10Apr 2016

Benefits of cloud based erp system vs on premise counterparts
BYKunwar Jolly
1 Comment

In case you are considering to implement an ERP system across your company, the most important selection you have to make is whether to opt for a cloud based ERP system or an on-premise erp. Though cloud computing has gained a lot of traction in the past few years, most SMEs feel skeptical when it comes to choosing between both options. Here are a few benefits that you can reap from a cloud based ERP system and would help you reach the final conclusion.

1.Low Ownership cost:

On-premise ERPs usually require an initial investment in peripherals like servers, dedicated server rooms, power backup etc. In addition to that, you need to have an experienced IT staff to maintain the hardware and ensure that your system is up and running all the time, creating an ongoing cost center. Whereas in case of cloud based ERP systems, the initial investment is much lower as compared to its on-premise counterpart. The cloud ERP vendor hosts and maintains all the infrastructure required and you can access the ERP using a web browser with a simple internet connection. Generally, the initial cost includes the cost of customization to make the ERP platform ready for your business process and functions. Cloud ERP operates on pay as you go subscription model, that means it makes cash flow management and planning much easier as compared to in house implementation.

2.Ease in System Updates and Enhancements

In case of on premise systems, if your ERP vendor releases an update with new feature, your IT team must first re-deploy the older version on each user’s computer, and then install the newer version. And in case you had a customized software, your IT team has to customize the new version from scratch. Imagine the amount of effort and cost that would incur in this whole process. In fact, that’s the reason why most of the companies that are running an onsite ERP software avoid upgrading their systems and are forced to use out dated technology. On the other hand cloud based ERP are periodically updated by vendors and your initial customization and features are automatically carried forward with the update.

Tip: Before selecting an ERP know how frequently does the vendor update the system with latest features and add ons

3.Enhanced Security

Earlier, businesses avoid cloud based ERP systems, primarily due to security of their business data. They thought that moving their business data on cloud servers would make their confidential business information accessible to others. However, this myth has gradually faded over time. Even a tier 1 data center has many times better physical security than that in an office building or an internally operated server room. In order to keep a check on transmission security, a reliable ERP vendor would use encryption tools for communicating data between the user, server and database.

Tip: For utmost security, ask your ERP vendor to encrypt all the data before moving it to cloud.

4.Secure Backup of Business Data

Data is like lifeblood for an organization. The worst case that a business could experience, and probably cripple it is the loss of its data. Companies generate a mammoth amount of data every minute. According to a report by CISCO, 94% of business work stations are not backed up routinely and this is where cloud comes handy. Most cloud vendors backup their servers several times a day and provide a instance to their clients for offline storage. Under no chance you can lose your lifeblood if you are on cloud.

Tip: To ensure time backup, ask your ERP vendor for weekly backup reports.


Fluctuations are inherent to businesses. Cloud based ERP systems are flexible and scalable and therefore allow you to respond to changing business needs faster. You can add or remove users on demand as per your business needs by just paying off the monthly subscription fee for number of users. Had it been an on premise system, you would have to invest in additional servers and IT infrastructure to meet the demand of growing number of users. And it is needless to say that this investment would become futile during trough.

Since every business is different and has its own unique needs. You must take a well informed decision before you put your finger on any ERP system. If you considering to implement a cloud based ERP system or you want to know more, please contact us.