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ERP On Premise vs Cloud?
By Nick Spooner
CEO at Salesorder.com | Software and expertise for wholesaler optimization
Enterprise Resource Planning (ERP) software has become an essential tool for wholesalers to streamline operations, make data-driven decisions, and increase efficiency.
ERP software integrates various core business processes into a single system. These processes include finance, inventory, human resources, supply chain, and customer relationship management. ERP software provides a unified view of a wholesaler’s operations, allowing for greater visibility and control over business processes.
Wholesalers have the choice between an on-premise ERP or cloud ERP. While on-premise ERP has been the traditional choice, cloud ERP has emerged as a new option that offers businesses greater accessibility and cost-effectiveness. The choice between ERP on-premise vs cloud ultimately depends on the specific needs and budget of the wholesaler.
In this blog, we discuss the difference between cloud-based vs on-premise ERP software. We highlight the advantages of each and the associated costs to assist you to make the best ERP software choice for your business needs.
What is the Difference Between On-premise ERP and Cloud ERP?
The primary difference between ERP on-premise vs cloud is where the software is hosted. Where the software is hosted also results in differences between the level of control and responsibility that the company has over the software.
We have outlined the differences between cloud vs on-premise ERP:
What is On-premise ERP?
On-premise ERP software is installed and hosted on the company’s servers and hardware. The company can configure the software to work with its existing systems and processes to ensure seamless integration.
With in-house ERP software, the business has complete control over the software, including security and data access. With this control comes a responsibility to maintain and update the software.
What is Cloud ERP?
Cloud ERP software, also referred to as Software-as-a-Service (SaaS), is hosted on the vendor’s servers and accessed by the business through the internet.
With a cloud-based ERP, it is the vendor’s responsibility to maintain and update the software. Depending on the vendor, the company may have less control over the software. The business will also be affected if the vendor experiences issues with their servers.
Advantages of Using a Cloud ERP
Cloud ERP has become an increasingly popular option for businesses of all sizes due to its numerous advantages.
Here are some of the key advantages of using cloud-based ERP vs on-premise ERP:
One of the biggest advantages of cloud ERP is that it is subscription-based, which means that businesses pay a monthly or annual fee to use the software. This is often more cost-effective than traditional on-premise ERP systems that require a large upfront investment in hardware and software.
For smaller businesses and start-ups that may not have the capital to invest in hardware and software, cloud ERP is an attractive option as it allows them to access the software for a lower cost. For larger businesses that have more resources, cloud ERP is still a cost-effective option.
Cloud ERP can be easily accessed from anywhere with an internet connection. This is especially beneficial for businesses with remote employees. Cloud ERP software allows employees to access the system from their laptops or smartphones, which increases productivity for the wholesaler business.
With the importance of ERP management, easy accessibility is also advantageous for wholesalers with multiple business premises. Cloud ERP software allows quick and easy collaboration and the sharing of information across different departments and locations.
Cloud ERP can easily scale up or down as businesses grow or change. Since the software is hosted by the vendor and accessed through the internet, businesses do not need to worry about upgrading their hardware or software to accommodate their changes in operations. This also means that businesses can quickly add or remove users as needed without having to purchase new hardware or software.
Easy and Flexible Implementation
Cloud ERP is generally easier and faster to implement than traditional on-premise ERP systems. Since the software is already installed and hosted by the vendor, businesses can quickly get up and running without the need for extensive IT resources. The vendor takes care of all the setup and configuration, which means that businesses can focus on using the software to improve their operations.
Cloud ERP also offers a more flexible ERP integration than on-premise ERP. Businesses can start with a small implementation and gradually expand as needed, without having to worry about the upfront costs associated with on-premise ERP.
Automatic Updates and Maintenance
With cloud ERP, the vendor is responsible for maintaining and updating the software. Vendors have dedicated teams that ensure the software is updated regularly with the latest security patches and features. This means that businesses can rely on the vendor to take care of all software updates and maintenance tasks, freeing up time and resources for other important tasks.
Another advantage of cloud ERP is that businesses can benefit from the latest technologies and updates without having to worry about implementing them. Vendors often roll out new features and updates automatically, which means that businesses always have access to the latest and greatest version of the software.
Cloud ERP vendors invest heavily in security measures to protect their customers’ data. These security measures include encryption, firewalls, access controls, and multi-factor authentication. By investing in these security measures, cloud ERP vendors provide businesses with a level of security that would be difficult and costly to achieve with on-premise ERP.
Advantages of Using an On-premise ERP
While cloud ERP has become the first-choice ERP software for wholesalers, on-premise ERP still has advantages that make it a viable option for businesses.
Here are some of the key advantages of using ERP on-premise vs cloud:
On-premise ERP offers businesses a high degree of customization, allowing them to fully tailor the software to their specific needs. This is particularly beneficial for businesses with complex workflows or unique processes, as they can adapt the software to match their requirements. This level of customization can increase efficiency and productivity but will require dedicated IT resources.
With on-premise ERP, businesses have more control over the software itself. Since the software is installed on their servers and hardware, businesses have complete control over their data and can manage their servers, backups, and security protocols. This can give businesses greater peace of mind, as they are not relying on a third-party vendor to manage their data.
No Recurring Costs
As on-premise ERP is a one-time purchase, businesses don’t have to worry about recurring costs or subscription fees. While the initial upfront costs can be high, businesses can save money over the long term by not having to pay monthly or annual fees. This can be particularly beneficial for businesses that have a limited budget or do not want to be tied to ongoing costs.
However, on-premise ERP will require IT resources to manage the software and ensure that it is running smoothly, which will have an associated cost.
Prices for On-premise & Cloud ERP
Pricing is a key difference between ERP on-premise vs cloud that can affect which ERP you choose for your business.
We take a look at the associated costs:
Cloud-based ERP Software Price
Cloud ERP software is considered an operating expenditure as it typically has a monthly or annual fee to use the software. This fee can vary depending on the vendor and the features included in the software.
On-premise ERP Software Price
On-premise ERP software is usually a one-time purchase. On-premise ERP software is considered a capital expenditure as the company will need to invest in both the software and necessary hardware, which can be a significant upfront cost. There are also ongoing costs as the company will be responsible for maintaining and updating the software.
Salesorder Can Help Your Business Save Time with Our ERP
Salesorder ERP software is a cloud-based system designed to save time and increase efficiency for wholesalers.
From sales to fulfillment to accounting to reporting, our cloud ERP integrates all business processes into a centralized system. This unified system enables businesses to streamline their operations and save time. Our software is easy to learn and implement, allowing you to start benefiting quickly.
As a cloud-based system, you have access to all your data at any time and in any way. This easy accessibility ensures you can always make decisions for your business based on real-time data.
Our cloud ERP software is the solution for wholesalers of all sizes. As an affordable ERP software, we also offer free ongoing support to ensure you have easy access to our experts.
Talk with an expert to discover how our ERP software can streamline your wholesale operations and save your business time.
One of the biggest disadvantages of on-premise ERP is the cost associated with maintaining and updating the software. The company is responsible for purchasing its own hardware and maintaining the software, which can be expensive over time. On-premise ERP software is also typically less scalable than cloud ERP software, which can limit the growth of the business.
A disadvantage to cloud-based ERP vs on-premise ERP is that the company does not have complete control over the software. Since the software is hosted on the vendor’s servers, the company is dependent on the vendor for maintenance and updates. The monthly or annual fee for cloud ERP may also be a disadvantage for some businesses.