This is the third in a three-part blog series that addresses the differences between Cloud ERP and On-Premise ERP for manufacturers.

On-Premise ERP software was developed as a platform for managing a manufacturing enterprise on-site and under complete control of the business owner. These ERP systems are installed and run on your own servers or hardware at the place(s) where your products are manufactured. You own the software outright and have full responsibility for maintaining and updating it. You are also responsible for maintaining the reliability of the system’s infrastructure and data security.

Within the past decade, the percentage of manufacturers using Cloud ERP has overtaken those operating their businesses with On-Premise ERP. However, an On-Premise ERP system still offers many advantages, such as increased control and visibility over data and systems, better integration with existing or legacy systems, the ability to meet legal or regulatory requirements more easily, works regardless of your internet situation, and on-site data security.

This blog – the third in our series of three comparing Cloud ERP to On-Premise ERP – will outline the benefits that keep large numbers of manufacturers using the On-Premise ERP platform.

Why Manufacturers Choose On-Premise ERP

For most On-Premise ERP users, the driving factor is having total ownership and control over the ERP software and the IT infrastructure that connects people, processes and systems. After this comes a list of benefits company owners carefully review when evaluating ERP software. These range from size and type of the business to growth plans, working in highly regulated industries like defense, aerospace and government projects, and manufacturing products that require the utmost data security.

When you own the software you can:

  • Select the servers, computers and other hardware to run your ERP
  • Control when to update the software, upgrade your servers, and complete data backups
  • Manage, modify, and troubleshoot the system as you see fit
  • Customize the software to align with your company’s processes and workflows
  • Avoid annual Cloud ERP provider fees

This level of control provides a considerable advantage for businesses with specific operational needs or stringent compliance requirements. Other important benefits include:

  • Cost. Launching On-Premise ERP requires an upfront investment to acquire the servers and other technologies you might need. However, Cloud-based system subscriptions can increase over time, especially when you add more users and ERP features. Depending on your initial investment, Cloud ERP can cost more over the long term.
  • More independence. Using Cloud ERP makes you dependent on the provider and your internet service in many ways. With On-Premise ERP, the system rests entirely in your hands. Your software is implemented, managed, and maintained in your manufacturing facility, allowing you to do what you want when you want.
  • More control over security and data. On-Premise ERP systems offer more control over security because the company’s internal IT staff can implement their own security policies and procedures. On-Premise ERP also has less exposure to cyberattacks or data breaches because it isn’t connected to the internet. Further, your proprietary documents and data stored in the ERP system are yours and kept on-site versus in a cloud server potentially shared with others.

See more benefits of On-Premise ERP.

Potential Disadvantages

The major downsides to On-Premise ERP generally have to do with initial costs, which are often considered capital investment rather than operating expenses, and limited scalability. Implementing On-Premise ERP requires an upfront investment. Performing maintenance, upgrades, support, and security adds to overall costs that Cloud ERP doesn’t require.

On-Premise ERP systems tend to have limited scalability based on the capacity of the company’s hardware and software resources, which can make expanding or upgrading difficult. They also require ongoing maintenance for hardware, software, networks, security, and support issues by the company’s own IT staff or external consultants. Performing periodic upgrades and patches can potentially cause compatibility issues that disrupt business operations.

Manufacturers who continue to use On-Premise ERP say they like the ability to manage their ERP software as they want to and acquire all the modules they need. Learn about the differences between On-Premise and Cloud ERP and how to make the best decision for your business by reading the other two blogs in this series – Cloud or On-Premise ERP: Which Is Right For Your Business? and The Advantages of Cloud ERP for Manufacturers.

Schedule a demo to see how Global Shop Solutions On-Premise ERP can simplify your manufacturing and grow your business by letting you work the way you need to.