Cloud ERP vs. On-Premise ERP

January 29, 2018 | Modern Manufacturing Blog

Which is right for you?

Most major ERP software vendors now have solutions that are available in the Cloud, but what deployment option is best for your company?  While Cloud solutions offer many benefits over the traditional, on-premise applications, there are situations in which an on-premise deployment is a better option.  In any event, the decision to move key systems to the Cloud should be made as part of an overall strategy, in which goals and evaluation criteria are defined company-wide.

First, a few definitions:

On-Premise: Software that is installed on on-site servers (hardware and facilities owned by the user).

Hosted: Software installed off-site, but on equipment dedicated to the user.  In these instances, the user company likely has purchased the software, and may own the server, but has chosen to outsource the maintenance of the system.

SaaS: “Software as a Service” – This is the “Cloud,” and is an environment in which users pay fees (usually per user/month) to access software that is hosted off-site.

Single-Tenant: In a single-tenant SaaS environment, the software provider hosts the software for a user, but dedicates a copy of the software and server(s) to the user (similar to hosting).

Multi-Tenant: This term is used to describe the situation where multiple user companies are accessing the same copy of software.  Typically, this is the SaaS environment that is described by the term “Cloud.”  The multi-tenant approach can offer several advantages over a single-tenant SaaS deployment, because the provider can share infrastructure costs across many users. Multi-tenant SaaS systems can also be more flexible because users’ processing can be seamlessly reallocated to additional servers – to cope with disruptions or peak loads.

Consider the following 4 questions if your company is thinking of moving their ERP system, or any central business system, to the Cloud:

Are you able to take advantage of cost savings and standardization offered by Cloud applications?

There are two big reasons companies move to the Cloud.  The biggest is the cost savings that can be realized by greatly reducing the technology infrastructure being maintained locally.  You no longer need to maintain large servers and databases – or the staff necessary to manage upgrades, backups, and security.  Secondly, by moving applications to the Cloud, companies can more easily enforce standardization of application versions, setup, and customizations.  These can be huge advantages for companies large and small alike.  Benefits of Cloud applications will be more easily realized by companies with a well-defined Cloud strategy which, among other things, aligns the IT department goals and responsibilities with all other areas of the company.

Read Infor’s article Why Cloud Should be on the Boardroom Agenda for more detail and information on the cost savings some of our customers have experienced.

Do you have a small IT staff (or none at all)?

Companies with small, or non-existent, IT staffs may see a large and immediate benefit to embracing the Cloud.  Not only are your applications and data hosted off-site; but backups, upgrades, security, and system maintenance are taken care of as part of your subscription.

Conversely, companies with large IT staffs may find resistance to moving important functionality to the Cloud.  While a large IT staff does not mean that Cloud applications won’t work for your company, it may be a sign that other conditions exist making on-premise solutions a better option (see next point below).  However, keep in mind that there are many large companies that have seen huge benefits by adopting a Cloud strategy, specifically manufacturers looking at Cloud ERP software.

 Do you have complex systems and/or require highly customized processes?

Companies with multiple, integrated, business systems and highly customized processes may be more comfortable with an on-premise solution that their IT staff has complete control over.  While many Cloud solutions offer good options for creating personalized processes, customized reports, and new screens and forms – there will be some limits to what your developers will be able to customize.

If your company has a large IT staff and a culture that expects to be able to modify business systems whenever needed, on-premise may be a better option for you.  When evaluating Cloud solutions, ask specific questions about the process for creating and maintaining custom reports, fields, and processes.

Infor CloudSuite Industrial and CloudSuite Process allow users to create personalized screens, custom reports, and automated workflow events that are maintained throughout system upgrades – both in SaaS (Cloud) environments and on-premise installations.

Are you in a regulated industry?

Companies in regulated industries, such as medical device manufacturers, may find their regulatory burden greater if key systems are running in the Cloud.  While most Cloud solution providers deliver excellent security and system reliability (often better than what a company can provide themselves), on-premise solutions may be an easier option in highly regulated industries.  For these companies, a hosted solution may be the right choice if the desire is to move to an off-site installation.

For more information please contact us!

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