Implementing ERP: What Are the Differences Between Cloud-Based and On-Premises ERP?

Enterprise Resource Planning (ERP) software provide a suite of integrated applications that allow an organization to process data from its entire host of operations from inventory to orders, HR department to employees in the field, both B2C and B2B sectors, accounting, and more.

Put simply, ERP software can encompass every facet of a company’s data. Not surprisingly, one study showed ERP implementation led to business process improvement for 95 per cent of businesses.

When implementing ERP, companies have two major options to consider.

On-premise ERP

On-premise ERP software is installed and hosted locally on a company’s in-house computers and servers. Until recently with the onset of cloud computing, on-premise ERP was industry standard.

It’s usually a one-time perpetual license fee where companies make a large upfront investment followed by recurring fees for support, training, and potentially updates, depending on the software. Companies can also build their own custom on-premise ERP according to their needs.

Cloud-based ERP

Cloud-based ERP is hosted on a vendor’s servers and accessed online. Generally, cloud-based ERPs are priced monthly, so the initial costs are lower for smaller companies who don’t have the capital to invest in hardware like servers. One survey found that over 20 per cent of companies are using cloud-based ERP systems.

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