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The Great ERP Debate: On-Premise v. Cloud-Based

By Katie Foley

When selecting an ERP system, one of the biggest decisions that needs to be made is on-premise or cloud-based deployment. Over the past decade we’ve seen cloud-based solutions take over the ERP industry, but that doesn’t mean that there isn’t a place for on-premise solutions. When it comes to ERP there isn’t a one size fits all solution. This blog will help you evaluate the pros and cons of both options and offer up a third hybrid option.  

On-Premise 

On-premise solutions are installed onsite on company owned servers and computers.  

Cost 

On-premise solutions require a larger upfront investment between license fees, associated hardware, and IT costs. However, over the long termthis early investment may pay off.  

Implementation 

Typicallywith on-premise deployment there is a longer implementation period required. This is often because on-premise solutions give more room for customization.  

Security 

With an on-premise deployment, data security is in the hands of your IT department. If you have a robust IT team that can take on the data security demands of an ERP systemthen this can be an advantage to on-premise deployment.  

Cloud-Based 

Cloud-based solutions are hosted on the vendor’s servers or by a third-party cloud service provider. The customer accesses the software through a web browser.  

Cost 

One of the most attractive features of the cloud-based deployment is the low upfront cost. There is no need to invest in hardware since the software is hosted by the vendoror a third-party providerand accessed through the web. The costs are predictable over time since there is usually a monthly or annual fee that includes software, maintenance, and support. The only downside to cloud-based deployment when it comes to cost is that over many years you may end up spending more money than the on-premise solution.  

Implementation 

The implementation time for a cloud-based solution is often shorter than an on-premise solution. However, the reason for this is usually that cloud-based solutions offer less customization options.  

Security 

Data security for a cloud-based deployment is on the vendor and/or the third-party provider. The disadvantage here is that you don’t have control over the data security. The advantage is that vendors and third-party providers have strict data security standards and you don’t need to use your IT resources to maintain them.  

Hybrid Models 

We have also seen hybrid deployment models. Some companies start on the cloud to get a jump on implementation and then move software and database on-premise once internal networks and servers are installed. We’ve also seen purchased and installed on-premise ERP systems move to the cloud to avoid upgrading servers and networks. Lastly, sometimes we see a permanent situation where some components of the software are hosted, and others are kept on-premise.  

Conclusion  

When it comes to choosing between the cloud and on-premise, there is no “right” choice as both options come with advantages and disadvantages. We suggest you list the factors in order of priority and make a decision based on that. With the hybrid models mentioned above, the possibilities are endless. Contact Visibility to learn about our many manufacturing ERP deployment options.  

Topics: ERP

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