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Cloud vs On-premise ERP, Choosing the Best ERP
09Jul

Cloud vs On-premise ERP: Choosing the Best ERP for Manufacturers

The number of organizations switching to Enterprise Resource Planning software is increasing at warp speed. 81% of organizations are either in the process of getting ERP implemented or have completed implementation. 

ERP connects your finances, accounts, HR, sales, CRM, inventory, business intelligence, and other operational data and makes visibility easy. It’s a business management suite that allows organizations to manage day-to-day activities, plan, budget, forecast, and create reports on the company’s financial results. ERP software can promote employee efficiency and expedites operations to meet strict deadlines.

Selecting an ERP solution requires a great deal of time and a big effort. There are so many factors to consider before embarking on the selection journey: 

  • Know your business requirements 
  • Is integration possible with third-party software
  • Budget and resources
  • Adaptability and future scalability
  • Total cost of ownership (TCO) and ROI 
  • Customization
  • Deployment type 
  • Implementation time 

Let’s talk about types of ERP deployments, focusing on cloud and on-premise ERP. 

Cloud ERP

Cloud ERP

Cloud-based computing enables businesses to access Enterprise Resource Planning software over the internet. Computing resources are stored remotely in datacenters.

Pros and cons of Cloud ERP

What is the strength of cloud? How does cloud ERP help your company?  

  • Eliminates the upfront cost on hardware and servers
  • Offers IT support remotely. Your in-house IT professionals can work on major parts of the business instead of service and support
  • Covers your business with data backup and disaster recovery plans
  • Data in cloud is easier to use with BI tools 
  • Cloud ERP package can be scaled as the number of users increase in your company
  • Data accessibility is quick. It is stored in multiple places to ensure that nothing gets lost in an unfortunate situation 

On-premise ERP

On-premise ERP

On-premise ERP is implemented on your office hardware and maintained by in-house IT employees. Like cloud, it cannot be used remotely on different devices via the internet.

Pros and cons of On-premise ERP

  • On-premise ERP software has more upfront cost
  • Slower deployment
  • You can have access to data even if the internet goes down
  • Data is stored in-house. Its security is the responsibility of IT team
  • Scalability is not easy in case of on-premise deployment 

In addition to on-premise and cloud, here are a few other ERP deployment options on cloud: Infrastructure as a service, Platform as a service and Software as a service. 

Infrastructure as a service – Is a type of deployment model in which the cloud vendor offers computing resources to their customers or users. Resources include servers, storage, and networking.

Platform as a service – You get access to a cloud-based environment where users can develop, run and manage without the complexity of maintaining or building the infrastructure. The service provider offers an intuitive cloud environment.  

Software as a service – In this deployment model, the cloud service provider offers cloud-based software applications. Users can subscribe and access it online or via vendor APIs.   

Cloud ERP and on-premise ERP come with their own set of gains.

Benefits of Cloud-based ERP 

1. Cloud ERP helps you save money 

Cloud ERP is a great choice for small and mid-sized businesses as it reduces unnecessary expenses. You can invest the saved amount in the activities that add value instead of mundane and futile tasks. 

  • Reduced overhead cost – When you choose cloud ERP, you save a huge amount of money on building, maintaining, and securing your data center. The cloud providers managed servicing of software, ensuring that firewalls and security measures are in place, repairing outdated hardware, etc. In addition to this, with cloud ERPs, your company saves costs spent on physical space for datacenter, electricity bills, security and cooling. 
  • No cost on updates – No additional cost for maintenance with a cloud ERP solution. Your cloud provider offers you timely automatic updates that don’t stop you from growing and performing well. Update costs are always included in the monthly cost. Pay it and get instant access to latest technologies. 
  • Save on upfront cost – Cloud ERPs can save you from heavy investment costs. You just need to pay a monthly subscription amount. There’s no money required for setting up machines, devices, servers and expensive IT personnel.
  • Quick integration – Company’s crucial data can be quickly and easily synced with the cloud platform. HR, CRM or marketing automation integrations can be done precisely. This can help you save a great deal of time and money. 

2. Cloud promotes flexibility 

Cloud ERP vendors understand that flexibility is a must for employees. It boosts employee satisfaction and enables better decision-making. 

With a cloud environment, employees are free to work from any device, share data across locations and departments and collaborate easily for better planning, budgeting and execution of tasks. 

A centralized cloud ERP platform allows users to break the data silos by creating a collaborative workflow in an organization. Cloud-based ERPs can also be easily used with many BI tools.

3. Easily scalable

Will your ERP software expand globally while remaining on a single database? Or will you have to break it into separate parts? 

Cloud-based ERP grows with your business. For example, if a new employee enters your company, you can scale your ERP package to X number of employees and you are good to go. It saves you from the hassles of investing in new hardware, getting the software installed, adding additional software seats etc. 

4. Fast and secure

Designed for easy and quick accomplishment of tasks, cloud ERP providers walk the extra mile to ensure enterprise-level security, compliance and privacy with their systems. 

As it manages updates with ease, businesses can take advantage of rapidly evolving technologies like IoT, Blockchain, AI, etc. 

Hexa Research Cloud vendors ensure every piece of data is stored in their state-of-the-art data centers that are well-equipped. There is no way that you can lose your data because of high-quality back-up plans. 

So, have you considered the advantages of cloud ERP? Cloud platforms come with their own set of benefits. If you run a small-scale business, this is probably the best choice for you.

Benefits of on-premise ERP

1. Data control

Data in on-premise ERP deployment is stored in-house.You have complete control over the volume, location and accessibility of data. You can deploy upgrades and updates at your discretion as it minimizes the risk of unexpected downtime. 

Confidential information about customers, employees and business plans is restricted to the stakeholders only. There is no involvement of a third-party. 

2. Less vendor dependency

You are your own boss with on-premise ERP. With cloud deployments the control of business decisions around ERP implementation, deployment time, etc. are made by the cloud provider or vendor. On the other hand, with on-premise ERP, you have the flexibility and control to implement new technologies on your own. 

3. Limited on-going cost
It’s true that the upfront cost of on premise ERP is more, but in the near future, you may find it a cheaper option. On-premise ERP comes with ongoing expenses like energy, IT maintenance, etc. 

Upfront cost is more but Total Cost of Ownership may be less. 

4. Security

62% of IT decision makers in large enterprises said that their on-premises security is stronger than cloud security.
— Dimensional Research, 2018

When data is locally installed, it is closely monitored and controlled in a better manner. The Data Center is easily accessible and the appropriate person can set the responsibilities about who should maintain the security. On-premise ERP gives more control to the organization.  

On-premise ERP software is preferable for larger organizations as its existing infrastructure can be customized easily. 

So, here we talked about the basics of cloud and on-premise ERP. Let us now see, what are the factors to consider before deployment that you should consider while weighing these two options. 

Ownership cost

The upfront cost of on-premise ERP is more – that’s affordable for bigger organizations, but might not be for smaller ones. Cost includes purchasing and managing software, servers and the capabilities to run it. This requires a good IT team that can manage upgrades, redeploy the system across different systems and manage customizations and integrations of software. It is an additional cost when you choose on-premise ERP deployment.

Talking about cloud ERP, the initial cost is much less as most of the organizations prefer to pay a monthly or annual subscription amount. You can access the ERP through your computer’s internet connection once implemented. It is the duty of the cloud provider to host and maintain the infrastructure for the company and ensure that every system is up and running.

Deployment speed

It goes without saying that every deployment model takes time to complete the process. Cloud deployment usually takes 3-6 months, while On-premise deployments may be done in 1 year. 

When you choose cloud, there are no pains for additional hardware or procuring and installing IT infrastructure. On-premise software is more time-consuming and expensive. 

Security

Cloud-based ERP ensures utmost security by providing standard data security certifications to its customers. Based on the volume of data, customers can choose the best suitable data recovery and back up plans, which are better and more cost-effective than on-premise software.

Cloud ERP is already at parity with on-premises ERP solutions.
— Eric Vanderburg (@evanderburg), vice president of Cybersecurity at TCDI.

“Cloud ERP offers many advantages over on-premises. Upgrades and maintenance to ERP systems can require significant resources and sometimes system disruption, but these activities are performed by cloud providers. Despite these advantages, on-premises ERP will still be around for many years, albeit at an ever-decreasing proportion.”

Performance and accessibility

Cloud is known for collaborating the workplace and for its real-time working nature. When employees work together in the cloud, management of documents and visibility of tasks are streamlined. When employees are efficient, and tasks are automated, performance will improve. 

On-premise ERP assures uptime but, when it comes to performance and accessibility – Cloud is better. 

Tech writer Will Kelly (@willkelly) says, it depends on the company: 

“Cloud ERP will find a home (or not) in SMBs where ERP was formerly out of reach due to lack of budget and in-house technology expertise,” he notes. “Cloud ERP will also grow in the federal sector because of a recent executive order for agencies to move to shared services. The hybrid ERP model will continue to dominate in larger companies for reasons of security, performance, IT staffing constraints, and ‘Hey, if it’s not broke, why fix it?’”

Support

Multi-layered security and predictive deterrence are going to be the norms in the near future. Cloud providers assure 24/7 support to organizations which means you get high-quality services round the clock. With On premise ERP, in-house IT professionals ensure 24/7 support. 

Cloud vs. On-premise ERP: Choose the Right ERP for Your Business

One of the biggest differences between cloud and on-premise ERP is the way it is implemented by the vendors. 

Once you make a decision to choose a specific ERP software, you are half way through the implementation in a cloud environment.

Cloud-based models have taken a leap in the SME segment. It is more affordable, convenient to use and less time-consuming. Take time to understand your future business endeavors and make a decision. 

How OptiProERP helps you succeed and outclass the competition

Built on the world-class and trusted platform SAP Business One, OptiProERP is end-to-end manufacturing software that gives you the foundation to succeed. With modules such as financial management, CRM, supply chain and other industry-specific solutions, it gives you access to business-critical data in real-time. 

Futureproof your ERP with a secure and nimble ERP software that can handle all the business functions. OptiProERP Cloud offers advanced infrastructure for reliable and quick performance. It assures no downtime for upgrades, rapid deployment, and scalability. 

When we talk about OptiProERP On-premise deployment, the software runs on in-house servers, at locations preferred by you. An on-premise solution offers the security and control of maintaining your own IT infrastructure for streamlined operations and enhanced business. 

Deployed on-premise, ERP can run on virtualized servers for easy configuration and to support extensive customization, if required. 

Designed by a team of SAP certified professionals, OptiProERP:

  • Complies with changing government regulations 
  • Lets you view and update information anytime, anywhere
  • Makes more accurate predictions regarding supply chain, product demand, etc. 
  • Ensures proactive planning and proper tracking 

To know more about How OptiProERP is Intelligent and what its functionalities are, please feel free to contact us.