ERP Selection: Making the Choice between On Premise and Cloud ERP

Selecting ERP software has always been an overwhelming process, and in recent years with the industry growing and more options becoming available on the market, it’s only gotten more complex. For example, with so many of the software publishers now offering cloud ERP options, businesses find themselves paralyzed when they have to face the big choice-deployment. If you’re currently evaluating whether to go with an on premise or cloud based solution, here are a few things to consider:

Critical Considerations – Premise vs. Cloud ERP

How big is your company? One of the largest benefits of Cloud ERP is a low total cost of ownership when compared to traditional deployment options. Minimal internal IT requirements and maintenance are other factors that speak specifically to the needs of small and medium sized businesses who want the power of ERP but not the cost or complexity. Larger companies, especially those with global operations usually opt for an on premise application or in some cases, will go with a hybrid approach.  That is not always the case though, learn how Chirch Global uses cloud ERP to manage their stamping business across multiple sites in the US and China here.

How large is your IT Staff? Managing and maintaining an ERP system is no walk in the park, not to mention that it is a mission-critical system for most companies. That is why most SMB’s look to the cloud and leave the heavy lifting to their software partner who handle all ongoing maintenance and upgrades to the system.  Smaller organizations with smaller IT departments, especially those who are not experienced with ERP installation and maintenance, tend to opt for Cloud ERP so their IT personnel can focus on more strategic tasks and will not be pulled away from day-to-day activities to handle ERP emergencies. For larger companies who have more IT resources and advanced knowledge of business systems, on premise ERP may be a better option if you are equipped to manage ongoing maintenance and other IT requirements.

Related Reading: The Pros and Cons of ERP in the Cloud

How much do you want to spend and when do you want to spend it? As mentioned above, cloud ERP offers a lower TCO and it also provides a predictable monthly subscription cost which can be very helpful for revenue planning and cash forecasting purposes. It is important to note though that the cost of cloud systems have been known to creep over time; something that can be avoided by careful selection and lots of research. Be sure to ask your potential cloud ERP vendor about the different ways your price could creep up so you know how to keep things within the budget you have set for your project.  On premise ERP means making a much larger up-front investment and things can be a bit more unpredictable with scope creep and other factors.

How much control do you need? The issue of data control and ownership is a hot topic in the debate between deployment methods. With an on premise system you have complete control over things like upgrade schedules and data; you own the software. In most cases with cloud systems the publisher is in control over when upgrades are done since you will not actually own the software. Further, unless you carefully investigate, you may not actually own your data if/when the times comes for you to change systems. This is a critical point to discuss with your potential vendor if you decide to go with a cloud ERP system- will you need to pay to export your data?

How fast do you need to get the system up and running? Utilizing cloud technology can help you get up and running on the system much faster than an on premise installation; roughly six to seven months faster.

Whether you end up going cloud or premise, always do your due diligence and become an informed buyer by asking lots of questions and doing a lot of research. The white paper below can help you explore additional areas to consider before you make your final choice.

e2b teknologies is a passionate and experienced team of industry leaders and business advisers providing high quality, uncomplicated, and innovative ERP and CRM software with turn-key ERP consulting and custom development services. We endeavor in every way to make the world a better place through our products and services while exceeding expectations in everything that we do – contact us today or follow us on twitter @e2bteknolgies to learn how we can help you succeed with your software project.

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