Differences Between ERP’s On-premise And Cloud Based Solutions

Using an ERP system is the easiest way of connecting all the nodes of an organization. It helps in improving operational efficiency, controlling costs and thereby increasing profits.

The basic difference between On-premises and Cloud-based ERP is in how the software is deployed and accessed. On-premises ERP software is installed on computers and servers that are owned, or leased. Cloud-based ERP is deployed on the cloud (servers owned or leased by the vendor) and accessed through a web browser. The SaaS (Software as a Service) model allows companies to pay and use the service.

What Would Be The Key Differences?

Cost and time:

On-premises ERP solutions need higher investment upfront to purchase and manage the software. If your organization does not have an IT team, you have to hire the right people to manage the system. You can consider On-premises ERP as capital expenditure. The On-premises ERP is a time-intensive process to set up the infrastructure and deployment.

With Cloud-based ERP systems, the vendor would have already deployed the software on their servers and will give you access to the system. You normally pay a subscription fee which includes hardware and software costs. This cost is generally lower in the long run but takes less time to deploy.

Data security and ownership:

On-premise ERP system holds the data security and control over it but it may lead to malicious attacks.

In the cloud ERP system, the data is hosted on the vendor’s cloud and accessed through a web browser. To safeguard the data companies will opt for encryption methods to enhance the security. The cloud service provider will update your system automatically to make sure that you are working under secured environment.

Integration and Scalability:

As the business grows progressively there is a need for integrating the business entities. The Cloud-based ERP system will bring scalability to business by using APIs to help ease in integration. Due to lack of accessibility, integration and scalability of On-premises ERP system will be restricted .

Training and support:

The On-premises ERP system needs extensive training and technical support to the employees for a long time. For cloud-based ERP systems, the service provider will support the technical team to manage the IT functions in fixing the technical aspects.

In recent times, the cloud-enabled ERP systems have become a prominent solution for organization’s trouble-free operations.


Zen Choo

Zen has worked in business software solutions since 2013. His expertise and knowledge are often called upon by colleagues and customers alike. He is passionate about sharing the benefits and values of implementing an ERP System for SME businesses. He has also consulted thousands of companies across Singapore and Malaysia. He has worked with some of the most well-known companies in Asia Pacific Region where he provided guidance on how best to leverage technology for business success. Zen specializes in Sharepoint implementation as well as dynamic CRM Online implementations - both are enterprise-level software solutions that help businesses grow their sales pipeline.

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