Cloud vs On-premise ERP
One of the most important decisions while selecting an ERP software is whether to go for cloud or on-premise. A cloud application is installed on a third party or vendor’s data center and can be accessed from anywhere. Whereas, an on-premise application is installed on your local servers.
Each has its own advantages and disadvantages, and the decision depends on the priorities a company has while considering the option. Selecting cloud vs on-premise is a crucial decision, which will have a long term impact. Hence, I have listed below some of the factors which you can consider while choosing the best option.
Factors you should consider while choosing cloud vs on-premise:
Accessibility: A cloud ERP is easily accessible from anywhere. Especially when there are multiple offices and employees working in the field, a cloud based application is more suitable. This is where the purely on-premise applications have a disadvantage.
However, if you are keen about on-premise applications, then selecting an ERP which can be accessed through a virtual network and which also supports mobile access is advised. There are ERPs that offer hybrid options where the application is installed on your server and can also be accessed through virtual networks from anywhere.
Data Security: The data is completely under the control of a third party or the vendor in the cloud option. Data migration could be the biggest challenge especially if you are moving to a new ERP in thefuture.
Whereas, in the case of an on-premise application, you will retain the complete ownership of data. If you are more concerned about retaining the complete ownership of data then installing the ERP in your server is more advisable.
Cost of Ownership: The cloud application is usually offered as a subscription, whereas the on-premise application involves upfront investment. Usually, an ERP is used for a long term, and hence, you should calculate the total cost of ownership for both options while evaluating the ERP.
Taking all factors into consideration such as post-implementation support and number of users while calculating the total cost. Assuming an application is used for over ten years, you can calculate the total subscription fee, support fee etc., for a cloud based ERP and compare it with the on-premise ERP.
Customizations & Integrations: While customization is possible with both options, on-premise application is more customizable comparatively. If your business processes require advanced customization, then the on-premise ERP is more advisable.
Also, the integration with third party applications is limited with the cloud option. Whereas, integration with various third party devices or applications is possible with an on-premise application.
System upgrades: Most of the ERP applications come with newer versions and upgrades especially when there are changes in technologies or compliance regulations. The upgrades are usually automatic with cloud based applications.
Whereas, in case of on-premise application, the upgrades should be installed manually and it may incur additional costs. Also, if the on-premise application was highly customized then upgrades could be a challenge.
Implementation Time: The implementation time is usually shorter in cloud application compared to on-premise. Especially, if you have multiple locations or field employees then installing a cloud application is more convenient and can be implemented faster.
In conclusion, the above mentioned are some of the important factors which you should consider while choosing between the cloud vs on-premise ERP. At FACTS, we provide cloud, on-premise, and hybrid ERP solutions as per your requirement.