Cloud ERP vs On-Premise ERP: Which Should You Choose?

 

A cloud ERP system is hosted on remote servers and users access it over the internet. You pay a subscription fee to use your ERP solution to a software-as-a-service (SaaS) provider. In turn, your cloud ERP service handles the maintenance of your environment.

On the other hand, an on-premise ERP is one you run from your organization's internal servers. This means you have to take care of setting up, configuring, managing, and updating your environment.

The biggest differences between cloud and on-premise ERPs include:

  • Where they are deployed. While a cloud ERP lives in a data center, an on-premise one is inside your physical building.
  • How you pay for them. Setting up and maintaining on-prem ERP involves purchasing equipment and software, as well as updating and securing it. With a cloud ERP, your software provider sources and maintains your solution.
  • Scaling. The scaling process for cloud ERPs involves asking your cloud provider for access to more features and perhaps computing resources. Scaling with an on-prem ERP centers around your internal staff installing additional features, and if you need more computing, you have to purchase it yourself.
  • Securing your ERP environment. Cloud ERP setups come with the security systems your cloud provider uses for its environment, as well as those it uses for your specific ERP. With an on-premise ERP, you're responsible for purchasing and updating the security tools used to limit cyber risk.

Cloud-based ERPs solve some of the more difficult challenges businesses have to tangle with, especially when it comes to scaling and controlling the cost of deployment and maintenance. You simply pay a monthly fee and your provider takes care of this for you.

An on-prem ERP is a good fit for a company that wants ultimate control over its ERP environment, especially when it comes to making new configurations and implementing integrations with other on-prem systems. Some businesses may also feel more comfortable if they can secure their ERP environment themselves, particularly when they consider the possibility of hackers infiltrating their cloud environment.

 Cloud ERP vs On-Premise ERP: Which Should You Choose?


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