Cloud vs. On-premise ERP Deployment: What You Need to Know

In the past decade, the cloud has become a fixture in the enterprise IT landscape. Companies run entire workloads in the cloud, including mission-critical applications.

Applications such as ERP systems are now available in cloud versions, but are they right for you? Read on to learn what the major differences are between cloud and on-premise ERP deployments.

Pricing

You’ll generally see a significant price difference between on-premise and cloud ERP systems. That difference has to do with how the two versions of ERP systems are deployed.

On-premise ERP systems are installed on a local server. In contrast, cloud ERP systems are hosted by the vendor on its servers. Users access the ERP system through a web browser. On-premise ERP vendors charge users a licensing fee based upon the size of the organization or the number of users. Cloud systems, on the other hand, are based upon a subscription model. This tends to be quite a bit cheaper than an on-premise deployment, because someone else is managing the servers.

Implementation Length

When you invest in a business application, you want to get ROI from it as soon as possible. The length of the implementation period is another differentiating factor between on-premise and cloud deployments.

Cloud deployments are known for being shorter because there isn’t a need to do much to a server or workstations. It can take weeks to complete a cloud implementation. In comparison, on-premise deployments can take months – servers need to be configured, software needs to be installed, and customizations need to be performed.

Customization and Integration

Every business has its own needs, and sometimes, an out-of-the-box solution simply won’t cut it. The abilities to customize and integrate your ERP system differ between on-premise and cloud deployments.

Cloud deployments of ERP systems generally offer greater customization options than an on-premise deployment. There are more third-party integrations available that are included in your investment.

It’s possible to customize on-premise deployments of ERP systems, but it’s far more costly. In addition, if the vendor updates the on-premise ERP system, those customizations and integrations might not be compatible.

Security

One of the biggest issues with the cloud is security. Someone else controls your data, unless you choose a private cloud option. For businesses in regulated industries (such as life sciences), the concern that sensitive data could be compromised lowers cloud adoption rates.

However, security is a double-edged sword. When an organization deploys an on-premise version ERP system, it’s responsible for the security of that information. If a company doesn’t have strong security practices, its data is still highly vulnerable.

The cloud offers a number of benefits, especially when it comes to ERP deployments. It can save you money and time as well as enable you to customize your ERP system so that it meets your needs. When you achieve those goals, you can become more agile and competitive. The long-term benefits of such a deployment are well worth the investment.

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