On-premise ERP systems usually require large upfront and ongoing investments to purchase and manage the software and the related servers, database licences and facilities necessary to run it. If your company doesn’t have a large or experienced IT staff, you may also have to invest more time and money in additional personnel and train them.
Even more importantly, on-premise systems require that your IT team spend a significant amount of their time and budgets ensuring your system is up-and-running when you need it, including maintenance of hardware, server rooms, and more.
When it’s time for your on premise ERP system to be upgraded, you must then redeploy the system across the various users’ computers and re-implement various customisations and integrations that your business installed on your previous software. This all means cost and upheaval.
For cloud-based ERP, initial costs are typically much lower because you simply implement the software to your requirements and then access it through a browser device be it a laptop, tablet etc. The cloud ERP provider hosts and maintains all the IT infrastructure for you, ensures the system is always running, that the data is secure, and that product enhancements are rolled out painlessly to your solution without breaking your previously implemented customisations.
Ultimately, this all allows your IT resources to focus on innovating and helping grow the business more effectively, rather than spending a disproportionate amount of their time on maintaining and managing your on-premise systems. Cloud ERP also offers a predictable, pay-as-you-go subscription model that can make cash flow management and planning much easier.
Over time, those IT savings add up. When comparing the total cost of ownership of on-premise ERP solutions relative to cloud systems, one industry analyst study found that cloud-based ERP can cost 50 percent less than on-site ERP for a 100-employee company over a four-year period.