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Cloud ERP Vs. On Premises ERP: Key Points to Consider

24 May 2016 5 MIN READ

To cloud or not, is a critical question which businesses face while considering an ERP. On one side is the scalability and flexibility offered by the cloud, and on the other side is complete ownership of on -premises. Here is a point by point comparison of cloud and on-premises ERP to help you decide better!

What’s the difference?

The basic difference between on premise ERP and cloud ERP is that an on premise ERP solution would typically be set up locally on your IT infra – all hardware and server components would be managed by your staff, locally. While in the cloud model, the infrastructure is offered as a service. All the required hardware and servers are managed by the vendor.

Cloud-based ERP:

Ups Downs
Cost • Lower upfront cost

• No fixed asset investment in hardware or servers.

• Businesses may eventually end up spending more money depending on the lifecycle of the system and the number of users.
Security • Data security is completely controlled by the vendor. • Data security is in the hands of the vendor. While vendors pledge strict data security standards, some organizations might not have total peace of mind with this arrangement.
Customization • Customization is frequent and comparatively cheaper as the vendor takes care of all necessary updates and upgrades.

• Businesses can also decide what customizations they want to opt for.

• Less customizable in general
Implementation • Shorter implementation cycle • Since customization is limited, implementation cycle is also shorter.

On-Premises ERP

  Advantages Disadvantages
Cost • License driven one-time costs. • Heavy upfront investment for hardware and other required IT infrastructure.
Security • Business has the complete control over data security. • Businesses need to be well versed with all security protocols.
Customization • Can be customized to a large extent to match even very niche needs. • Customizations come at the cost of longer implementation cycles.
Implementation • Organization has more control over the implementation process • Implementation process can take significantly longer
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About the author

Nidhi Batra

Nidhi Batra is a marketing and brand communication professional with 10 years of experience working in the dynamic B2B marketing environment. She strategizes, writes, reviews a variety of content for demand generation and sales support activities. Having a Master’s in English from Delhi University, she knows how to navigate her readers on insightful journeys with her SAP published blogs and thought leadership content.

Follow me on LinkedIn to stay updated on the latest industry trends & technology update

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