An ERP system undoubtedly comes with countless comforts for you and your business. It helps you in managing an array of departments under one roof. It also provides faster computing and the ability to keep an eye on inventory details. Everything is so easier! However, not so easier is the decision to choose one between cloud ERP and on-premise ERP system.
The basic concept that differentiates the cloud ERP and on-premise ERP is clear. Cloud ERPs are also popularly called as SaaS or software as a service. These are the ERPs that are provided as a service by ERP vendor. The data in cloud ERPs resides on cloud and is managed centrally by the service provider. On the other hand, on-premise ERP systems are installed locally on the company’s servers. They make use of company’s hardware which is then managed by IT staff.
While each of these ERP systems has its own pros and cons, it really gets tough to decide which one to choose. Here we have discussed the advantages and disadvantages of each of these factors depending on various parameters. Explore!
Performance and accessibility
Undoubtedly, cloud ERPs get higher points here. Cloud ERP systems provide better performance and network availability when compared to their counterpart – on-premise systems. Cloud ERPs are designed keeping in mind the network performance and seamless availability. In the case of any unwanted circumstances, Cloud ERPs have the capability of automatically adjusting themselves in order to meet the demand.
That’s not all, cloud-based ERP also equip you with real-time data. Your employees can access the data anytime through laptops, smartphones, and other devices.
Security is of most importance in ERPs. A big chunk of data that could be critical for your company is at stake. Cloud ERPs are more secure than on-premise ERP. Based upon who is your provider of your cloud based ERP; there are generally strict rules on who can access the physical servers where the data is stored. Most cloud vendors have a three tier security system with strict access to the physical servers/virtual servers only to the person validated by three layers of security.
On the other hand, in an on-premise ERP, you have everything in your local server. Local server could be easily compromised during a break in or by a disgruntled employee.
On-premise ERP systems take the lead here. They are easier to customise but with the advantage of customising local ERP systems to the extent you want comes the responsibility of controlling the level of customisation as well.
Don’t forget if you keep customising your system your upgrades in the future are going to be difficult and very expensive as well as they may delay the project from go live in the first place.
It goes without saying; on-premise ERP systems are more expensive as compared to Cloud ERP systems. Investments here include that of purchasing, installing and managing the software, hiring and training the experienced IT staff. Furthermore, you need to have compatible hardware to complement the installed ERP including server rooms and the likes.
This is not the case with cloud-based ERP. Here initial costs are within reach. They only comprise of implementing the software and a working internet connection. The IT infrastructure is already set by your cloud ERP provider. You only need to pay a certain fixed amount until the time you wish to seek services for and it is done!
Upgrades and Enhancements
Enhancements and upgrades are a bit tough in on-premise ERP. Your previously installed customizations would require a lot of redevelopment if you were to go with the newer version of the ERP. And this is one of the major reason why organizations deploying on-premise ERPs are often found running the older versions. Cloud-based ERPs, on the other hand, provide you with the access to new and upgraded versions without any failure.