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5 Ways to Decide Between a Cloud and On-Premise ERP System


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Selecting an ERP system is not as simple as just picking a product and partner to roll it out.  You need to know how that ERP software is going to be deployed, or where it is going to reside.  How your ERP solution is deployed will determine how you access the system, who is going to maintain it, how you're going to pay for it, who is going to keep your data secure, and more.

Sometimes a deployment method will help inform your ERP software system choice.  For example, some ERP systems are only available in the Cloud or provided as Software as a Service (SaaS).  Other systems are available on-premises but can be hosted by a partner or deployed in your partner's private cloud.

To learn more about ERP Deployment Options, check out our guide.

There is no "right" deployment method across the board, but you do need to make the right deployment decision for your specific business requirements.  The chart below shows you 5 factors of cloud and on-premise ERP solutions so you can find the ERP deployment method that would bring the best benefits to your business:

Questions to Ask Yourself When Looking at SaaS/Cloud vs. On Premise

SaaS/Cloud Benefits

On Premise Benefits

What is your organization’s size?  Cost benefit analysis reflect that SaaS/Cloud is the most effective when the user count is less than 50. Greater user counts change the model. After 50 users, often it’s more competitive to host on premise.
How strong are your IT competencies? With little to no IT staff, companies get most benefit from SaaS/Cloud – they get implementation without headaches Companies that are IT heavy and have extensive infrastructures, there is less of a desire for SaaS/Cloud.
Do you tend to work with software “out of the box”? If you have slight modification to an application, have few integration points, or typically have heavily modify reporting If you have heavily customized apps or integrations to other systems or solutions, this adds both fixed/variable costs to deployment if you consider the Cloud.
Can you deal with downtime events? Typically has redundant systems. 24/7 staffing, and scheduled off-peak downtimes. If you can continue with rare downtimes, Cloud is likely a good fit. If uptime is critical, it is likely better to be on premise.
Minimize up-front costs and control cash flow? Little or no startup costs. They handle security, data backups, disaster plans, data storage, and other IT-related tasks for you. There are many tax implications so an outright purchase may be better than monthly service charges.

Learn more about Cloud ERP and get a pricing quote here!
By Socius, an Ohio Cloud ERP Partner

2 Responses to “5 Ways to Decide Between a Cloud and On-Premise ERP System”

  1. Some good points here, but I disagree with the statement, “If uptime is critical, it is likely better to be on premise.”

    Prior to RedTail, I spent years in OSS/BSS and load balancing in high availability environments for F500 clients. In the late 90s, most of those clients realized that uptime would be far better if they located in facilities with fully redundant subsystems (cooling, power, network links, storage etc.) in a Tiered 1/2/3/4 data center – often a third party.

    On premise reliability typically comes down to server reliability, staff response time, maintenance schedules for each application and use of high availability configurations for software-based hot fail over.

    Most of these redundant systems would be off limits to all but a few well-heeled mid market businesses, but they can have access to them through the use of well architected cloud applications.

  2. Tim T. says:

    Hi Bill,
    this is a very helpfull collection of the most important questions every company should ask themself before making choices. One aspect i would add is “data security” and “privacy” issues. For some industries SaaS could offer some more issues concerning those aspects.

    Keep up the good work/ Best regards
    Tim