Δημοσιεύθηκε:
Feb, 2024
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ERP (Enterprise Resource Planning) systems are software applications that integrate various business functions such as accounting, inventory management, human resources, customer relationship management and others. By using ERP systems, you can streamline your business processes, improve efficiency and reduce costs.

To arrive at an alternative, you need to weigh up several parameters (cost, customisation options, interconnectivity and so on). In this article we will look at ERP solutions from the perspective of how they work and how they are installed. In this context there are 2 main categories on-premise and cloud-based.

On-premise ERP systems (in-house) are installed locally on a company’s computers and servers, while cloud-based ERP systems are hosted on vendor servers and offer access via a browser.

Depending on your business needs or preferences you will find advantages and disadvantages in each category. We will try to make a comparison by looking at 6 different areas:

  • Deployment and Investment: one of the biggest differences between in-house ERP systems and cloud-based ERP systems is the way they are deployed and costed. In-house ERP systems require a large initial investment in hardware, software licenses, installation and customization. They also involve ongoing costs for maintenance, upgrades, support and security. In-house ERP systems are generally considered as a capital expenditure (a large upfront investment).
    Cloud-based ERP systems have lower start-up costs as they do not require hardware or software purchases. They are priced below monthly or annual subscription based on the number of users or functions used. They also include maintenance, upgrades, support and security as part of the subscription.
  • Security: a factor that is one of the main concerns for prospective buyers as they store critical information such as company financials, employee data and customer lists in their ERP system.
    On-premise ERPs offer more control over security, as they are managed by the company’s IT staff who can implement their own security policies and protocols. They also have less exposure to external threats such as cyber-attacks or data breaches.
    Cloud-based ERP relies on the vendor’s security measures, which can vary in quality and compliance standards. They also have more exposure to external threats as they are visible on the internet and share servers with other customers. However, cloud ERP vendors typically invest heavily in security technologies such as encryption, firewalls and backup systems to protect customer data.
  • Customization: Customization refers to how well an ERP system can be adapted to fit the specific needs or preferences of each business.
    In-house installations offer more customisation options, as they allow companies to modify their source code, add custom features, integrate with third-party applications or hire consultants to create customised solutions.
    Cloud solutions offer fewer customization options, as they limit enterprises to predefined configurations, features and integrations offered by the vendor. Some cloud ERP may allow some degree of customization via APIs, but this may require additional fees or technical expertise.
  • Maintenance: How much effort and resources are required to keep an ERP system up to date and guarantee smooth operation?
    Eon-premise ERPs require more maintenance, as they involve managing hardware, software, networking, security and support issues by the company’s IT staff or outsourced partners. They also require periodic upgrades and code updates that can disrupt business operations or cause compatibility issues.
    Cloud ERPs require less maintenance as they are managed by the vendor who takes care of hardware, software, networking, security and support issues on behalf of their customers. They also offer automatic upgrades and code updates that are seamless and transparent to users.
  • Reliability: Reliability refers to how consistently an ERP system performs its functions without errors or failures.
    On-premise ERPs have lower reliability as they depend on the company’s own IT infrastructure which can be prone to power outages, hardware failures, software bugs or human error. They also require regular backups and disaster recovery plans to prevent data loss or destruction.
    Cloud-based ERPs have higher reliability as they leverage the vendor’s cloud infrastructure, which is designed to provide high availability, redundancy and fault tolerance. They also offer automatic backups and disaster recovery options to ensure data integrity and continuity.