost business hours.
Depreciation of Hardware Costs:
Establishing an on-premises Human Resource Management System requires substantial initial investments in machines, space, and equipment. The IT team responsible for system maintenance and updates requires hardware, including laptops, servers, and desktops. Each piece of hardware has a limited lifespan, leading to depreciation and value loss over time, an often overlooked expense.
Unseen Opportunity Costs:
An outdated on-premises system forces manual and paper-based processes, increasing costs. For example, a fully integrated Oracle HCM system can reduce onboarding and recruitment costs by 50% compared to paper-based systems. Likewise, the Average Time to Hire can decrease significantly with Oracle HCM, improving recruiting and onboarding efficiency by 35%. (Source)
Making Informed and Sustainable Choices:
Every penny counts in uncertain times with looming recessions and heightened market competition. Implementing Oracle HCM is a commitment that can yield substantial savings in operational and opportunity costs, contributing to your organization’s success.
To understand how an on-premises HR system may hinder your sustainable business goals, read our whitepaper, “Is Your On-Premises HR System Limiting Your Sustainable Business Goals?” This resource explores the challenges of on-premises solutions, highlights critical differences between on-premises HRMS and Oracle Cloud HCM, and showcases the benefits and capabilities of Cloud HCM. Don’t hesitate to get in touch with our expert team today if you have any questions or want to discuss how Oracle Cloud HCM can benefit your organization.
