How does the cloud compare to on-premise ERP?

Global cloud expenditure is estimated at $40bn and is growing at a rate of more than 20% per year. With such intense growth, many IT teams are looking to migrate their traditional on-premise ERP solutions onto a cloud-based solution. But is cloud ERP as light and fluffy as it seems?

Due to the number of options available, selecting the right ERP system for your business can be a difficult decision. Traditional ERP solutions are locally installed on your servers and are maintained and managed through an in-house IT team. Comparatively, software-as-a-service or cloud-based ERP solutions are managed by a central team from an ERP vendor, allowing your business to subscribe to the software it needs and access it online. Furthermore, you may even opt for a hybrid model of both systems. To explain the differences further, here are some pros and cons of cloud as an ERP solution:

Advantages

  • Easier updates – compared to upgrading an on-premise ERP system, applications on the cloud are easier to update and offer you access to the latest features your software provider has to offer.
  • Future-proof enhancements – with the pace of enhancements to cloud applications exceeding that of on-premise applications, there is a concern that your business could be left behind if you decide to stick with your in-house system.
  • Faster implementation – once your data is on the cloud, updates are faster and can also be customised to suit your business processes. With faster deployment, your business can expand its ERP system across different divisions much quicker than it could deploy an on-premise system.
  • Flexible and secure – with ever-changing business requirements and security policies, using the latest technology can give your business more chance of staying flexible and secure.

Disadvantages

  • Limited product suites – user requirements vary so much that very few providers are able to offer the full suite of products that individual businesses might need. With more customisations now being offered as standard, your on-premise applications might actually offer you more options for customisation.
  • Potential cost – depending how much you want or need to commit to a cloud solution, it may not always be the most cost-effective option. If you trial the cloud in one part of your business but keep using your on-premise system for other parts, you are likely to end up running additional costs. As with any cost comparison, it is best to look at the long-term to work out where you can make savings.

Robin Miller, Oracle EBS specialist, summarises his view on how the cloud compares: “There is no one-size fits all ERP solution and your decision about which system to opt for should be based on what will benefit your business the most, rather than feeling forced to use the latest technology. Cost is clearly a big factor to consider but the value of a secure, customisable system which can deliver the full package of features your business needs cannot be overlooked.”

“The cloud is a concrete part of the digital landscape so sooner or later; businesses will have to start embracing it, if not as part of their preferred ERP solution, for their other IT requirements. Whatever system they opt for, businesses should start considering the in-house IT skills they will need now for the future, such as skilled, experienced Oracle cloud specialists.”

 

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