Cloud ERP vs. On-Site ERP: Top Considerations
Before you can begin considering specific ERP (enterprise resource planning) providers, it’s important to decide whether you want a cloud or on-site deployment. There are pros and cons to both options, and certain businesses will reap much greater rewards choosing one option over the other.
The challenge in focusing on the aspects of cloud ERP vs. on-site ERP is that it will significantly affect your business and inform your decision making. If you have little experience vetting enterprise class software, it can be easy to get overwhelmed by the details.
Here are the key aspects to consider:
All success is somehow measured in terms of ROI, and the two types of ERP have very different cost structures. With cloud ERP solutions providers like Kenandy, you pay a monthly subscription fee based on the level of service you access. You pay only for the capabilities you need and only when you need them. That makes it much easier to forecast IT costs, but the total amount you spend over the life cycle of the ERP could be greater.
With an on-site deployment, you pay an upfront licensing fee and then have unlimited access. But you will also need to pay for any necessary hardware (servers, network hubs, etc.), cover the total cost of ongoing maintenance, and may end up saddled with an ERP you don’t like. The total cost may be less over time, but it’s very hard to predict.
Since ERPs handle your most sensitive data, security must also be a real concern. With a cloud deployment, security is maintained and monitored by your ERP provider. They have a dedicated IT team who instantly installs updates and patches and watches closely for any anomalous behavior. When a threat does present itself, they are able to put all their resources behind a defense.
If your ERP is housed and managed on-site, you are solely responsible for security. The benefit is that you have more flexibility over the security measures you put in place. The hazard is that you may pick the wrong measures, fall behind on maintenance and monitoring, and lack the resources to shut down threats quickly. In some cases, security concerns can overwhelm an in-house IT team very, very quickly.
The quality of an ERP is judged largely by how well it integrates with your data. Cloud solutions are customizable to a point, but since this delivery method is based on packaged offerings, companies will not have total control over how their ERP works. The key becomes finding a provider that is either already well suited to handle your data and workflows, or willing to work with you to customize.
IT teams that manage their own ERP have a lot more freedom and flexibility to modify the system. However, they have to shoulder the burden of creating the customizations, and troubleshooting any problems that arise with them. There is also the risk that customizations created in-house will compromise the ability of the ERP to accept updates from the vendor and work as prescribed.
In most cases, opting for an in-depth, on-premise ERP provider that’s difficult to implement isn’t worth your time. Cloud ERP systems are faster and easier to deploy. This is partly due to the fact that they are less customizable. But it has more to do with the fact that they require little to no hardware setup, don’t drain your IT team’s bandwidth, and come with the help of implementation experts who understand best practices.
Implementing an on-premise ERP gives you more overall control over the process, which could be a priority for some companies. But the process will likely be more complex, and you will need to have professionals skilled in implementations on staff, or else hire a consultant. As with all things, you have less help when you go it alone.
It’s important to focus on each of these considerations in the context of your goals over the short, medium, and long term. Something that works great for you now could hold you back down the road, and vice versa. Be sure to take a step back from the claims made by the vendor and assess the real positive and negative impacts an ERP product will have on your company, not just a few years, but 10 years down the road, and beyond.