Cloud ERP vs On-Premise ERP

Cloud ERP vs On Premise ERP

Selecting an ERP is a major decision for a business as choosing a wrong ERP can harm your business while if you choose the right one your business can flourish.

One of the most critical factors in your decision while choosing an ERP nowadays is weather to go with a Cloud ERP or an on-premise ERP.

On-premise ERP is in the market for ages while Cloud ERP is gaining more and more popularity with each passing day especially among small and mid-size businesses. So how can you compare Cloud ERP vs On Premise ERP and which ERP is for your business?

Factors to compare on Cloud ERP vs On Premise ERP

Deployment

One of the major differences between cloud ERP and on-premise ERP is how they are deployed. While on-premise ERP is installed locally on a company’s own computers and servers cloud ERP is hosted on the vendor’s servers and accessed through a web browser. Some vendors also offer “hybrid” deployments, in which cloud software is hosted on an organization’s private servers. Since cloud ERP requires no additional hardware, your business doesn’t have to waste time procuring and installing IT infrastructure. With cloud ERP, you can easily roll it out across multiple regions, subsidiaries, and divisions, avoiding the cost associated with those rollouts.

Pricing

While there are few variations in this rule generally cloud software is priced under a monthly or annual subscription basis, with additional recurring fees for support, training and updates. On-premise software is generally priced under a one-time perpetual license fee (usually based on the size of the organization or the number of concurrent users). There are recurring fees for support, training and updates.

Thus, on-premise systems are generally considered a capital expenditure (one large investment up front). Cloud-based systems, on the other hand, are typically considered an operating expenditure (an additional overhead cost the organization will continue to pay).

Customizability

On-premise systems are generally easier to customize. For many organizations, the ability to customize to their specific needs and requirements is paramount especially in niche industries, such as specialized manufacturers with unique processes.

Organizations with less specialized needs such as general consulting firms can get by just fine with a cloud system out of the box capabilities.

Security

Security is one of the major concerns during an ERP implementation as it will hold all the company and employees records.

In cloud ERP vendor handles data security but IT division of a company can work with the vendor to ensure the highest level of security. When hosted on an established, secure cloud platform.

On-premise ERP systems are historically considered very secure because the hardware and software are installed locally. Access can be more closely monitored and controlled. However, the need to constantly patch these systems together with updates and customizations may introduce security risks.

Implementation

While in cloud ERP organization has little to no control over the implementation of the ERP and is completely dependent on the vendor. In on-premise ERP organizations have more control over the implementation process. Due to this implementation time is generally shorter in cloud ERP as compared to On-premise ERP.

Conclusions

There are more options available than ever in the market for ERP. Choosing between on-premise and cloud ERP is a tough decision. You have to take in consideration of what is best for the company. While cloud ERP provides faster implementation and greater mobility, on-premise ERP offer advantages in customization and control. On-premise ERP generally comes in onetime cost which seem higher than cloud ERP cost but ERP will be implemented in your organization for a long time and hence cloud ERP’s monthly cost can get higher than on-premise ERP’s onetime cost. Most of the cloud ERP system supports mobile while on-premise ERP May or may not support mobile.