The critical decision to use Cloud ERP over On-Premise ERP or vice versa will affect companies’ future and success in various ways, depending on the company’s strategy and approach. Cloud ERP has become very widespread in the recent years due to its low cost, accessibility and security, on the other hand, On-Premise ERP systems is still being used as well since it has its own reward such as more customization and control over the process of implementation. However, both have many downsides along with having many advantages. 

What is Cloud ERP and On-Premise ERP?

Cloud-based software means that the data is hosted on the servers of the provider and it can be accessed via a web browser. This way, security is controlled by the provider and most of the vendors have a strict security procedure. Differing from Cloud ERP, On-Premise ERP is installed locally and kept in company’s computers and servers. By implementing an On-Premise ERP, a company will manage its own security, customization will be greater and the company won’t have the risk of a possible leakage.

Advantages and Disadvantages of Using a Cloud ERP or On-Premise ERP

Cloud ERP has a monthly or an annual subscription fee. Although it is a cheaper upfront investment, depending on the system’s life cycle, saving money is harder since as long as a company operates, the payment fees must be paid. On-Premise ERP, however, is a one-time payment. It will be cheaper overall if a company stays up for a long time, but it is also riskier.

Depending on how it is handled, both the Cloud ERP and On-Premise ERP have its own advantages and disadvantages when it comes to security. In the Cloud ERP option, security of the data is in the hands of the supplier, this may be advantageous if it is a trusted provider, but you also run the risk of a possible leakage. In the On-Premise ERP option, security is in the hands of the company, this means that your data will be kept behind the walls of the company but if your company doesn’t have proper data security protocols, it may cause a problem.

Cloud ERP has less customization since the data is controlled by the vendor but organizations can collaborate with vendors to see which option suits most for them. Cloud ERP also has shorter execution time. Compared to the Cloud ERP, On-Premise ERP is more customizable. With On-Premise ERP, customization is in the hands of the company but if the provider releases an update on the software, it may be a problem. A disadvantage of this customization process is that it takes long to implement.

Depending on the company’s predictions and goals, by weighing the pros and cons of both systems, companies may make a decision which one suits better for them and use these solutions in accordance with company’s strategies.