You may be considering a new or different
On-premise ERP solutions would be installed on your company servers while cloud-based ERP would be installed and managed off-site by a third party cloud provider and accessed through your internet connection. One is not necessarily better than the other; the method of deployment best for you will depend on your company structure, your existing IT infrastructure, your internal IT staff, your company’s growth expectations, and a number of other considerations.
Here are some important factors to consider when weighing your options:
To determine initial and ongoing costs of ownership for your ERP solution, you’ll have to consider not only the cost of the software but any implementation fees and ongoing expenses.
On-premise solutions require a significant capital expenditure for the hardware servers. Also, there will be the ongoing costs of maintaining an IT staff. You may even have to expand your present IT department in order to deal with the increased workload.
An on-premise system will generally have one perpetual license fee depending on the number of users and features required. Training, support, and updates will require additional expenditure.
Cloud-based systems, on the other hand, do not necessitate the capital expenditure for hardware because that is owned by your cloud provider. Instead, you will pay a monthly fee that will be an operating expense. You will not need to have your own IT staff to care for service, maintenance and backups because that is all done automatically and behind the scenes by your cloud provider. Of course, training will still be required.
For a small or growing business that might not have the initial capital for an on-premise solution, cloud ERP is an easy and less expensive way to get up and running quickly. But it’s important to consider the long-term total cost of ownership. The costs associated with cloud-based solutions are more predictable and hence easier to anticipate and budget. However, because of ongoing monthly subscription costs, a cloud-based system could be more expensive in the long run.
You’ll also have to consider your growth plans. As your company expands, a cloud-based solution is easier and less expensive to expand across multiple locations.
Deployment and implementation time are of concern. Likely you can’t afford to have your daily business processes interrupted while your new ERP solution is installed. On-premise deployment will be slower because you have to have the proper infrastructure to run your system. Cloud-based implementations are usually much faster, especially when deployed across multiple locations.
Upgrades and Expansion
All software systems require periodic upgrades to keep them up to date. With on-premise solutions, you have to schedule and pay for your ERP partner to come to your office to upgrade your system. If you have multiple locations, this will require multiple upgrade appointments and probably some disruption or downtime while the work is being done.
With cloud-based solutions, updates take place automatically, outside of business hours, and are performed behind the scenes by your cloud provider.
Expanding the system or scaling it is infinitely easier with cloud-based ERP. The addition of a new branch, for example, can be done remotely without the need for additional hardware or on-site installation.
Performance and Accessibility
Either solution can be subject to performance issues. If your solution is on-premise, you have more control over your system, and your IT department may be able to fix any problems quickly. But, if they are backed up with other jobs, you may have to wait your turn.
Cloud providers base their reputations on providing good service and support. They offer increased redundancy, backups, and performance guarantees.
Cloud-based solutions are available on devices anytime and anywhere with an internet connection. If your workforce is mobile, this could be the deciding feature. On-premise applications require special configurations and protocols in order to be truly mobile.
On-premise solutions will allow you access to your data and processes even if the internet goes down.
Security is important to any business. With a cloud-based solution, the cloud provider is responsible for security. Top cloud providers have the highest standard of security and staff that are experts in their field. But it will be important to find out how the provider you choose deals with security and what guarantees they provide. With on-premise solutions, your data remains in-house, and your IT team will be responsible for providing security.
On-premise ERP is generally more customizable It does require time and expense in the form of additional hardware and possible downtime, but you can almost always get the customizations you want.
Cloud-based solutions are faster and less expensive to customize, but if you need unique or extensive customization, on-premise might be your best option.
Features and Applications
On-premise solutions, custom tailored to your business requirements may be exactly what you need. Cloud-based solutions have some flexibility, but generally they are limited to the environment for which they were designed and serve the requirements of the greatest number of users. On-premises systems may provide more options in terms of features and applications.
Cloud-based solutions depend on remote support, and the cloud provider will handle the majority of issues remotely. On-premises systems will be your responsibility and will require more involvement from your IT department.
As you can see, there is a lot to consider when deciding on your ERP deployment. Cloud computing is becoming more mainstream, more secure, more reliable than ever, but it may not be the best option for your business. It’s important to know your needs and ask the right questions. A reliable ERP partner like iNECTA can help you to better understand your options.
Our consultants are passionate about delivering value and efficiency to businesses through technology solutions. If you are considering a new or updated ERP solution,