While moving to the cloud is right for many businesses, some businesses prefer to have their own servers managed on their premises.

What is the difference between cloud and on-premise ERP systems?

The main differences between having an ERP system in the cloud or on-premise are the way they are deployed and how they are charged for.

Cloud-based software is hosted online and is accessed easily from your computer or mobile device. You only pay for the computing resources that you need, and software may be licensed as Software-as-a-Service (SaaS).

On-premise systems are installed locally on physical computer hardware in your office. You purchase software licences and have more control over the system as you are not reliant on a consistent online connection to be able to work.

Cloud-based Systems

On-Premise Systems

Deployment – Hosted online and is accessed easily from anywhere on your computer or mobile device.Deployment -Installed locally on physical computer hardware in your office.
Pricing – Usually subscription-based pay as you go.
Lower upfront cost, but licences must be paid for monthly / annually to allow usage.
Pricing – One-time perpetual licence fee options.
Higher upfront cost but generally lower ongoing costs.
Security – Security is the responsibility of the vendor.Security – You are responsible for security.
Advantages of Cloud-based ERP systems include:

  • Fast and cheaper setup
  • Scalability
  • Enables remote working
  • Instant access
  • Data is always backed up
  • Consistency and control
  • Security
Advantages of On-premise Systems include:

  • Easier customisation
  • More control over the system
  • Wider integration options
  • You own the hardware
  • Less vendor dependency
  • Limited on-going costs

  • Less customisable.
  • Can be more expensive long-term.
  • Requires a reliable  internet access.
  • May be more difficult to integrate with other third-party systems in your business.

  • Higher upfront costs.
  • Requires long-term investment.
  • May need your own in-house IT expertise.
  • Remote access can be more difficult and requires security setup.

What factors should be considered when deciding between cloud and on-premise?

There are a number of factors to consider before making this decision including:

  • Ease of access
  • In-house IT expertise
  • Software licensing options
  • Capex versus ongoing costs
  • Integration with equipment and systems
  • Geographical location of data
  • Security stipulations
  • Requirements for customisation
  • Potential user growth

Cloud ERP systems are generally best-suited for small and midsize businesses who are looking for an easily accessible, stable system with a fast setup and lower upfront costs.

On-premise ERP systems are usually more suited to larger enterprises requiring a highly-customised system and have larger budgets with existing infrastructure to host, maintain, and secure data.

However as with all systems, the final decision depends on your own unique requirements. Contact our team of ERP experts who can help you determine which is the best option for your business.

On-premise and Cloud SAP ERP Systems from Teamsoft

At Teamsoft we offer two state-of-the-art ERP systems that can operate in the cloud or on-premise:

Which is right for you? Our ERP experts can discuss the options with you and help you decide which is best for your business.