The traditional model of ERP deployment is called “on-premise”, but it is no longer the only available option. You can also choose an “on-demand” cloud option for your enterprise resource planning (ERP) software. Both have their advantages and disadvantages, depending on the size, type and scope of your business.
In this traditional model, you pay for the infrastructure, the hardware, the operating system and underlying software (such as database servers), the ERP software itself, the maintenance and the support. It is up to you to keep all of it going on your servers and workstations, and it is up to you to decide when you want to pay for upgrades.
Benefits of On-Premise ERP
The benefits of the on-premise model are that you are able to pay for a lot of the expenses up front, if you have the capital expenditure to handle it. Your ongoing payments are limited to maintenance and support, as well as any infrastructure costs. For a large enterprise, those costs may not be an issue. Another benefit is total control over how your system is managed, when it is upgraded and how it is implemented.
This model generally refers to any number of cloud ERP subscription models, the most popular being software-as-a-service (SaaS). With on-demand, you often do not need any capital expenditure to pay up front. You instead pay a monthly fee, making it ideal if operational expenditure is all you have at your disposal, which is usually better for small and midsized businesses.
Benefits of On-Demand ERP
Some of the benefits for On-Demand include not having to pay for any infrastructure, hardware/software maintenance, tech support or any other IT expenses beyond the devices that connect to your ERP system. It is also very mobile, accessible from anywhere, and you do not have to worry about upgrades or new releases, since that is generally handled by the cloud service provider.
The Cloud also offers the opportunity for natural integration with other business systems that on-premise solutions do not. On-Demand ERP solutions like Microsoft Dynamics 365 and NetSuite also include additional business process functionality including CRM, BI, Apps, and Office capabilities within their licensing packages.
Choosing a means of deploying an ERP system is unique to each and every business. Based on our extensive experience successfully deploying and supporting ERP systems on-premises, in the cloud, and in hosted environments, we’ve developed a tool that can help you determine which option may be best for you and your organization. Answer 3 or 4 questions and get an instant recommendation here.
If cost is no concern and you want that total control, on-premise might be best for you. If you are concerned about cost, like most businesses today, and/or may not want to maintain your own infrastructure, on-demand ERP is an excellent option. If you are interested in exploring more about on-demand cloud services, request a Cloud Impact Assessment.
Originally published July 2015. Updated for relevancy in November 2016.