Pros and Cons—On-Premise vs Cloud Solutions for Enterprise Resource Planning (ERP)
What is ERP
ERP is the integrated management of core business processes, often in real-time and mediated by software and technology.
What is Cloud-based Software
Software hosted on the vendor’s servers and accessed through a web browser.
What is On-Premise Software
Software installed locally, on a company’s own computers and servers.
On-Premise vs. Cloud
Cloud computing has grown in popularity as its allure as ‘cutting-edge’ and promise of new flexibility for businesses: saving time and money, improving agility and scalability.
On-Premise software, on the other hand, was the only option for businesses for a long time and may continue to adequately serve your business needs. What is the old adage, “If it ain’t broke, then don’t fix it”—
Cloud and On-Premise — How They Are Priced
- Typically, cloud software is priced in terms of a monthly or annual subscription with additional recurring fees for support, training, and updates.
- On-premise software is generally priced in terms of a one-time perpetual license fee (typically based on the size of the business or number of users). There are also recurring fees for support, training, and updates.
Advantages and Disadvantages of Cloud ERPs
Security is a top concern for businesses. Not surprising, considering the critical the information stored in a business’s ERP system—including company financials, employee information, client lists and more. While once wary about the security of cloud-based software, many businesses are becoming less skeptical today. This is helped by the increase in reputable cloud vendors. Many have strict standards in place to keep data safe. Do your research before you buy!
Cloud systems typically enable easy mobile accessibility. Many even offer mobile apps. This ease of access also comes with security considerations to keep in mind. Are employees accessing company files on their personal mobile devices?
Cloud ERPs are a good fit for most small and midsize businesses seeking lower upfront costs, system stability, and ease of access.
Advantages and Disadvantages of On-Premise ERPs
You will mostly find many of the same features in an On-Premise ERP system. However, there are a few differences, worth mentioning, in the deployment strategies.
In general, on-premise systems are much easier to alter. The ability to customize specific needs and requirements is paramount for many businesses, especially in niche industries, such as specialized manufacturers with unique processes.
On-Premise ERPs put more control in the hands of the organization, up to and including the security of its data. Therefore, it is essential your business set-up is capable of safeguarding an ERP’s most sensitive information—security protocols must be in place. Otherwise you are at high risk for cyber attacks.
Mobile accessibility can be limiting for on-premise deployments. These often require a third-party client to communicate between a mobile device and the on-premise software. It’s not an unresolvable problem, but it can be a frustration.
On-premise ERPs are a good fit for larger businesses with higher budgets; a desire to customize system operations; with the existing infrastructure to host, maintain and protect its ERP data.
PCS can help you with all of the above-mentioned items.
Still not sure where to start? What’s right for your growing business? Give PCS a call today and let us help you with an assessment for your unique business needs. (256) 513-8206