Face Off: On-Site vs. Cloud ERP

VanessaJames 22 September 2012 0

Vanessa James is a business technology consultant specializing in database management. She has a passion for sharing her knowledge with individuals and companies alike. She currently writes for web based ERP company, qad.com.

“The cloud” is popular at the moment. In reality, it probably will play a huge role in business (and the world in general) for a while to come. This leads a lot of people to assume that cloud ERP (enterprise resource planning) software is the best choice for any company. Not always. The benefits of each type of software stack up differently, and deciding which the “better” technology is depends on which angle you’re looking at it from.

Cloud ERP, in the long run, costs less than on-site ERP. Of course, no one wants to say exactly how much less it costs. One article at GetApp reports on a study that shows cloud ERP costs as much as 50 percent less than on-site over a four-year period. But the article doesn’t provide the actual report.

If you search for the cost of on-site ERP you’ll find articles and companies telling you that the cost varies based on the organization. Look for the cost of cloud ERP and you’ll find that some companies tell you exactly how it scales, like QAD’s web-based ERP package that costs a flat $250/user each month. However, these are mostly speculations. But there are a few factual reasons why cloud ERP costs less than on-site ERP

  • Companies that offer cloud ERP also offer full IT support, while on-site ERP requires a company to pay its own IT team.
  • Cloud upgrades are instant and don’t cost extra, while on-site ERP requires software cost (when you buy the upgrade) and downtime for implementation.
  • Cloud ERP doesn’t usually require on-site hardware, while on-site does (hardware that requires constant upkeep)

Integration is a commonly discussed, and sometimes contentious, subject. No matter what, though, integration of previous ERP database (or a collection of databases) isn’t a simple process. But cloud ERP does seem to make the process easier.

Traditionally, on-site ERP integration and implementation can take months. Some cloud companies, however, report it can take as little as a month (depending upon your company). Regardless of this feature, it may be worth it to your company to not have to focus on the integration and implementation yourself. Since cloud ERP companies offer their own IT teams, your IT crew can focus on your business while the cloud ERP company focuses on integrating and implementing the system.

If it seems like cloud ERP has had the upper hand so far, it has. But not here. Cloud security is one of the biggest topics in the technology world today. This is not to say that cloud ERP data is unsecured, just that it’s more likely to be accessed illegally. Because the conversation is still going (and because ERP technology and cloud security is constantly evolving) there’s not much to say on this subject that isn’t theoretical. However, if security is a big concern, it’s clear that (for now) on-site ERP wins out.

The uptime conversation (what percent of the time the ERP database is available) is a messy subject. While cloud ERP companies report a 99 percent uptime (or better), on-site ERP uptime varies from company to company because the company is entirely responsible for its own system. Because of this, on-site and cloud ERP are about equal.

Again, cloud and on-site ERP come up about equal under this category, but for different reasons because each has different limitations. Increasingly, cloud ERP software offers the chance for companies to customize the system to its liking. However, a company’s ability to customize the system is limited by what the cloud software allows.

On-site ERP also offers the ability to customize the system, but is limited by a number of factors, such as budget (for buying customizable options), IT knowledge (for implementation) and the downtime required to implement the customized features.


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