If you are debating on whether to go for a cloud or on-premise ERP (Enterprise Resource Planning) software, it is important to weigh the benefits and negatives of both. Like most decisions, evaluating the pros and cons to make a confident, correct decision is a justifiable way to spend your time. Let’s look at the differences between a cloud and on-premise system.
Less IT requirements– With the cloud, you do not need to have a server or other IT infrastructure to run the ERP. You also do not need a true IT staff to manage it, so this will save time and costs since employees can now focus on other parts of the business.
Cost can be less- If you use the SAAS model (Software as A Service), you can save money upfront. Instead of paying a large upfront fee, you pay a smaller month to month fee. You do not own the software then, but you also do not have to do any work on it as your ERP provider has the responsibility to maintain it.
Security not up to you- Since the software itself is hosted in the cloud, the security and reliability of the connection are dependent on the cloud service used. Any breakdowns or errors are out of your control to diagnose and fix, so you are at the mercy of your provider if something happens.
Cost can be more- If you find a system you like, and use it year after year, the small month to month fee will eventually surpass the cost to purchase it outright. At that point, you are paying more continuously and taking away cash from the business.
More control of system– Since you are hosting the ERP on your server, you are in complete control of what happens with it on a day to day basis. Updates, security, and customizations are all up to you, so you do not need to rely on anyone else.
More security- You are now responsible for the security of your data. You can be as secure as you want as you have total control over your software. If you know what you are doing, this is a great benefit as you can be sure of your security.
Higher upfront cost- An on-premise ERP will have a higher cost upfront. You pay for the licenses and implementation, which can get pricey based on how many users you have, what configurations you are doing, and what data you need to migrate over.
More IT requirements- You need to have a server and other IT infrastructure in place to support the ERP. This includes both hardware and software, as well as having at least one quality IT person on site who can help with any concerns.