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How Cloud ERP Compares to On-Premise ERP

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If you’re considering an ERP system for your business, there are chances of you being bombarded with number of choices. While considering different options, one of the most important decisions you’ll need to make is whether to go for a cloud-based ERP solution or for a locally installed one.

The basic difference between cloud ERP and on-premise ERP is very clear, where on-premise ERP systems are locally installed to a company’s hardware and servers and managed by your IT staff. On the other hand, cloud ERP — also called SaaS (Software-as-a-Service) — is offered as a service. A company’s ERP software and its associated data are all managed centrally (in the Internet “cloud”) with this type of deployment, by the ERP vendor and can be accessed by customers using web browser.

Below are some key factors that you need to consider while deciding upon whether to use an on-premise ERP or a cloud-based ERP software.

Ownership Costs

On-premise ERP systems mostly require large upfront and ongoing investments to purchase and manage software and other related facilities like hardware, servers, etc. to run it. If your organization doesn’t have a big or experienced IT staff, you may also have to invest more time and money in additional personnel and to train them further. Even more importantly, an on-premise system requires that your IT team spends some time and budget ensuring your system is always up-and-running whenever needed, including hardware maintenance, server rooms, and more. When the time comes for upgrading the ERP system, IT must redeploy the system across various users’ computers and re-implement various customizations as well as integrations that your business installed on to the previous software.

For cloud-based ERP, start-up costs are typically much lower because you simply go for software implementation and access it through computer’s internet connection. Cloud ERP provider hosts and maintains complete IT infrastructure for you, ensures the system is always running and data is secure without breaking your previously implemented customizations. Cloud ERP also offers a certain, pay-as-you-go subscription model that makes cash flow management and planning easier.

On-site ERP software are customizable, but customizations are tied to your current software deployment and aren’t easy to re-implement with upcoming versions. With a latest product release, your previous customizations will be wiped out and will lead you to do it from scratch again, which makes it a reason to why companies settle for an outdated technology.

Cloud ERP solutions such as NetSuite are repetitively upgraded by the provider to make sure you always use the latest and most advanced ERP software version and carry on with updated solution without additional investment.

Improved System Performance and Accessibility

Cloud ERP delivers better performance as compared to on-premise solutions. Cloud-based ERP also offers optimized performance by adapting to your individual needs. NetSuite commits to 99.5% availability for its customers and has delivered 99.98% average uptime performance. It is worth noticing that a cloud-based ERP solution provides real-time data, accessible via the Internet, with which your staff can have accurate information over laptop, tablet devices and smartphones, while traveling for free. Being a core competency, cloud-based ERP provides high security as per industry standard data security certifications like SAS 70 standards and PCI DSS.

Deployment Speed

Cloud ERP offers clear advantages, considering various scenarios of deployment. With cloud ERP, you don’t need additional hardware or need to waste time procuring and installing IT infrastructure. Also, it can be easily rolled out across multiple regions, divisions, and subsidiaries; avoiding the cost associated with those rollouts. Cloud ERP deployments also help in saving time by usually taking nearly 3-6 months compared to the 12 months that on-premise would take.

Since every business is unique, it is good to take time to consider how different ERP deployment options will affect your company in the long run. Get in touch with NetSuite Expert to learn about deploying a cloud-based ERP solution rightly.