If you’ve been researching the best ERP solution in the Philippines, you might have already gained a lot of information. It goes from features and benefits, to applications. You might’ve also encountered on-premise and cloud ERP.
These are the types of deployment for your chosen ERP software. Now, you might be asking yourself which one is the better option.
To help you decide, we’ll talk about these two ERP deployment models and their major differences.
The Key Difference Between On-premise ERP and Cloud ERP
Let’s get straight to it. The main difference between on-premise ERP and cloud ERP is that:
- On-premise ERP is installed locally, within your internal servers, which may be leased or owned by your organization. Your company’s IT staff manages and maintains this type of ERP system in-house.
- Cloud ERP is deployed via SaaS or Software-as-a-Service. It is offered as a service—managed and maintained by a cloud ERP provider. This ERP system runs in the cloud, hence the name, and is accessed via the internet.
Apart from where the software is physically located, there are other things in which these two ERP systems hugely differ. Let’s take a look at these items below.
On-premise ERP normally costs more upfront. You would have to spend on the computing infrastructure, such as hardware and data servers. A company would then require its IT team to work on the ERP system. They should be well-experienced and equipped with the knowledge to efficiently run it.
With on-premise ERP, you invest in the infrastructure as well as your staff. This is typically a one-off, capital expense.
Cloud ERP is more affordable for it doesn’t require huge upfront costs. No additional infrastructure fees and specialized IT staff needed. Instead, you pay a subscription fee for the software applications you use which are managed by a third-party. This results to reduced costs on maintenance and upgrades.
This type of ERP deployment is part of your operating expense.
Some cloud ERP vendors may charge for additional users. With Acumatica Cloud ERP however, you pay only for the computing resources you use; no extra costs for adding users.
Speed of Implementation
On-premise ERP takes a longer time to set-up. The company will take care of procurement, installation, maintenance, and everything else to keep the system up and running. On-premise ERP solutions can take up to 12 months to implement.
Cloud-based ERP is generally faster to deploy and implement. Unlike on-prem ERP, installation of hardware and software on servers or devices is not required. Cloud ERP systems can take as short as 6 months to set-up. This ERP deployment is then ready to use in much less time.
Cloud-based or software-as-a-service (SaaS) ERP products often win over the traditional, on-premise ERP when it comes to accessibility.
Traditional, on-premise ERP solutions offer limited remote and mobile access.
Since cloud ERP runs on the internet, it offers greater accessibility anywhere, anytime. For example, Acumatica ERP solution offers real-time access to business information using any device through its native mobile app. Your ERP system is updated and synced whenever there are changes.
Of course, security is a top concern. As IBM’s CEO Ginni Rometty puts it, “Cybercrime is the greatest threat to every company in the world.”
On-premise ERP gives the company full control over data and have it secure onsite. In many ways, handling ERP in-house offers high security. The company is responsible for placing security measures and protocols to avoid possible data breaches.
Whereas, cloud ERP has the company’s data hosted on the vendor’s cloud platforms. Cloud vendors usually take a layered security approach to further increase data security. This means they have redundancy, security protocols built into their cloud infrastructure.
There are backups plus a disaster recovery plan.
Cloud ERP providers like Acumatica employs an intrusion detection system (IDS). This detects any suspicious activity against your company’s data. Any attempt to compromise data availability, confidentiality, or integrity will lock the intruder out of the system. An investigation follows to identify the intruder.
On-premise ERP allows for great customization. Since companies have total control over the assets, on-premise ERP offers robust customization features to fit individual business requirements. Note, however, that customization with an on-prem ERP involves setbacks like additional expenses and downtime.
Cloud ERP in general is more difficult to customize. Rather, SaaS ERP solutions are based on industry standards and best practices. Some products like Acumatica Cloud ERP are highly configurable through the use of industry-standard tools.
Maintenance and Upgrades
On-premise ERP is managed and maintained by your company’s IT department. Your in-house tech team will be the one to take care of system upkeep and other necessary upgrades.
With cloud-based ERP, your vendor is the one handling the regular maintenance and enhancements. Software is always up-to-date and comes with the most recent features every single time.
Scalability is about how your ERP system can support your business needs as it grows. It relates to company size and the number of users as your business eventually expands.
On-premise ERP’s scalability relies heavily on the hardware. You have to plan and consider at the outset the possibility of expansion. In which case, you would have to deploy additional hardware to accommodate.
Cloud ERP on the other hand, typically offers more flexibility when it comes to business growth. Acumatica ERP, for one, easily scales resources up or down based on your changing business needs.
Choosing between On-Premise and Cloud ERP
Ultimately, choosing the right ERP deployment would depend on your unique business requirements and capacity. Carefully evaluate your processes today as well as consider developments in the future.
It’s worth to note though why cloud or SaaS ERP deployment has shown rapid growth recently. It has distinct advantages that prove to be relevant today, as well as potentially useful towards the future.