Cloud ERP vs. On-Premises ERP – Total Cost of Ownership
Cloud ERP
Usually, you have to pay a subscription fee to start using a cloud ERP system, along with additional fees for training and support. The investment is cheaper up-front because the software vendor manages all the server costs, maintenance issues, and software updates.
However, according to the article, Cloud Vs On Premise Software: Which is Best For Your Business? by Xperience Group, cloud applications can be more costly, over the course of the system’s life cycle, increasing the total cost of ownership.
Also, per the article, Cloud ERP vs. On-Premise ERP, on softwareadvice.com over a 10-year period costs for on-premises and cloud-based ERP systems tend to converge.
Source: Softwareadvice.com
On-Premises ERP
An on-premises ERP solution is usually license based and also includes a fee for the number of users that will be using the software. You’ll also need a server and other appropriate hardware to install the software locally.
Additionally, unlike a cloud-based system, you need an internal IT team to manage the software, which adds to the total cost of ownership for running the system.
Scalability
Cloud ERP
Scalability is one of the major advantages of cloud-based platforms.
According to the article about Cloud ERP vs On-Premises ERP software on Xperiencegroup, “cloud technologies provide greater flexibility as you only pay for what you use and can easily scale to meet demand, for example adding and scaling back licenses.”
On-Premises ERP
Scalability may be an issue with On-premises systems due to the limitations of your existing hardware configuration. You may have to purchase additional hardware to scale the functionality of your ERP system.
Next Steps
As you can see, there are several factors you need to consider prior to finalizing on the ERP system that is right for your business. Cloud systems are becoming more mainstream and are a great choice for many businesses. However, that isn’t always the case and it really depends on your unique business needs and requirements.
If you would like assistance in choosing the right ERP system for your business, contact CTO Associates for a complimentary ERP system consultation.
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About CTO Associates
Whether you’re looking to restructure your accounting operations, resolve inventory issues, quit using MS Excel spreadsheets for reporting; or find a replacement for your old accounting system, we’d love to talk with you.
Our team has combined experience of over fifty years in a wide variety of industries. We have a CPA, a senior financial consultant with a background in international operations and financial analysis, and experienced bookkeepers and consultants to assist your growing business.
At CTO Associates, we provide accounting and manufacturing software solutions to manufacturing, distribution, and service businesses. We have clients in MA, CT, NY, and across the US. We look forward to connecting with you soon.
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