Amongst the decisions to be made when choosing a business management software also known as ERP (enterprise resource planning) is, where will the system be hosted, is it to be hosted in the cloud or on-premise?
Irrespective of your choice, business management software (ERP) has created some type of level playing ground for both small and medium-sized businesses. In other words, they have a scalable tool that is used to efficiently and effectively run their businesses.
In the past, it was basically expensive and geared for large organizations, but cloud-ERP has changed the narrative. It is more common than before and it has seen more adoption, especially by small and medium businesses.
According to a report by Gartner:
· About 50% of organizations have surveyed plan to move onto a cloud ERP system.
· Service-centric industries, small and medium businesses are adopting cloud ERP.
All in all, it will be nice to do a review of both business management software to find out their pros and cons, so as to give room for a more informed allocation of resources.
PROS AND CONS OF CLOUD vs. ON-PREMISE BUSINESS MANAGEMENT SOFTWARE
1. Deployment and Pricing
| ON-PREMISE ERP | CLOUD ERP | |
| 1. | The ERP is basically on the company’s own computers and servers. | The software is hosted on the software vendor’s servers. |
| 2. | The software is accessed through the organization’s server. | The software is accessed through a web browser or application. |
| 3. | Its pricing is most times on a perpetual basis. | The software is priced on a monthly or yearly basis. |
| 4. | It is costly because of the high initial cost of setup, due to purchase of hardware, assembling the right people, time-consuming, and so on. | It is relatively cheaper to set up because of its pricing system. Mostly seen as SaaS (Software as a Service). |
2. Data Security
| ON-PREMISE ERP | CLOUD ERP | |
| 1. | Data security is the responsibility of your organization. | It is the responsibility of the software vendor. |
| 2. | It is considered more secured because skilled professionals deployed, maintains, and troubleshoot the software. | You are at the mercy of your software vendor’s expertise and infrastructure. |
| 3. | Fewer security risks compared to cloud ERP. | Security risks arise when employees access company files through their personal mobile devices. The files can be corrupted or the whole system to be hacked. |
3. Performance and Customization
Depending on your needs, performance is best with on-premise ERP compared to cloud ERP. A contributing factor to this is service outages and slower connections that can occur for organizations transferring large files.
In terms of customization, on-premise ERP gives you the flexibility to tweak the software to suit your organization’s needs.
4. Implementation Time
Cloud ERP takes less time to implement compared to on-premise ERP, especially if there’s a lot of customizations to be done.
In conclusion, choosing your desired business management software (ERP) depends on what your organization wants to achieve. However, organizations using on-premise ERP are gradually shifting to a Hybrid system. This is when the organization buys a cloud server on a rental basis and deploys the business management software (ERP) on the cloud server. The cloud server is then accessed through a web browser or an application.
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