Cloud vs On-Premise ERP: Which is right for you?

Enterprise resource planning (ERP) software is extremely important for businesses’ success, so choosing the right ERP for your company is critical. While deciding on the ERP system for your organization, you’ll encounter multiple types. It’s crucial to read about and understand all of the options, as the type of ERP system you choose will greatly influence what benefits your business will reap from your ERP in the future.

In this article, we dive deep and explain the difference between cloud-based and on-premise enterprise resource planning systems, compare top ERP systems, and give you tips based on Steelkiwi’s experience.

What is an ERP system and why would a company want one?

Enterprise resource planning systems are valued across many companies and industries. These systems link together business processes and aid the flow of information between them. Enterprise resource planning software functions as a single source of truth by gathering a company’s shared data from multiple sources, significantly increasing the efficiency and clarity of internal communication.

A 2021 report by Panorama Consulting Group reveals that 91.7% of companies that have implemented enterprise resource planning software consider their ERP project to be successful, as they have already noticed the benefits.

Companies implement ERP systems for different reasons. According to the 2020 ERP report by Software Path:

There are multiple ERP benefits that help companies achieve these goals. One of the most important advantages of an ERP system is optimized productivity. An ERP automates many operations, significantly decreasing the need for manually inputting data while eradicating duplicate information. In addition, modern enterprise resource planning systems allow staff to access and input information remotely from mobile devices.

Access to real-time data is another crucial benefit. Data is the most important resource a company can have. It’s vital to collect and process it regularly as well as to be able to access it in real time from anywhere to ensure business growth. Also, instead of having numerous spreadsheets and databases, it’s much more efficient to place data in a single location where you can easily view it all in one session.

Modern ERP systems offer an extensive range of helpful tools and functionalities, from the most basic (like financial planning and talent management) to specific functionalities like lot traceability and engineering change control (ECC) that are offered by manufacturing ERP software for makers of automotive parts and accessories. A wide variety of industry-specific features make businesses eager to switch from their legacy software to enterprise resource planning software. Moreover, because such functionalities and tools are explicitly designed to address a particular industry’s concerns, they’re capable of boosting a company’s efficiency and saving time.

You can get numerous other benefits depending on the type of enterprise resource planning system you implement. Both cloud and on-premise ERP have solid advantages that can promote your company’s success. Let’s dive in!

What is a cloud-based ERP system?

A cloud-based ERP is a technological infrastructure characterized by the business accessing the ERP through the internet, and the servers being in an offsite data center.

Frequently, when someone refers to a cloud ERP, they mean software as a service (SaaS) type. The SaaS model is the most common for a cloud-based ERP, but many people mistakenly consider these terms to be interchangeable.

In a SaaS deployment, you don’t own the software. It is offered to you by a vendor through a monthly subscription. The software is then made available via the internet, and your data is stored in the cloud.

In recent years, the popularity of cloud-based ERP systems has grown rapidly. In 2017, only 6% of ERP software was deployed in the cloud, as evidenced by the 2017 Report on ERP Systems and Enterprise Software from Panorama Consulting Solutions.

Enterprise resource planning (ERP) software is extremely important for businesses’ success, so choosing the right ERP for your company is critical and it's even more critcal if you're thinking about erp development. In this article, we dive deep and explain the difference between cloud-based and on-premise ERP systems, compare top ERP systems, and give you tips based on Steelkiwi’s experience.

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