Cloud ERP Vs. On-Premises ERP: What Are The Differences?

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According to the latest industry data, a growing number of businesses are choosing to switch to cloud-based ERP systems.

There was a 13% market value jump for cloud ERP systems from 2021 to 2022, and all signs point to a similar growth next year.

So what’s driving this trend to cloud systems? Is it worth investing in cloud ERP? Are more traditional on-premise ERP solutions a safer bet for your business?

To help you decide, we’ve put together a side-by-side comparison. Read on to learn the difference between cloud and on-premise ERP software solutions.

Upfront Costs 

When running on-premise ERP systems, you’ll have certain expenses upfront before you start using your new software. That includes the fees to buy the software and the costs of implementation.

If you don’t have an IT department in-house, you’ll also need to hire a technical team to manage the installation.

You may also need a dedicated server, which will mean paying for the physical hardware and setup of the server (including physical and network security).

In contrast, a cloud ERP system is ready to go and may only require a few custom system tweaks to get them prepared for your team. That means fewer upfront costs.

Timescales 

It’s not just the costs of installing on-premises ERP systems you’ll need to consider.

With expenses comes work and that installation process takes time. That means that from the moment you purchase an ERP system, it may take weeks or even months before you can begin using it in-house.

With a cloud-based system, there is no setup apart from customization.

Your team can use a straight off-the-shelf setup with no bespoke features from day one. That means you’ll start seeing the benefits of your purchase immediately.

Remote Access

More of us are working from home nowadays. But even with advanced technology like Zoom and Teams, there are still limitations.

That’s often down to having the proper security to access sensitive data and systems when you’re outside of the company’s internet office network. That is often a problem facing companies that have on-premise ERP solutions.

Remote access often means advanced setup from IT departments (for example, using a VPN) or limited browser-based access that doesn’t offer the full suite of tools.

However, cloud-based technology is – by design – accessible from anywhere.

That means your teams can access sales data from home, inventory management from client premises, or even resource planning spreadsheets via mobile when traveling by train.

Security 

Engineers build top security into a cloud system. That means you will benefit from world-class security protocols to protect your system and data from hackers.

While you can set up high security internally, it takes time, money, and experienced network security engineers to put that in place. Without it, you could have a vulnerability.

Is Cloud ERP Right for You? 

Is it time you switched to cloud ERP to future-proof your business systems? It’s undoubtedly what other leading businesses are doing, and the benefits are apparent when examining both options.

Do you need further tips on how to implement an ERP system? Head to our business section to browse our latest posts.

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