On-Premise ERP vs Cloud ERP

For companies who are thinking of adopting a new ERP or upgrading from an old system, one of the biggest challenge is to decide to deploy the solution on-premise or in the Cloud.

Most ERP solutions these days offer Cloud as an option. Some offer a hybrid option while some may have completely moved to Cloud and no longer offer on-premise as an option. The decision to choose either depends on your requirements and needs. To assist you in making the decision below is the rundown on the pro and cons of both the options.

on premise ERP vs on cloud ERP

What is On-Premise ERP?

To put it simply, On-Premise ERP refers to a business management solution that is installed locally on the company’s own servers and hardware architecture. The maintenance of the hardware will be the company’s responsibility.

What is Cloud ERP?

Cloud ERP is a business management solution that is hosted on a vendor’s server (either public or private cloud) and can be accessed via web browser. The maintenance of the hardware will be the Cloud provider’s responsibility. Some similar terms used for Cloud ERP is Hosted ERP.

Pro & Cons of Cloud ERP

Cost – You pay a monthly subscription fee and thus you have a predictable cost, with no additional hardware cost. You can save a massive amount of money on servers, hardware and IT infrastructure. However as this is a monthly fee, you will have to continue making payments for the life cycle of using the solution.

Security – Your vendor is responsible for the security of your data and solution. Most of the time your vendor will have strict security standards and you can get more information on how your data will be handled. However, some organisations might not feel completely secure with this arrangement.

Customisation – All your updates and upgrades will be directly administered on Cloud by the vendor – so you need not worry about massive downtime. Cloud applications have a different approach to customisations and thus enable upgrades to be done at the server level with minimal disruption.

Time Saving – Companies save massive amount of time as implementation time is usually shorter. This means companies can implement Cloud solutions must faster, with less downtime.

Disaster Planning – Cloud-based ERP would usually include disaster planning in place to ensure that your data and system can be restored in event of a downtime. Your service provider would be able to provide you with information on how they are prepared for disasters such as downtime, system attacks and how they can recover data or corrupted data.

Pro & Cons of On-Premise ERP

Cost – Upfront investment is higher as you will have to consider the hardware and software cost. However, it is a one-time capital investment and thus you will not be required to pay any monthly subscription fee. You will only be required to pay for the yearly maintenance from your vendor of choice to support and maintain your solution.

Customisation – You have full control over the solution and thus is able to customise to its maximum. We usually do not recommend massive customisation as future upgrades will be trickier. In short, it will be tougher to maintain the solution in the long run.

Security – Your organisation will be able to manage the security on your own. For companies who have proper data security protocols, this will give them peace of mind. However if the company does not deploy good security practices, there are chances of data leaks, hacking incidents or even social engineering.

In a nutshell, cloud-based ERP systems are an excellent choice for businesses of all sizes as there are a lot of advantages associated to this solution approach, among them are cost and resource savings.

If you are not sure which deployment model you should choose for your organisation, give us a call and we will be able to help you determine the best fit for your business requirements.