When searching an ERP solution for your business, you will be given 100’s of products to select. As you decide your options, one of the key decisions you will need to make is whether to select a cloud ERP Software or On-premise ERP Software.
The basic difference between the both the options is: On-premise ERP Software is deployed locally in your company and then managed by your IT staff while cloud ERP software also called Software-as-a-Service (SAAS) is provided as a service. In SAAS ERP model data are managed centrally by the ERP software vendor and accessed through the internet using a web browser and mobile apps.
Small and medium businesses are adopting Cloud-based ERP Software, but there are several reasons why a company might choose a traditional, on-premise ERP solution.
This post elaborates the advantages and disadvantages of Cloud ERP Software and On-premise ERP software. And how you can decide which is suits best your company.
Cost :
Cloud-based ERP Software (SAAS) is generally priced as a monthly or annual subscription, with additional cost for training and support. The advantages of this pricing model are your software expenditure can be OPEX instead of CAPEX. Minimal initial investment and easy to forecast. You can avoid hardware such as servers and maintenance cost. All the backups and maintenance will be taken care by the vendor.
On-premise ERP software is a one-time investment for the license (perpetual license), usually license is based on the size of the company and number of users. Generally, On-premise ERP software will be CAPEX. Selecting the right implementation partner with Industry (domain) knowledge and experience are the key factors. There are many ERP failure stories and court cases are filed against implementation partners because of poor implementation.
Deployment:
In cloud-based ERP solutions software is hosted on vendor server and accessed through a web browser or mobile apps. Whereas in on-premise solution software is hosted locally on the company server and accessed through LAN and VPN when outside the local area network.
Implementation:
Typically cloud-based ERP implementation is much faster than On-premise ERP software. The average time for Cloud will be approximately 2 to 3 months whereas On-premise ERP implementation can take 6 to 24 months depends on the company size, users, locations, and customizations.
Security:
The Software vendor takes care of data security but company’s IT department should work with the software service provider to make sure the highest level of security. Even though the software is hosted on the highly secured data centers organizations data are still under threat. In the past, we have seen many hacks and data center outages.
On-premise ERP Software is generally considered as more secure because the server and software are installed locally in the company premises. Access can be closely monitored and controlled. Proper security policy and timely data backup can save the company from any kind of security threat.
Customization:
Cloud ERP system comes with the standard features and only minimal customization is possible because as a customer you will have less access to the source code. Therefore, you will be forced to use the existing features and work around solutions.
On-premise ERP systems are highly customizable as per your requirements and business process. Every business is unique in the operations, culture and business process, therefore, a customised ERP software add more value, streamline the operations and saves time and money in the long run.
Conclusion:
Both the On-premise and Cloud version have their own advantages and disadvantages. Selecting the right ERP Software and architecture is completely depends on the Organizations Management, Stakeholders, Security policy, Budget, and Vision. If you are still confused and need more clarity before making the decision reach us now for free consultation.
Brainsphere IT Solutions provides both on-premise and cloud ERP software solutions, check out our Products page for more information about our solutions.