While taking your business to an online ecosystem, you are always required to make a decision to implement the Enterprise Resource Planning software to effectively manage your business operations and keep all the things on the same page.
The ERP implementation in your online store will help you to make smarter business decisions, improve collaboration, and streamline processes. You can achieve higher efficiency in inventory management, project management, and manufacturing – all with a single system. ERP will act as a single source for your entire business line.
However, the most critical step is to identify what kind of ERP would be right for your online business. One of the major considerations here is how you want your solution to be implemented:
1. On-premise: The traditional method i.e. on-site installation.
2. In the cloud: The SaaS (Software-as-a-Service) model which is gaining high popularity among manufacturers.
There are a lot of factors which will help you decide the implementation method along with what will work best for your company. You should ask yourself questions like How large is the IT department of the company? How much you can spend upfront? Or, over time with monthly or annual fee structures?
Definitely, you may not have answers to these questions as of now. But after reading this blog, you will get all the information to help you decide what would be best for your business requirements. We will go through various aspects including the pros and cons of each implementation which will help you make the right decision. Let’s start with understanding each approach.
What is Cloud ERP Data Management?
In the last few years, “in the cloud” has become a common phrase in the IT ecosystem. The data in the Cloud ERP data management system is hosted remotely in an environment managed by your vendor so that you don’t have to manage any hardware or software at your premises.
In the Cloud ERP model, you are not required to face the hassle of buying expensive hardware or hiring a full-time staff to manage those servers. Instead, you can access the cloud-hosted ERP solution using the internet and use it from there. Regarding the issues of data management, you will find vendors offering either shared or dedicated hosting. In the dedicated hosting, the entire infrastructure will be solely yours while in the shared hosting it will be used by several clients. But as you can expect, the performance and peace of mind that comes with dedicated hosting is unmatchable, however comes at an extra cost.
Pricing:
The upfront costs associated with the Cloud ERP implementation are much less than on-premise alternatives, in which you have to pay the hardware prices upfront. Thus there is less risk associated and if you don’t like this approach down the line, you have the flexibility to discontinue it. But you should be aware of the fact that the recurring costs for the time duration you use the cloud software will result in more costs vis-à-vis on-premises setup.
On-Premise ERP Data Management:
With the conventional on-premise deployment approach, you can buy the ERP program and manage the required hardware at your premises. You would be responsible for all the management, maintenance, and upgrades. Since you are in control of your own database and software solution, the question of data security or access rights doesn’t even arise.
Pricing:
As we mentioned above, the on-premise ERP have a much higher upfront cost than its counterpart Cloud ERP. However, licenses and implementation are a one-time fee, while the maintenance and upgrade may incur some small overhead costs. The on-premise deployment is a long-term investment that requires strong planning and envision.
You will stick to a single solution and pay less to the vendor than a cloud implementation. But you should consider the fact that it offers less flexibility if you require more data storage or performance.
Cloud vs On-Prem Model, Pros and Cons
Both of these approaches will offer certain Pros and Cons, after weighing which, you can get a better idea of what will fit your business.
Pros and Cons of Cloud ERP Software:
Cloud ERP software has become a common practice in most businesses, particularly the manufacturing industry. It offers a plethora of benefits but to ensure that it is right for your business, you should also consider the cons. So, let’s dive in.
Cloud ERP Pros:
– Less IT Requirements:
You don’t need to have a server or other IT infrastructure with a cloud ERP. You also don’t require a dedicated staff to manage it. Thus, you save both time and money.
– Lower Initial Costs:
In SaaS, you are not burdened with a heavy upfront cost, instead, you pay a smaller amount but recurringly as a monthly fee. That way you don’t get the ownership, but you also don’t need to take any responsibility as your ERP provider will do all.
– Quicker Deployment:
With a cloud ERP system, you are not required to purchase and install additional hardware. Therefore, a faster, more straightforward, and more efficient approach significantly cuts down on the amount of time needed to get “up and running.”
– Better Scalability and Agility:
If there is any peak in the traffic or data, it is easy for a SaaS provider to quickly and easily make capacity adjustments.
– Faster ROI:
The ROI is achievable in a shorter period of time due to cheaper upfront expenses and faster deployment.
Cloud ERP Cons:
– Less Control:
As the software is hosted on the cloud, the vendor is responsible for the security and reliability. If there are any breakdowns or errors, you are at the mercy of your provider if something happens.
– Higher long-term costs:
If you are considering using Cloud ERP for a longer duration, the total you will pay as monthly fees will surpass the cost to purchase the system outright.
Pros and Cons of On-Premise ERP Deployment:
Just like Cloud ERP, the On-premise ERP deployment also offers multiple pros and cons. Let’s know about them:
Pros:
– Higher control over data:
As you are hosting the ERP on your server, you have complete control over it. Hosting your ERP on-premise allows your company to have complete control over all of the data that is stored there, as well as the security measures required to access it.
– Less Vendor Dependency:
You have all the flexibility of operation, updates, and customizations, thus you don’t need to rely much on your vendor.
– More security:
There are very less risks associated with any data threat with on-premise ERP software deployment. You can manage the access of the data and the overall infrastructure.
– One-time-cost:
There is only a single-time cost that you are required to pay for initial hardware and software installation. After a time, you also achieve the ROI associated with that cost.
On-premise ERP Cons:
– Higher Upfront Cost:
The upfront cost associated with on-premise ERP is quite high which requires prolonged time to get recover through ROI.
– Eventual Outdated Software:
After a certain period of time, you will be required to update your ERP software to meet the newer requirements which is not easy with an on-premise solution.
Conclusion:
As we observed, the Cloud-ERP solution is best when you have to change capacity requirements, demand for newer technologies, and want to pay less upfront costs while the on-premise ERP will work when there is a need for a stable solution with high data security. At Ebizneeds, we can provide you with the services of ERP installation of either type. Let us know your requirements.
