Cloud ERP vs. on-premise ERP

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Cloud ERP vs. on-premise ERP
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Both cloud and on-premise ERPs have their own sets of pros and cons. Cloud ERPs tend to offer more flexibility, while on-premise ERPs can offer more control.



Cloud ERP vs. on-premise ERP: Examining the pros and cons 
Enterprise resource planning (ERP) systems can be valuable tools that help businesses pull data together and complete business processes in areas like finance, supply chain management, and more. But when selecting ERP systems, companies not only need to find specific vendors but also choose a deployment method.


Specifically, businesses need to choose between cloud and on-premise ERPs. In this guide, we’ll look at what both types of ERPs offer, including some of the top pros and cons of each.

 

What is a cloud ERP?

Like other software-as-a-service (SaaS) offerings, cloud ERPs are hosted by the software vendor and delivered to users via the internet, rather than the user needing to download the system onto their own devices.



Pros of cloud ERPs

Cloud ERPs can offer several advantages that tie into the general benefits of SaaS. These include:


- Simplicity

For many companies, especially small and mid-size businesses (SMBs), the simplicity of cloud ERPs can’t be beat. The vendor delivers the software via the cloud, so you typically just need an internet connection to get started, rather than having to go through a complicated installation procedure.

From there, cloud ERPs offer simplicity in terms of the vendor managing all the updates. As new software features and security patches get released, those should automatically be integrated into your cloud ERP, so you don’t have to worry much about managing the technical aspects of your ERP system.


- Flexibility

Cloud ERPs also tend to offer superior flexibility. Since the vendor delivers the system remotely, you can generally access cloud ERPs from any computer with an internet connection. Some vendors offer mobile device access, so you can work from anywhere. Some ERP systems also enable offline access for times when you’re on the go but don’t have internet, but features might be limited in these cases.

Cloud ERPs also offer flexibility in terms of price and scale. Instead of locking yourself into one upfront fee to obtain an on-premise solution, and then having to pay for future versions of the system, cloud ERPs tend to offer flexible monthly pricing. If your team grows, you may be able to easily switch to a package with more licenses. The total cost might not always be cheaper over the lifetime of using a cloud ERP vs. an on-premise ERP, but cloud ERPs tend to at least be more flexible.  


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What is an on-premise ERP?

As opposed to cloud ERPs that are delivered via the internet, an on-premise ERP needs to be hosted on your own server. Larger enterprises tend to be the ones selecting on-premise ERP systems, as they may already have the technology needed to host the system, along with the IT staff to manage it. Plus, larger businesses may have specialised data requirements that mean they need to keep everything under their own control. That said, some SMBs do turn to on-premise ERPs, depending on their requirements.



Pros of on-premise ERPs

Cloud technology may be popular, but there are still several reasons to choose on-premise ERPs. Some of the top advantages involve:


- Full ownership

Unlike the SaaS subscription model of cloud ERP systems, purchasing an on-premise ERP gives companies full ownership of that version. To some businesses, that may be a positive, as you only have to pay for the software once rather than on an ongoing basis. Plus, you can then use the system however you want. With full ownership, you can host the system and associated data wherever you’d like and manage everything on your own terms.


- Offline access

Since on-premise ERPs are not delivered via the cloud, you don’t necessarily need to be online for access. To be fair, some cloud ERPs do offer a version of offline access, but that may not give you the full offline control that you might get with an on-premise solution.


Cons of on-premise ERPs

What look like positives of on-premise ERPs to some businesses can look like negatives to others. Some of the cons relate to:


- Management

Not only do you have to host an on-premise ERP on your own but you also need to manage the system and update it as needed. For SMBs without large IT teams, managing on-premise ERP systems might be more hassle than it’s worth. Plus, it can lead to risks in areas like security, such as if the ERP does not get upgraded in a timely manner to a new version that has patched security flaws.


- Rigidness

On-premise ERPs can also be fairly rigid in the sense that once you purchase one, that’s the system that you’ll have until you replace it. In contrast, cloud ERPs can continually update behind the scenes. If your company scales up or down, you may find that the on-premise ERP you purchased no longer fits your needs, so you would then have to implement a new system.

Which type of ERP system is right for you?

Both cloud and on-premise ERP systems offer pros and cons, so it’s hard to say that one is universally better than the other. Instead, the answer depends on your own circumstances and requirements, such as your company’s IT expertise and need for data control.

If you’re ready to explore your options to buy a new ERP system or upgrade your current solution, Software Advisory Service can help. We're a technology consultancy using procurement best practice and data insights to save companies time and money. Our goal is to make business technology procurement simple, transparent, and cost-effective.  Click the button below to book a consultation at your convenience. We won’t charge you anything, and we won’t share any of your project details without your explicit approval.


Cons of cloud ERPs

Although cloud ERPs offer several benefits, such as being simple and flexible tools, it’s also important to recognise what could be considered drawbacks. Before selecting your ERP, keep in mind that cloud ERPs have cons related to:


- Control

One potential downside of cloud ERPs is that they don’t offer the same level of control as on-premise solutions. Since the software vendor hosts the system, they’re the ones generally managing the software overall and in control of things like data storage and security.


 - Privacy

Related to control, cloud ERPs also potentially pose some privacy drawbacks. If you work in a highly sensitive industry, or if you’re particularly privacy-conscious, you might not want your data to be in the hands of a vendor. That’s not to say that cloud ERP providers will abuse their position — many have their own privacy controls — but you might not be able to have the exact privacy levels you desire as you might if selecting an on-premise ERP, where you could store data on your own servers.

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Using an enterprise resource planning (ERP) system can be a powerful way to pull data together to improve business processes. But do you have the right ERP system in place? If you’re using an older ERP system such as Microsoft Dynamics NAV or Microsoft Dynamics AX, you may want to upgrade to more modern, advanced ERP solutions.
 
In this guide, we’ll explore why you need to upgrade your ERP system to access the latest features and support. We’ll also look at how you can find ERP recommendations that you can then use to see if you want to switch ERP 
providers.



Why you need to upgrade your ERP system
While Microsoft Dynamics NAV or Microsoft Dynamics AX may have served you well in the past, they are legacy systems. Microsoft has rebranded its ERP suite to Microsoft Dynamics 365, with NAV and AX now incorporated into the Dynamics 365 umbrella of solutions.

But you don’t need to just upgrade due to the name change. Because Microsoft Dynamics NAV and Microsoft Dynamics AX are legacy products, support for them is fading, while some new ERP systems have already surpassed their capabilities. Some of the reasons to upgrade your ERP system could be to:
 
Keep up with the latest features
As technology advances, legacy systems won’t receive updates that help them compete with modern ERP systems. Even something relatively straightforward, like integrations with new software tools, might not be supported unless you upgrade to a more current ERP system.

If you were using an on-premise ERP tool, you might want to take advantage of modern cloud-based ERP tools. These SaaS systems can upgrade their features remotely, so you can always have access to the latest version, rather than needing to go through a complicated upgrade process for an on-premise ERP solution.

Access security updates
By not getting the same upgrades that current ERP systems receive, you could be more exposed to security risks. Often times a vendor will release a security patch to address a flaw that was discovered after the initial release of the software. So, upgrading your ERP system to one that’s still receiving support from that vendor can help you access these security updates.

Gain technical support
Similar to accessing security updates, upgrading to modern ERP systems also may help you gain the technical support you need. Like many vendors, as Microsoft retires legacy systems, they also end free and paid technical support for those products, and they won’t release new technical documentation online.

Depending on which version of Microsoft Dynamics NAV or Microsoft Dynamics AX you have, the end of support date may differ. But even if you still have a couple years left of support, you may be better off upgrading to an ERP system that’s more in focus right now. That way, you can expand your options for technical support. For example, if you work with other partners like a managed services provider, or if you’re simply looking for support online, a modern ERP system may have more current documentation and experts on hand who can help you get the most out of the software.
 
Selecting the right ERP system  
If you’ve been using Microsoft Dynamics NAV or Microsoft Dynamics AX, a natural fit might be to upgrade to Microsoft Dynamics 365. Doing so can provide you with access to even more business intelligence (BI) tools than you may have had previously.

But you don’t necessarily have to stay with the same vendor. You could use this period as an opportunity to explore other ERP options to see if another vendor offers features that would help your business more.
 
Many software companies offer robust ERP systems that can not only help you manage business processes, but also gain BI that helps you discover ways to work more efficiently and effectively. Yet choosing from the long list of ERP vendors can be difficult, as there are so many different types of systems out there. Some are geared toward large enterprises, while others are focused on small and mid-size businesses (SMBs). Some are cloud-based and some offer on-premise solutions.
 
So, if you want to upgrade from Microsoft Dynamics NAV or Microsoft Dynamics AX, Software Advisory Service can provide you with a shortlist of ERP recommendations tailored to your needs. Simply fill out the form on the right to receive these ERP recommendations, and you can then decide whether you want to stay within the Microsoft Dynamics ecosystem or if you want to try another ERP vendor.

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Both cloud and on-premise ERPs have their own sets of pros and cons. Cloud ERPs tend to offer more flexibility, while on-premise ERPs can offer more control.


Cloud ERP vs. on-premise ERP: Examining the pros and cons

Enterprise resource planning (ERP) systems can be valuable tools that help businesses pull data together and complete business processes in areas like finance, supply chain management, and more. But when selecting ERP systems, companies not only need to find specific vendors but also choose a deployment method.

Specifically, businesses need to choose between cloud and on-premise ERPs. In this guide, we’ll look at what both types of ERPs offer, including some of the top pros and cons of each.

 
What is a cloud ERP?

Like other software-as-a-service (SaaS) offerings, cloud ERPs are hosted by the software vendor and delivered to users via the internet, rather than the user needing to download the system onto their own devices.


Pros of cloud ERPs

Cloud ERPs can offer several advantages that tie into the general benefits of SaaS. These include:


- Simplicity

For many companies, especially small and mid-size businesses (SMBs), the simplicity of cloud ERPs can’t be beat. The vendor delivers the software via the cloud, so you typically just need an internet connection to get started, rather than having to go through a complicated installation procedure.

From there, cloud ERPs offer simplicity in terms of the vendor managing all the updates. As new software features and security patches get released, those should automatically be integrated into your cloud ERP, so you don’t have to worry much about managing the technical aspects of your ERP system.


- Flexibility

Cloud ERPs also tend to offer superior flexibility. Since the vendor delivers the system remotely, you can generally access cloud ERPs from any computer with an internet connection. Some vendors offer mobile device access, so you can work from anywhere. Some ERP systems also enable offline access for times when you’re on the go but don’t have internet, but features might be limited in these cases.

Cloud ERPs also offer flexibility in terms of price and scale. Instead of locking yourself into one upfront fee to obtain an on-premise solution, and then having to pay for future versions of the system, cloud ERPs tend to offer flexible monthly pricing. If your team grows, you may be able to easily switch to a package with more licenses. The total cost might not always be cheaper over the lifetime of using a cloud ERP vs. an on-premise ERP, but cloud ERPs tend to at least be more flexible.  


Cons of cloud ERPs

Although cloud ERPs offer several benefits, such as being simple and flexible tools, it’s also important to recognise what could be considered drawbacks. Before selecting your ERP, keep in mind that cloud ERPs have cons related to:

 

- Control

One potential downside of cloud ERPs is that they don’t offer the same level of control as on-premise solutions. Since the software vendor hosts the system, they’re the ones generally managing the software overall and in control of things like data storage and security.

 

 
- Privacy

Related to control, cloud ERPs also potentially pose some privacy drawbacks. If you work in a highly sensitive industry, or if you’re particularly privacy-conscious, you might not want your data to be in the hands of a vendor. That’s not to say that cloud ERP providers will abuse their position — many have their own privacy controls — but you might not be able to have the exact privacy levels you desire as you might if selecting an on-premise ERP, where you could store data on your own servers.

What is an on-premise ERP?

As opposed to cloud ERPs that are delivered via the internet, an on-premise ERP needs to be hosted on your own server. Larger enterprises tend to be the ones selecting on-premise ERP systems, as they may already have the technology needed to host the system, along with the IT staff to manage it. Plus, larger businesses may have specialised data requirements that mean they need to keep everything under their own control. That said, some SMBs do turn to on-premise ERPs, depending on their requirements.


Pros of on-premise ERPs

Cloud technology may be popular, but there are still several reasons to choose on-premise ERPs. Some of the top advantages involve:


- Full ownership

Unlike the SaaS subscription model of cloud ERP systems, purchasing an on-premise ERP gives companies full ownership of that version. To some businesses, that may be a positive, as you only have to pay for the software once rather than on an ongoing basis. Plus, you can then use the system however you want. With full ownership, you can host the system and associated data wherever you’d like and manage everything on your own terms.


- Offline access

Since on-premise ERPs are not delivered via the cloud, you don’t necessarily need to be online for access. To be fair, some cloud ERPs do offer a version of offline access, but that may not give you the full offline control that you might get with an on-premise solution.


Cons of on-premise ERPs

What look like positives of on-premise ERPs to some businesses can look like negatives to others. Some of the cons relate to:


- Management

Not only do you have to host an on-premise ERP on your own but you also need to manage the system and update it as needed. For SMBs without large IT teams, managing on-premise ERP systems might be more hassle than it’s worth. Plus, it can lead to risks in areas like security, such as if the ERP does not get upgraded in a timely manner to a new version that has patched security flaws.


- Rigidness

On-premise ERPs can also be fairly rigid in the sense that once you purchase one, that’s the system that you’ll have until you replace it. In contrast, cloud ERPs can continually update behind the scenes. If your company scales up or down, you may find that the on-premise ERP you purchased no longer fits your needs, so you would then have to implement a new system.

Company Reg. No. SC482015

Registered Address: 131-133 Minvera St,  Glasgow, G3 8LE

Which type of ERP system is right for you?

Both cloud and on-premise ERP systems offer pros and cons, so it’s hard to say that one is universally better than the other. Instead, the answer depends on your own circumstances and requirements, such as your company’s IT expertise and need for data control.

If you’re ready to explore your options to buy a new or ERP system or upgrade your current solution, Software Advisory Service can help. We're a technology consultancy using procurement best practice and data insights to save companies time and money. Our goal is to make business technology procurement simple, transparent, and cost-effective.  Click the button below to book a consultation at your convenience. We won’t charge you anything, and we won’t share any of your project details without your explicit approval.

Company Reg. No. SC482015

Registered Address: 131-133 Minerva St,  Glasgow, G3 8LE

Company Reg. No. SC482015

Registered Address: 131-133 Minvera St,  Glasgow, G3 8LE

Company Reg. No. SC482015

Registered Address: 131-133 Minerva St,  Glasgow, G3 8LE

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