In the contemporary business arena, there is increased competition between organizations in various fields. This implies that all companies irrespective of their size and industrial background need to consistently grow and evolve to meet the changing customer demand patterns. So, for that we’ve The enterprise resource planning system abbreviated as the ERP System is capable of helping organizations enhance their business capabilities in a wide number of ways and provide unfathomable benefits. It has two platforms as cloud based ERP system & on-premise ERP.
In simple words, the ERP system is software developed for performing business management procedures that allows the user company to utilize a suite of applications, integrated to provide a comprehensive experience.
This implies that this system can aid the achievement of accuracy and efficiency in internal business processes. Along with this, it also provides complete visibility into the core of business processes. 85% of ERP adoption in 2018 was either SaaS or cloud-based versus just 15% for on-premise.
What is a Cloud-based ERP System?
The cloud-based ERP system is available in the software as a service format which allows the user organization to access the ERP software through the internet. In simple words, the term Cloud-based ERP software refers to the Enterprise resource planning features and tools that are offered in the cloud platform for managing organizational data in the cloud as opposed to storing the company data in the on-premises structure.
This means that the ERP software in this situation is stored and managed off-site, within the cloud platform, by the specific cloud platform vendor.
In this system, the user is not required to maintain any additional infrastructure on-site for the storage of data. After the cloud deployment of company data is completed successfully, the user organization can concentrate on running the business procedures rather than worrying about IT administration. SaaS-based cloud platforms shift the data storage, management and maintenance responsibilities on the cloud vendor which allows the user company to focus on its growth and performance. An estimated 83% of enterprise workloads will be in the cloud by 2020.
Uses of Cloud-based ERP Program
The uses of cloud-based ERP programs can be enumerated in the following manner :-
- Achieving real-time analytics – One of the biggest advantages of using cloud-based ERP systems is the capacity to perform in real-time by accessing the features of the software. This provides the user company with the opportunity to see valuable information as soon as it is available. In simple words, the data viewed by the user always remains up-to-date.
- Advanced security features – Several organizations fear the cloud-based ERP system, thinking that the major control over the organizational data is handed over to the vendor of the cloud platform. But, in reality, the security features of the cloud platform are capable of keeping the company data extremely safe and confidential through the process of complete encryption within the software. According to brightpearl.com, almost 94% of businesses believe their security is better after implementing cloud services, which includes their use of ERP.
- Achieve flexibility – With the use of ERP Software in the cloud platform, the user company can achieve certain flexibility in its business operation. This implies that as long as the user has access to the internet, the company can access its business data and information very easily from any remote location.
- Decreases operational costs – As the user company is not required to invest in additional data storage architectural setup, the operational costs of using the ERP System in the cloud platform becomes sustainable through subscription packages.
- Receive proper service support – After a certain organization deploys its data in the cloud-based ERP platform, the vendor of the cloud platform becomes liable to provide the necessary support demanded by the user company from time to time.
Cloud-based ERP vs On-premise ERP
The cloud-based ERP vs On-premise ERP comparison can be enumerated in the following tabular format:-
| Cloud-based ERP System | On-premise ERP System | |
| Deployment | This is also known as the software as a service and provides storage in the vendor’s server and allows access through a web browser. | This installs data locally in the user company’s computers or servers. |
| Pricing | Apart from some exceptions, cloud ERP systems are available in a monthly or annual subscription format with additional charges for training programs, support or updates. | This system is usually priced based on a one-time license fee. Along with this, training, support and updates are priced additionally. |
| Implementation | The cloud ERP implementation is completed in a short period with less upfront costing. | The on-premise ERP implementation is tackled by the user company itself and is a long process involving a lot of expenditure. |
Difference between Cloud and On-premise ERP system in other aspects
| Cloud-based ERP System | On-premise ERP System |
| Deployment time is short | Deployment time is stretched based on the amount of data to be stored. |
| Accessibility is easy and flexible. | This system is flexible. |
| Cloud platform vendors have better data recovery protocols and strong security features to avoid data mishaps. | If the company has a weak IT infrastructure, the security protocols will be lacking to a great extent. |
| Software updates and general maintenance is tackled by the vendor | The maintenance and updates are tackled by the company staff. |
| Cloud platforms can provide space for large volumes of data. | On-premise ERP systems cannot support business data expansion to a large extent. |
The Cloud-based ERP software consists of a collection of features that are combined in a complete set-up and managed by the vendor. The user of this software simply has to buy a subscription to the platform based on the organizational needs and deploy the cloud platform in the existing company infrastructure.
Along with this, the maintenance issues are tackled by the vendor itself. On the other hand, the users of the on-premise ERP software have to invest additionally in creating an infrastructure for the server and hardware along with installing it on site.
An internal IT team of the company needs to consistently manage and maintain the complete setups; the cloud platform is more cost-effective than the on-premise ERP system. It’s been proven that cloud ERP can be as much as 46% less than a comparable on-premise solution.
This is why, according to one recent study, 93 per cent of enterprises currently use cloud-based software or system architecture, and the use of hybrid cloud systems increased from 19 per cent to 57 per cent in one year.
The choice of adopting the cloud-based ERP Platform or the on-premise ERP platform should be based solely on the organizational needs and the working pattern of the specific company.
But, upon analysis of both the ERP platforms, it is revealed that the cloud-based ERP software is way more cost-effective, flexible and agile in the processing of managing and maintaining data. Thus, from the perspective of small businesses, cloud-based ERP softwares are beneficial as the decreased cost in maintaining ERP software would allow more resources to be available for business purposes.
A small and medium business approach upon consideration of all the aspects of cloud-based ERP solutions as well as the on-premise ERP solutions, it is seen that according to the performance, deployment time needed, resources at stake as well as cost structure, the cloud platform has an advantage over the on-premise structure.
In addition to this, the data security protocols are also way more secure than the on-premise set-setups, even for small to medium businesses, the cloud platform for ERP software is beneficial.
Pros & Cons of Cloud vs On-premise ERP System
Cloud Based ERP
Pros –
- Cost-effective
- Strong security protocols
- High scalability
- Data access flexibility
- Predictive Analytics
Cons –
- No control over the data.
- More vendor dependency.
On-premise ERP system –
Pros –
- Complete control over data.
- No vendor dependency.
- High customization availability
- No express permission is required to access data.
Cons –
- No Predictive analytics feature
- Increased cost.
- Less scalability
Decreased flexibility in accessing organizational data.
A list of best Cloud-based ERP Softwares
The following are the list of top-rated ERP softwares across the globe in recent years:-
- SAP
- ORACLE
- Microsoft Dynamics 365
- Infor
- IFS
- EPICOR
- Acumatica
- SYSPRO
- IQMS
- Salesforce
While all these ERP Systems cloud platforms are popular in the market, Dynamics 365 is one of the most chosen cloud platforms for ERP software and with good reasons.
The following are the reasons why Dynamics 365 is better than the other cloud platforms in the market:-
- The increased performance of the ERP System is reflected right from the start
- The access to organizational data is simplified through the access to data from the internet.
- The billing is done according to the specific subscriptions and the usage pattern of the user company.
- All the Microsoft applications are kept at the beck and call of the user company.
- The security standards of Microsoft are unparalleled in the market which provides organizational data in the Dynamics 365 cloud, the security guarantee of Microsoft.
- The predictive forecasting & analytics in Dynamics 365 features help the user company to derive useful insights in real-time.
Conclusion
The cloud-based ERP platforms consist of several features that make them more advantageous than the on-premise ERP solutions. Along with being cost-effective, the cloud ERP Systems gives the user the required flexibility to run business operations without the tension of maintaining and update issues. In addition to this, the storage of data in the cloud increases with the expansion of the user company along with no additional costs.
Frequently Asked Questions In the process of selecting an Enterprise Resource Planning system or ERP system for the organization, a user is faced with the biggest challenge of choosing between the cloud-based ERP Program or the on-premise ERP. This forms one of the most critical factors on which the choice of ERP Systems largely depends. To choose a suitable ERP system for their enterprise, the user company must have a clear idea regarding the cloud vs on-premise pros and cons. While on one hand, cloud-based ERP systems are becoming increasingly popular, there are still several organizations that opt for on-premise models of the ERP software which was a traditional norm in yesterday year.
Again, the Cloud-based models of ERP software lack certain features like customization along with having some security issues. On the other hand, while the On-premise version of ERP Systems has ample customization options, they are rather expensive to maintain. Thus, the final choice of choosing from Cloud vs On-premise ERP system depends on the user organization and this decision can be made through an analysis of the needs of the company.
The two terms ‘Hybrid Cloud’ and ‘On-premise Cloud’ might seem synonymous but in reality, these are quite different in their meanings. The phrase On-premise Cloud storage implies that the user organization keeps the organizational data servers within the internal IT structure of the organization and even manages them internally. This implies that the organization has its data servers stored at its location. When a company opts for this method, it is required to have a cloud data stack server in its location. Subsequently, such companies also need to arrange for the process of managing and securing their data at their own risk. The on-premise Cloud storage option is usually preferred by organizations that have a large location or a huge stack of organizational data.
On the other hand, the Hybrid Cloud is a mixture of both on-premise cloud storage and cloud-hosted storage solutions. This method provides the user with an opportunity to store some data servers in the in-house structure and utilize the hybrid Cloud facility to manage the data and share the insights across other locations of the organization. In other words, the hybrid Cloud platform creates a communicative structure between the various locations of the organization.
The Cloud ERP Technology implies that the features of the ERP System are provided to the user organizations through a cloud platform. This system does not require any managing or servicing to be done by the employees of the user organization. This Technology promotes the management of organizational data in the cloud through a centralized structure which is then accessed by the organization and its customers using a web browser. The benefits of a cloud-based ERP Program includes the following:-
● Better performance of the ERP System in conjunction with the contemporary business environment.
● Decreased operational costs
● Enhanced security features
● Successful performance of real-time analytics
● Flexibility in the access options.
● Lesser requirements of technology
● Round the clock service support.
● Unhindered geographical accessibility.
The term Dynamics 365 refers to a cloud-based solution designed by Microsoft that is a combination of the Enterprise Resource Planning features and the Customer Relationship Management Solutions within a single service. There are ample reasons for choosing Microsoft Dynamics 365 as the organizational ERP System. Some of these can be listed as follows:-
● Increased and simplified access to organizational data.
● The billing structure is scaled according to monthly subscriptions and the choice of the workforce.
● The array of applications under the Microsoft arena is at the fingertips of the user organization.
● Increasing productivity of the company’s workforce.
● The use of predictive analytics features within the service enables the creation of actionable insights.
To understand whether a certain organization is ready to move to the Cloud ERP Platform, the user company is required to evaluate their internal organizational needs. A Cloud ERP platform provides organizations to adapt and innovate with their data in real-time. Along with this, an array of applications can be used to compose and modify data management processes. The business users that intend to use cloud platforms to be empowered and adapt to the changing business environment should use cloud ERP Systems.
The term ‘Cloud’ refers to a cloud-based solution that provides the user with the capability to store their organizational data in different hardware or infrastructure. This implies that a large amount of control over the company data is in the hands of the cloud platform vendor. On the other hand, the term Data Center refers to a group of servers that is purchased by the user company and kept on site for serving the purpose of data storage needs. This can be disadvantageous for some companies as the servers along with the networking hardware have to be bought by them.
The major difference between Cloud storage and Data Center storage is that the organizational data is stored in the former while it is stored on-premises in the latter. The concerned organization should choose the suited storage platform based on their needs and available financial resources as both have their pros and cons.
