Cloud vs On-Premises ERP Solutions - Which is Best for You?

Not sure whether a cloud or an on-premises ERP solution is best for you? Use this table to help you decide...or give us a call.

Attribute

Cloud ERP Solutions

On-Premises ERP Solutions 

Company Profile Want efficient, scalable solution with robust capabilities "out-of-the-box", but with ability to scale. Anywhere, anytime permission-based access without IT infrastructure investment. Want complete control over IT resources and have the means to do so; sophisticated requirements requiring customization for business processes
Application Design and User Interface Designed for Web technology interface, with typical user-friendly features for Internet usage. Usually supported in most/all major brower choices. Designed for multi-tenant architecture specifically for web delivery. Client-server based applications designed for speedy processing over local area networks using commonly available PC-based OS and user interfaces such as Microsoft Windows 7 and industry-standard reporting tools such as Crystal Reports
Application Development Developed from the ground up for online delivery Developed from the ground up for client-server network topologies and Windows-based graphical user interfaces
Application Deployment A single vendor both develops and operates the applications - delivered via the Internet Applications deployed locally on client owned and maintained IT infrastructure
Customization Highly customizable and does not break with application upgrades May be completely tailored to a specific client's business processes to even the source code level
Software Customization Built in a method that is very "configuration oriented," generally configurable by an implementation-trained system user, but not requiring programming customization skills (see Integration below) Source code and object-oriented architecture lend to easy integration with other similarly-architected solutions.  Robust community of experienced development companies can complete and maintain sophisticated links to mission-critical business applications or data sources.
Implementation Generally shorter implementation timeframes (1-2 months). Varies greatly by project. Potential for specific business adaptation may lend itself to implementation times of 2 to 4 months.  Varies greatly by project.
Integration Readily available via application programming interfaces (APIs) using connectors that are either generic or built for specific need. May require programming customization skills in some areas, but many are "pre-built" for popular applications Mature development languages provide seasoned developers with a portfolio of software objects, Office software scripting tools, and database connectors for robust, deep and responsive integrations.  Links to other programs may affect planning for subsequent upgrades as publishers release newer versions of any of the connected applications.
Multi-Tenancy Applications are designed to be multi-tenant Applications support one client per instance
Accountability One vendor provides end-to-end solution so accountability is inherent Value-added software resellers, software publishers, and infrastructure integrators team up to provide a high level of expertise and service
OS Requirements Delivered via Web browser or mobile device;  generally operating system and browser agnostic Application publishers maintain a comprehensive list of operating system requirements and provide support for mainstream OS upgrades as released
Hardware/ Infrastructure Investment A reliable Internet connection  Unless hosted and deployed by the publisher or another hosting provider, the licensee may use existing network and workstation components to run on-premise applications
IT Support Generally included in the package from vendor Generally provided by customer personnel or contractors
Upgrades Generally monthly or even more frequently Upgrade cycles frequently span from 12 to 18 months
Remote Locations Delivery is via internet web browser without requirement for IT infrastructure. Multiple sites or many geographic locations are easily served without need to build or support remote access network. Remote users access applications and data over the Internet or private networks using terminal server or other remote access technology
Software Investment Delivered via License fee or subscription allowing the client use of the software. Fee/license includes use of software, infrastructure, vendor support, back-ups, security, and software upgrades. Choice between perpetual license fees or subscription license plans.  Perpetual licensees keep technology current through publishers' software maintenance offerings, which are typically priced at 20% to 25% of the retail price of the license.  License subscribers, on the other hand, receive all updates included in the subscription fee.
Initial Costs Subscription Fee, Customization, Implementation, Training; acquire user nodes Software licenses or subscription fees, customization, implementation, training, server and workstation hardware and software, and other mission critical infrastructure components including backup and power systems as well as personnel or consultants to configure and maintain the same
Recurring Costs Subscription Fee, application training and support Annual software maintenance subscription fees or annual software license subscription fees, application training or support, software upgrade installation and support, customization upgrades when necessary, and network infrastructure maintenance and support
Initial Services Investment Implementation services tend to be less than on-premise solutions since installation, infrastructure prep, and some configuration are completed by the SaaS vendor Implementation services generally cost $1 to $2 for every dollar of software license fees
Ongoing Services Investment Business process improvements as necessary Software and customization upgrade installation cycles generally occur every 12 to 18 months, business process improvements as necessary
Infrastructure and Security None or very limited internal IT resource. Vendor is typically partnered with Fortune 100-class data center providers that provide backbone; backup/recovery systems, redundancy (included in subscription service due to ability to scale and requirement to focus on this requirement; costs spread across all multi-tenant users)  Unless hosted by the publisher or a data center, the licensee's personnel or consultants support and maintain network infrastructure, security and fault tolerance
Upgrade cost and risk Vendor responsible; no downtime Client and channel partner work together to minimize cost and risk of downtime 
Upgrade timing and availability Continuous - major release quarterly Generally occurs every 12 to 18 months
Hardware infrastructure risk Vendor responsible; no downtime due to redundancy Unless hosted by the publisher or a data center, client maintains responsibility for hardware infrastructure
Accountability "Pay as you go" model so vendor is regularly accountable to client to ensure renewal subscription  Publisher provides additional value through regular software maintenance and updates to maintain high software maintenance subscription renewal rates
Service Level Agreement With cloud computing, there is reliance on vendor for continuation of service, so due diligence is necessary along with formal SLA requirement and published system availability status Unless hosted by the publisher or a data center, client maintains responsibility for hardware infrastructure
CapEx vs OpEx The subscription model converts traditional technology capital expenses into an operational expense, which can be positive for maximum cash flow flexibility Software license fees and associated hardware are capital expenses subject to favorable cost recovery tax treatment.  Software subscription fees are operating expenses