SaaS ERP & Cloud ERP Vs On-premise ERP – Pros and Cons

The smoother the process, the better the business productivity! In short, the purpose of Enterprise Resource Planning (ERP) is pretty much the same! Technically, it is a type of software that makes the business process smoother by managing day to day business activities like accounting, procurement, risk management and compliance and helping in budget planning, profit and loss prediction, financial reports and more. ERP systems have the ability to tie multiple business processes together and enable the data flow between them. This is why every business needs an ERP system to this day.      

Today, ERP systems have been widely evaluated. Now, organizations have more choices to opt for more advanced ERP solutions and get benefited. So, when it comes to various ERP systems, SaaS ERP & Cloud ERP and On-Premise ERP are the most opted ERP systems these days. But as you need only one for your business, you would like to put these three on a comparative scale.

SaaS ERP & Cloud ERP Vs On-premise ERP

There is a multitude of differences in these systems, each has its own benefits and risks. SaaS (Software as a Service) ERP and cloud ERP are service-based ERP systems, hosted remotely on the cloud. Both run on a multi-tenant SaaS architecture. Cloud-based SaaS ERP systems are flexible, customizable, and economical.

The cloud ERP and cloud-based SaaS ERP systems are remotely operated by third-party service providers. So, it doesn’t require installation, updates, or maintenance, thus saving your additional cost. For both, you just need to pay subscription fees to your service provider, and henceforth, you and your employees can access and interact with the SaaS applications on the web using any device.

SaaS ERP and cloud ERP are widely popular among organizations, and the main reason for this is their scalability benefits.  With SaaS ERP, the ERP spend can be adjusted according to the business need. It can be scaled up and down. The changes too can be implemented easily and quickly. SaaS ERP also helps in administration and its service provider is fully responsible for its security and safety. Thus, SaaS ERP helps organizations spend more time on core business activities rather than wasting time on troubleshooting IT problems.

On the other hand, On-premise ERP systems are designed to meet your business requirement. But it is complex as it needs to be installed locally on the company’s hardware and servers, therefore needs a whole IT Team to install, manage, and update the system. That means, companies need to bear all expenses to set up their On-premise ERP system including expenses of data backup and server support.

Further, an On-premise ERP system requires an efficient infrastructure and if it is not maintained well, it won’t be as efficient as Cloud and SaaS ERP systems. It is a hardware infrastructure that often requires maintenance, and this takes so much valuable time of the internal IT team.

However, On-premise ERP solutions minimize the business and security risks where the SaaS concept fails to do so. SaaS ERP is like a nervous system of an organization which is reined by a third party. For this reason, many companies don’t rely on SaaS when it has critical data to deliver and more confidential information to store.

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