Cloud or On-Premise ERP?

As you consider your options for a new ERP software, one of the most important decisions you’ll need to make is whether to select a cloud-based or an on-premise ERP solution.

Basically, On-premise ERP solutions are installed locally on your company’s hardware and servers and then managed by your IT staff, while a cloud based ERP is provided as a service. With this type of deployment, a company’s ERP software and its associated data are managed centrally by the ERP vendor and are accessed by customers using a web browser.

What may not be so clear is that the type of ERP deployment model you choose can have a significant impact across your business.
Here are 4 key factors that you need to consider when weighing whether to use on-premise or cloud-based ERP software:

 

  • Deployment speed & expanding
    ERP systems take time to fully deploy in a company. An on-site ERP will require a set of hardware and software to be available in hand before starting the deployment process. It also, requires upgrading hardware, and software, to add more users to the system. On the other hand, cloud-based ERPs are much more agile in that case. Since they’re being managed centrally, they require no hardware or special software whatsoever, whether to deploy or add users.

 

  • Ownership Cost
        On-premise ERP systems usually require large investments upfront to be deployed, and ongoing to maintain the software and the related hardware, servers, and facilities necessary to run it. Also, you will need to have a very well experienced IT staff, which will spend most of their paid time maintaining the software, and hardware, and making sure that everything is running smoothly, and when it’s time to upgrade, they will have to redeploy the system across the whole network.
        As for the cloud-based ERP solutions, they require much less initial costs, and running costs. The cloud ERP provider hosts and maintains all of the IT infrastructure for you, ensures the system is always running, that the data is secure, and that product enhancements are rolled out painlessly to your solution without breaking your previously implemented customizations.

 

  • Information Security
        When using an on-premise ERP software, your data security is your own responsibility. This means hundreds of hours spent on applying the latest data security protocols and ensuring there are no breaches. Many companies might not be as adept at practicing proper data security protocols.
        For cloud-based ERPs, the vendor takes care of all of this hassle for you. They’re responsible for keeping your data accessible and secured. Most vendors pledge strict data security standards, which will give you a peace of mind, knowing that all of your data in encrypted and secured.

 

  • Customisation and data control
        On-site ERPs offer very flexible customization, and you can make it as customs-built as you need it to be for your exact needs. However, it turned into a massive disadvantage when updating or installing a new version.
        Cloud-based ERPs offer less flexibility in customisation, but on the other hand, updating is pretty constant from the vendors side, due to the much less customisation required, vendors are able to provide newer, more powerful versions, several times a year. This doesn’t mean that customisation is not an option at all. You can always discuss with your provider on what can be done.

 

There are more options than ever for businesses of all sizes when it comes to choosing a new ERP system. Thankfully, cloud-based deployment models have made this software more accessible—though these systems come with a few drawbacks, such as more limited customization and potential security concerns.

Conversely, on-premise ERP systems offer advantages in customization and control, but are more expense up front, and many don’t support mobile.

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