Businesses have a lot to consider when choosing an ERP system. One of the most important decisions is whether to go with a Cloud ERP or on-premise ERP. Cloud ERP is hosted by the provider of the software, while on-premise ERP is installed and run from your business’ location.
In the article below we compare the two options, so you can make the best decision for your company.
What is ERP and Why do Businesses Need it
Enterprise Resource Planning (ERP) is a business management software that helps businesses manage their finances, operations, and human resources. It is an important tool for businesses of all sizes, as it helps them streamline their processes and improve efficiency.
Businesses need ERP systems to manage their complex operations. A good ERP system can help businesses track their inventory, sales, and finances. It can also help them manage their employees’ time tracking and payroll. In short, ERP systems help you manage every aspect of your business.
The benefits of Cloud ERP
Although Cloud ERP is the newest of the two options, it has many benefits over a traditional on-premise ERP. Some of the most important ones are:
1. Lower costs
Cloud ERP is often cheaper than on-premise ERP, because you don’t need to purchase or maintain any hardware or software. The provider takes care of all of that for you.
2. Easy upgrades
With Cloud ERP, upgrades are easy and happen automatically. You do not have to worry about downloading new software or installing it on your own servers as this is done by the service provider.
3. Increased flexibility
Cloud ERP can often be accessed from anywhere with an internet connection, which makes it more flexible than on-premise ERP. With Covid-19 increasing the number of people working remotely this type of flexibility can be invaluable.
4. Scalability
Cloud ERP can be easily scaled up or down to meet the needs of your business. If you need to add more users, for example, you can do so without any problems. This can be advantageous for growing businesses or for those who may flex in users when they have busier seasons.
5. Disaster recovery
With Cloud ERP, your data is backed up and stored off-site. This means that if something happens to your business’ location, your data will still be safe and accessible. And if you are hosted by a large ERP company they are more likely to be prepared to combat cybersecurity risks.
The Benefits of On-Premise ERP
Although on-premise ERP may be seen as the old option, that does not stop it having plenty of great benefits too. These include:
1. Increased reliability
On-premise ERP is installed and run on your business’ servers, which means that it does not rely on an internet connection to work. This increased reliability can be vital for a business that cannot afford to have down time.
2. Independence
On-premise ERP offers a level of independence that cannot be achieved with a Cloud-based solution. This means you do not have to worry about the provider going bust or being stuck accepting software updates that move the product in the wrong direction for your business.
3. More customisation options
On-premise ERP can be customised to meet the specific needs of your business. This can be through approved add-ons or by using custom code and modifications to get the exact functionality that you want.
4. Greater control
On-premise ERP gives you more control over your data and how it is used than Cloud ERP. Since everything is held on your own servers, you know exactly how it is being utilised and who has access to it at all times.
5. Better performance
On-premise ERP often has better performance than Cloud ERP, because it is not sharing resources with other businesses. This can avoid problems at peak usage times or if the Cloud provider user base is growing quicker than upgrades are happening.
How to choose the right ERP for your business
When it comes to choosing the right ERP for your business, there are a few things to consider before deciding:
1. Consider your budget
Cloud ERP is often cheaper than on-premise ERP, but it is important to consider all of the costs involved, including on-going maintenance and support.
2. Consider your needs
Cloud ERP is more flexible than on-premise ERP, but it may not be as customisable It is important to consider what you need from an ERP system both now and over the coming years to choose the option that best meets your needs.
3. Consider your business size
The size of your business, and if it is likely to grow, should be a factor you consider when choosing a system. The need for more flexibility in users might point you towards a Cloud solution whereas a more static number could put on-premise ahead.
4. Consider your IT infrastructure
If you have a strong IT infrastructure, then on-premise ERP may be a better choice as you will already have some of the more expensive hardware. However, if you have a smaller IT department then Cloud-based might be the way to go.
5. Consider your level of control
If you want more control over your data and how it is used, then on-premise ERP may be a better choice. If you are comfortable with the provider having more control over your data, then Cloud ERP may be a better choice.
These are just a few things to consider when choosing the right ERP for your business. It is important to weigh all the factors that impact your business before making any final decisions.
Comparing the cost of Cloud ERP and on-premise ERP
When it comes to comparing the cost of cloud ERP and on-premise ERP, it is important to consider all of the costs involved. Cloud ERP is often cheaper than on-premise ERP, but it is important to consider the maintenance and support costs. On-premise ERP is more customisable than cloud ERP, but it may not be as flexible. It is important to consider what you need from an ERP system and choose the option that best meets your needs.
Conclusion to Making the Decision Between Cloud ERP or On-Premise ERP
In conclusion, there are many things to consider when choosing between Cloud ERP and on-premise ERP. It is important to weigh all the factors and choose the option that best meets your needs. Both Cloud ERP and on-premise ERP have their pros and cons, so it is important to make a decision based on what’s most important to you.
If you would like help and support in selecting the right path for your business then get in touch with our team today.