Technology | 6 Min Read

Cloud-Based vs. On-Premises ERP: Pros and Cons

Posted By
Chelsea Carter
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By now, most people are in agreement that an enterprise resource planning solution like NetSuite ERP is necessary for their organization. However, over the last few years a debate has emerged regarding exactly which type of ERP system will provide the best results. Do you want to keep everything in-house and maintain total control by way of an on-premises solution, or would a cloud-based ERP be better positioned to offer you what you need in terms of scalability, flexibility, versioning, pricing and security?

To be clear, this is not a decision that can be made lightly and there truly is no "one size fits all" approach to finding an ERP. Only by understanding the pros and cons of each system will you be able to make a choice regarding which is right for what you're trying to accomplish.

On-Premises ERP

By far the biggest advantage that an on-premises ERP solution brings to the table for small and mid-sized businesses in particular is one of control.

A lot of the data that your business is dealing with on a daily basis is highly sensitive in nature. This includes but is certainly not limited to things like employee social security numbers, accounting and expense information, supply chain management logistics data, and more. With an on-premises solution, everything is kept entirely in-house, which means that all of this sensitive data is relatively easier to keep away from prying eyes.

Likewise, an on-premises ERP solution allows you to enjoy less vendor dependency, meaning that you're not totally at the will of decisions being made by some of your technology partners. You can change different aspects of the system as needed, all without worrying about what your contract says or having to ask a third party for express permission to do so.

Cloud-Based ERP 

Business Intelligence

A cloud-based solution like NetSuite ERP, on the other hand, also brings with it a number of unique innovations that simply cannot be matched by an on-premises option.

Chief among those is business intelligence, something that allows you to rely on real-time data to better understand and improve the journey that your customers are going on. Inside all of that aforementioned data that your business is creating are the types of insights that you can use to improve your products and services, or make a better impact with your target audience. Not only is a cloud-based ERP your key to unlocking that intelligence, it also allows you to do so in real-time as well.

Scalability That is Second-to-None

Along the same lines, a cloud-based ERP solution will also bring with it a level of scalability that an on-premise solution simply cannot match. With an on-premises solution, if you want your ERP to continue to grow as your business does the same, you'll need to handle every aspect of this yourself. That means buying new hardware, performing upgrades, handling additional maintenance, adding new users, and more. Not only is it time-consuming, but it's inherently costly as well.

With a cloud-based solution, however, your ERP deployment will grow effortlessly because everything you need is delivered to you in an on-demand fashion. Even something like adding new users is as simple as picking up the phone and making a call to your partner.

You also don't have to worry about things like updates like you would with an on-premise solution, as new versioning automatically installs without any manual overhauls, ensuring that you're always using the most up-to-date software. This allows your own in-house people to focus on those tasks that really need them.

Flexibility to Spare

A cloud-based solution is also inherently flexible in the way that an on-premise option can never be. Because your system exists in the cloud, it can be accessed via any device with an active Internet connection from everywhere around the globe. This means that all of that data and those insights are available at any time, anywhere, from your computer, smartphone, or tablet.

Security in the Modern Era

Finally, we arrive at one of the most important topics of the modern era: security. Yes, it's true that it's technically easier to keep your ERP solution "secure" when you have total control over your on-premise environment. But keep in mind that the responsibility to follow best practices and implement the right cybersecurity steps falls squarely to you and you alone. This means that there's no such thing as a "small mistake" anymore and if your security is lax, you can expect to pay dearly for it.

With a cloud-based solution, however, security is accounted for because features like sophisticated encryption, data monitoring, and logging are all baked into the system’s very DNA. All of your security needs are built into the provider system, allowing you to rest easy at night knowing that nothing you're doing is going to fall into the wrong hands.

Picking the Right Solution

As mentioned before, there isn't a "one size fits all" choice to make, and you'll need to carefully consider what you're looking for in order to invest in the right ERP. Some organizations need the data control that only an on-premise solution can offer, and that's understandable. But for most businesses who need flexibility, security, and the ability to rapidly scale operations, it's clear that a cloud-based option like NetSuite ERP is the right way to go.

At ManoByte, we work with businesses of all types to help them accomplish their ERP implementation goals. If you're interested in a cloud-based ERP like NetSuite, it's an investment that is well worth making, and we're prepared to stand by your side every step of the way to help you extract as much value from your deployment as possible.

So if you'd like to continue the discussion of the pros and cons of cloud-based ERPs versus on-premises solutions, or if you just have any additional questions you'd like to discuss with someone in a bit more detail, please contact ManoByte today.

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Topics: Technology