Key Security Differences Between On-Premises and Cloud ERP Solutions

June 30, 2021 | Data Security
cloud erp software

Wondering if you should move your ERP system to the cloud? Deciding whether the ERP system you choose should be cloud-based or on-premises depends largely on your business needs and security needs. On-premises ERP security is vastly different from cloud-based ERP security. Take a look at the following comparison before you decide which ERP system is best for your business.

About the Cloud

Cloud-based ERP security is a partnership between the ERP vendor and your business. Servers are kept off-site and monitored by the ERP vendor. Software licensing and upgrades are all maintained by your ERP provider as well. An on-premises ERP is kept completely on-site, meaning that the business purchases all physical equipment such as servers, software, and security tools.

With cloud-based ERP systems, security is monitored by your ERP vendor and includes 24-hour security for off-site servers, updates for software, and automated monitoring of both internal and external activities. Internal activities include role-based authorizations and monitoring for out-of-trend activities such as account logins from unauthorized areas. With on-premises ERP systems, all monitoring and updates are under complete control of the business, increasing the IT department’s responsibility.

Since a cloud-based ERP system is kept off-site, data is housed in a data center with constant 24-hour security. As more jobs become remote and move online, it can be helpful to have data already accessible online to streamline business processes. Security is a top priority, so firewalls and encryption methods enhance security and update the system automatically in a cloud-based ERP. This provides more protection to sensitive data by blocking malicious threats from outside the business. Cyberattackers looking to find personal information or to shut down manufacturing processes and disrupt a supply chain are blocked. This denial-of-service protection goes with employees as they move around using mobile devices.

Data can be distributed across multiple servers in several locations with cloud-based ERP, making it difficult for cybercriminals to pinpoint private information. A cloud-based firewall provides a layer of protection around assets by blocking malicious web traffic. In addition, a cloud-based ERP implementation automatically and consistently backs up data. If a catastrophe happens, immediate and complete recovery is possible.

Cloud-based ERP systems can also watch for fraud or asset misappropriation inside of the business. Specific controls quickly identify unauthorized employee reimbursements and violations of company policies.

About On-Premises

On-premises ERP security can keep your business just as secure as a cloud-based system, but it takes more effort since all of the responsibility of security falls on the company itself. With an on-premises ERP system, you can have dedicated staff familiar with your industry to manage the infrastructure once it’s up and running. Having an industry specialist available on-site is invaluable, and business information doesn’t need to be shared with outsiders. An on-premises ERP can also be easily customized to suit specific needs.

Another advantage is the protection from internet threats offered by on-premises ERP software. No internet connection is needed with an on-premises ERP system; it’s connected to the company’s local network, making it easier to observe company-approved, role-based credentials. However, extra measures such as VPNs need to be taken if the systems and data are accessed remotely. An inherent risk to this format is that the company is then reliant on its firewall. 

If you would like more information about cloud-based or on-premises ERP solutions, give our experienced team a call at 412-562-9660, or email

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