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Cloud vs On-Premise ERP: Which is the right option for your business in 2022?


Karan Tulsani - December 16, 2021 - 0 comments - 63 Views

Reading Time: 5 minutes

ERP or Enterprise Resource Planning is an extremely important ingredient for any business in 2022 and making the right choice can be a challenge due to the wide range of options available in the market. While researching for your business, try to go through a number of options and try to understand the pros and cons before the Oracle ERP implementation process.

According to industry experts and leading researchers, the ERP market is slated to surpass USD 85 billion by the end of the year due to the growing demand for ERP in the business landscape. ERP will be the first point of contact for most of the business processes like marketing, sales, accounting and more.

What is an ERP System? What are the benefits of cloud ERP?

ERP tools are popular amongst businesses across different industry verticals due to the inherent advantages offered by the platform and the ability to seamlessly connect multiple business processes. More often than not, ERP tools act as a connecting bridge between different business processes, collect vital business critical data from multiple sources and enhance communication.

According to Panorama Consulting’s 2021 report, more than 90% businesses believe that ERP implementation has been a major boon for their business.

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There are valuable benefits of Oracle ERP implementation that enables businesses to fulfill their objectives revolving around increasing business productivity, reducing manual data entry processes and chances of human error. Moreover, all employees can access and edit this data while working remotely from their handheld devices.

Second most important advantage is the direct access to real-time data and it is one of the most essential resource for any business. If the data is collected, stored and managed on a single tool, it can be used efficiently to make better business decisions.

Let’s discuss this in detail. 

What is a cloud based ERP system?

A cloud based ERP is one step ahead of an on-premise system due to apt use of technology. All the servers are located in a single place which helps businesses. What do you think when you hear the term ERP? ERP is a type of a Software as a Service model. SaaS model is commonly used for a cloud-based ERP by most people, which is not entirely inaccurate.

 

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Let us discuss the pros and cons of the Cloud-ERP system.

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Pros of Cloud-ERP System

Some of the benefits of a Cloud-ERP system include:

  • It is easier to maintain and the “pay-as-you-go” model helps businesses to reduce their overhead costs and pay only for the services that are used.
  • Teams have quick access to edit all integral data from remote locations from any handheld device.
  • Cloud ERPs are perfect for growth and scalability.

Cons of Cloud-ERP System

It is hard to find any major disadvantages with the Cloud-ERP system but the cons are:

  • Total dependency and need for internet connection which can be an issue for businesses.
  • Cloud ERP systems do not provide a lot of tailor made options and hence it can be inconvenient for businesses and can pose certain challenges.

What is on-premise ERP?

The on-premise ERP system is deployed on computers on a business’s premises and is handled by their internal IT team. An on-premise ERP might require high-powered servers, operating systems, or database software which you need to purchase. On top of that, you will have to hire a dedicated IT team to manage the software and hardware, but in return, you will have full control on the system along with the updates and security.

Irrespective of the rising prominence of Cloud-ERP systems in the last couple of years, on-premises solutions are still giving a tough fight. As per 2021 reports, on-premises ERP systems still have 46.9% market share which took a major hit since the last report came out in 2017.

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Pros of On-Premise ERP

  • One of the major advantages of on-premise ERP is that your business has full control on the system and is not vendor dependent. It is possible to arrange updates, backups, or security checks when required and important for your business. There will be enough time to organize maintenance processes, resulting in almost nil workflow disruptions and saving your business time and money. Moreover, you do not need to seek permission from a vendor before making updates to the system. On-premise ERP can accommodate custom features and meet your business requirements.
  • Data security is the sole reason why organizations prefer an on-premise ERP. By installing your ERP on-premises, it is easy to protect your crucial data which can be stored on premise for internal access. There will be complete control on the backup system and you would not need high-speed internet connectivity to access your data. Businesses from specific industries would prefer on-premise ERP due to security concerns. These businesses would typically not prefer the cloud. It is extremely important for them to have control on their data and hence an on-premise ERP or hybrid deployment works well for them.

Cons of On-Premise ERP

It is evident that there are more cons than pros for On-premise ERPs like:

  • On-premise ERP systems might lose business critical data during failures or glitches as they are located in-house. So, if on-premise ERPs do not take period backups, a business is at risk of losing data completely or to put other crucial business processes on hold while they manage to recover the data.
  • Hardware maintenance is a complicated and overwhelming task. It is important to make sure server rooms are prepared for any incident which may occur. You will need to ensure that your hardware is always updated and purchase new hardware when required. A full server and required rack-mount hardware is expensive to purchase and maintain.
  • It is also important that you have a proper cooling system so the hardware doesn’t get damaged due to heat. Additionally, you will need to make sure you possess backups for unforeseen situations when you lose power and will have to invest heavily in generators which can provide uninterruptible power supply.
  • It is crucial to follow strict guidelines and follow fire protection activities for your server rooms and hardware. Enterprises deploy special systems to stop fires. These steps are crucial to make sure the correct working of your hardware and software which makes on-premise ERP extremely expensive.

Conclusion : Which ERP system is the right choice for your organization?

The right ERP system has the ability to enhance your business processes and productivity by reducing overhead costs. So, it is best to analyze all the available ERPs in the market, discuss with your internal teams and choose the best option. In the above blog, we have tried to include on-premise as well as Cloud ERP along with the pros and cons. According to popular opinion, it is best to go with an on-premise ERP if you are a large enterprise and have the resources to manage the ERP system internally. In any other case, it is best to go with a Cloud based ERP.

If you are looking for better custom options along with remote handling and accessibility, it is best to choose a Cloud based ERP. We have been advising our customers to choose Cloud based ERP and have been getting amazing feedback from more than 80 percent of the people.

Are you looking for an ERP partner? At Conneqtion Group, we can provide end to end cloud solutions including but not limited to entire business analysis, enterprise integration, custom development and more. Our team of certified Oracle developers will work with you to choose the right ERP solution for your business. 

For more updates on what we do at Conneqtion Group, follow us on LinkedIn.

Author avatar

Karan Tulsani

Karan works as the Delivery Head at Conneqtion Group, a Oracle iPaaS and Process Automation company. He has an extensive experience with various Banking and financial services, FMCG, Supply chain management & public sector clients. He has also led/been part of teams in multitude of consulting engagements. He was part of Evosys and Oracle's consulting team previously and worked for clients in NA, EMEA & APAC region.

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