Cloud ERP vs On Premise ERP? Which one is right for your business?
One difference in cloud ERP vs on-premise ERP systems is clear: the cloud-based software is provided as a service and maintained by the vendor, while the on-premise application is installed locally, on your company’s servers and handled by your internal IT staff.
Here are some key factors you need to consider when weighing whether to use on-premise or cloud-based ERP software:
Ownership Costs
On-premises ERP solution needs additional investment in server and hardware to install it locally. Further, unlike a cloud-based ERP system, you must have an internal IT team to manage the software, which adds to the total cost of ownership for running the system.
For cloud-based ERP, initial costs are typically much lower because you implement the software to your requirements and then access it through your computer’s internet connection. The cloud ERP hosts and maintains the IT infrastructure for you, ensuring the system is always running well, that the data is secure, and that product improvements are rolled out painlessly to your system without breaking your previously implemented customisations.
System Upgrades and Enhancements
On-site ERP software customisations are tied to your current software deployment and are challenging to re-implement with future versions. As your ERP provider releases new product updates and enhancements, your previously implemented customisations will be removed when you upgrade. Your IT team will have to customise from scratch again, and a full-time IT administrator will maintain the application and deal with all versions of its software updates.
Conversely, the vendor manages routine software updates and enhancements for a cloud-based ERP system. You don’t need an in-house developer or IT administrator to facilitate this change.
Improved System Performance and Accessibility
Cloud ERP delivers better performance as its architecture is designed from the ground up for maximum network performance, which can mean better application availability than on-site ERP systems. Cloud ERP Solutions also offers optimised performance that can adapt to your needs.
By contrast, on-premise ERP software lacks this flexibility. These systems restrict remote access, and often you are unable to manage business operations when away from your office premises.
Deployment Speed
Every ERP deployment takes time and requires careful planning, but cloud ERP offers obvious benefits when considering the deployment speed. Since cloud ERP requires no additional hardware, your business doesn’t have to waste time buying and installing IT infrastructure.
With cloud ERP, you can easily integrate the system across multiple regions, subsidiaries, and divisions, avoiding the cost associated with those rollouts. If you choose a cloud-based ERP system, these differences can add to significant time savings: Cloud ERP deployments usually take 3-6 months compared to the 12 months it typically takes to implement an on-premise solution.
On-site ERP solutions don’t offer the same freedom to give more employees access to an on-site system; providing additional hardware is often crucial.
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