By now, it is apparent that no matter how big or small your company is, an ERP system helps streamline processes for better inter-department coordination. Cloud ERP systems and On-Premise ERPs ensure everyone in the company is aligned on updates and changes. It is kind of a cross-functional management system on overdrive.
When you’ve decided to pursue an ERP, the biggest question you’ll have to answer is: do you want it on cloud?
An ERP can be embedded on a cloud or your own on-premise hardware.
Cloud ERP vendors typically host the systems on their cloud servers. They then provide the system licenses that includes full system management via a software as a service (SaaS) model, with a platform interface that users access on the internet through a web browser.
In contrast, on-premise systems require installation and maintenance in your company’s own computer and servers, managed by your in-house IT staff.
Note that the type of ERP deployment model you choose can have a significant impact on your business operations and overall costs to own, run and maintain the system. These come in the form of IT infrastructure investments, deployment speed and scalability, degree of control over the system, and finally upgrades and modification efforts.
While there are obvious benefits to having an on-premise ERP such as the complete control over the system and the hardware that it resides in, the biggest hurdle to overcome is the total cost of ownership.
On-premises ERPs commonly require huge investments to set up if you don’t already have existing hardware infrastructure. The upfront and the inescapable investments for hardware, facilities, and the data security that is necessary to run the on-premise software will undoubtly put a dent on your finances. Initial investments on servers and related equipment can cost anywhere from hundreds of thousands to millions of dollars based on company size.
You’ll also need to hire additional IT staff to manage the software and maintain the hardware. Hiring and training IT staff on an ongoing basis, adds another indirect level to total ownership costs that many tend to forget.
Not to mention, having huge racks of servers also requires huge storage spaces. Tying up CAPEX on commercial real estate for non-revenue generating storage – that’s a damper on your per-square-feet ROI. Don’t even get started on electricity consumption!
FUN FACT: Did you know that on-premise servers are not waterproof? Unless you have a 0% chance of floods in your location your best bet would be to have a private plane and niche transport specialists on-call during rainy days!
As the number of users increase overtime, you will likely find yourself having to spend again on additional hardware to support the software volume. To add to that, customizing on-premises ERP system is not an easy task, making it a hassle to constantly ensure version compatibility when software upgrading season comes around.
To top it off, there’s no guarantee your data won’t get lost in translation.
On the other hand, cloud ERPs don’t require hardware procurement or IT infrastructure, hence can be deployed faster and more conveniently. Simply implement the ERP system based on your requirements and leave the struggle of maintaining the system to your vendors. This means that not only do you have software experts ensuring the integrity of your system, dedicated vendors can quickly troubleshoot potential issues in shorter time.
Upgrading these systems are a breeze! Cloud ERPs are capable of continuous software upgrades with little to no impact on data. Integration and customizations are oftentimes automatically carried forward on the cloud ERP system at predetermined intervals. This not only helps your ERP and consequently your business run efficiently, but also eliminates data breach at no additional cost.
But the real game-changing fact is that it is more cost efficient in the long run. On average, cloud ERP systems cost 50% less in 4-years compared to an on-premise ERP.
Cloud ERP systems allow you to allocate more of your resources into fulfilling your core business tactics, growth and process innovation rather than illiquid capital stuck in IT infrastructure that becomes redundant overtime.
And did we also mention it’s more convenient?
Most modern cloud ERP systems offer predictable pay-as-you-go subscription plans that make cash-flow management and planning much easier. It reduces the burden of having an on-premise ERP, worrying about what to do if it breaks down and how to cover the repair costs that can easily skyrocket out of control.
This model also makes it possible to effortlessly scale cloud ERPs. Often just by topping up an additional user license or switching the usage capacity tier gives you the capacity to operate according to your current scale – think unlocking a new level in a game.
Cloud ERPs are set to eventually outperform on-premise solutions. This is owing to the fact that cloud ERP models start with a ground-up architecture design, leading to optimum network performance and operation without interference. This makes them easily adjustable to accommodate sudden spikes in your company’s activity by allocating more resources to your system quickly.
These adjustments are only possible in a cloud computing environment where the software is embedded on virtual machines. Who would say no to better cloud system availability than traditional on-site counterparts?
Cloud ERP systems also provide access to real-time data no matter where your users are situated globally, at any time. The world never sleeps, why should your business? Your staff can quickly query the information on their computers; smartphones or tablets on the internet while they are traveling. Some even come complete with a fully integrated, dedicated mobile app. Plus points for no extra setup requirements.
Cloud ERPs also provide better data security than the on-premise ERP system. SPOILER ALERT: you pay a lot less on security.
And if you are a multi-region company? The best thing about cloud ERP is that such a system can be rolled out across multiple regions. This saves you cost associated with major geographical rollouts.
A cloud ERP usually takes three to six months (psst… we can do this in 1-3 months! Ask us how!) to deploy compared to a yearlong deployment schedule when you opt for an on-premise ERP. You can also add more resources to your cloud ERP at any time without disruptions from having to scale up. Why waste time to buy additional hardware and install the software?
The same is true for reducing resources to the cloud ERP as well. This gives you flexibility to adjust the throttle as your business scales up or, hopefully not, down.
As a business owner, you already know that digital transformation in this age and era is inevitable. Offices are getting smaller; everything is going virtual. Why not stay ahead of the curve and look to the sky cloud?
Afterall, cloud ERPs can significantly improve the allocation of resources in your business and reduce costs at a grand scale. IT infrastructure and maintenance are expensive, but with a cloud-based system, it does not have to be.
This article is part of a campaign for CRT Insights Technologies’ Live-in-5 Rapid Implementation programme. Just 5 Easy Steps to getting your business future-ready.
CRT Insights Technologies provides world-class ERP solutions and expert advice from experienced regional consultants. No matter stage of your ERP discovery journey you’re at, CRT’s got the solution to make your digital transformation a breeze. Contact us today and quote “Live-in-5” for a free 1-hour consultation on your ERP needs today.
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