This is the first in a three-part blog series that addresses the differences between Cloud ERP and On-Premise ERP for manufacturers.
Cloud ERP is rapidly becoming the platform of choice for a majority of manufacturers. Yet, On-Premise ERP remains the better fit for a large number of manufacturing businesses based on specific criteria. With so many differences between the two platforms, how do you choose?
Determining the right ERP solution for your business requires close evaluation of your industry, size, complexity of your business model, long-term goals, planned growth rate, industry regulations and much more. Your decision-making process should also include evaluating personal preferences, such as ownership of the software and hardware, expected benefits and ROI to discern how they align with the features and capabilities of the ERP platform you prefer.
Answering questions like these will provide important insights for your decision-making process:
- What are your current business needs and objectives?
- Where do you see your business in five, 10 or 20 years down the road?
- What is your budget for upfront and ongoing ERP costs?
- How much independence do you want to have during implementation?
- How much control do you want over your ERP system and the data it manages?
- What existing or legacy systems do you need to integrate with?
- How much flexibility and/or customization do you need?
- What legal or regulatory requirements must your business comply with?
- Which platform is better suited for scalability as your business grows?
One system. Two ways to run it.
Same ERP. Same data. Same results. The only difference is where it lives. Cloud ERP runs online. No servers. No maintenance. On-premise ERP runs in your building. Full control.
You’re not choosing different software. You’re choosing how you want to run it.
Regardless of the platform you choose, ERP will become the most important asset in your business when used to its full capacity. Ultimately, the key is making an informed decision that supports your vision for the business and your long-term business goals.
Cloud-Based ERP
Cloud-based ERP is hosted and managed by a third-party provider on the internet. Its primary advantages include lower upfront costs, faster implementation, better performance, greater flexibility, and leading-edge security technology from the top-tier cloud computing providers. Unlike On-Premise ERP, users don’t have to invest in expensive servers, computers, or the cost of maintaining the hardware.
Potential drawbacks for Cloud ERP can include lack of control over the software, updates, customizations and your data, potentially higher costs over the long term, and dependence on a reliable internet connection. Users may find it hard to switch providers or move to an On-Premise ERP platform in the event of compatibility issues or contractual obligations.
Read our Advantages of Cloud ERP for Manufacturers blog for more insight into the pros and cons of this platform.
In general, Cloud ERP is best suited for small and midsize manufacturers where low upfront costs, system stability, and ease of access are top priorities. It fits well with manufacturers that:
- Prioritize flexibility and scalability
- Are startups or small businesses with limited capital
- Have multiple departments, teams, and locations
- Have customers in a wide variety of industries
- Don’t require a lot of customization
- Prefer the “pay for what you use” model
On-Premise ERP
On-Premise ERP users buy, implement, own, and manage the ERP software and all the servers, devices, and other technologies required to run the system. The advantages of On-Premise are polar opposites of the Cloud platform. These include total control of your ERP system and data, potentially lower long-term costs, more flexibility and customization, and more control over data security. Downsides can include upfront investment costs, slower implementation times, the cost for data security personnel and technology, and more.
Read our Advantages of On-Premise ERP for Manufacturers blog for more details on the pros and cons.
On-Premise ERP generally works best for small, midsize, and large manufacturers that:
- Work in highly regulated industries like defense, aerospace and government
- Insist on in-house deployment
- Have demanding data security policies
- Can afford to hire an internal IT person to maintain the system
- Need robust flexibility and customization
- Require specialized integration with legacy or other systems
IT and security: what actually changes
ERP security isn’t optional. It’s your data, your customers, your entire operation. The difference between cloud and on-premise comes down to who’s responsible for protecting it. If you want the full breakdown of how we handle security, backups, and access, check out the Trust Center.
For Cloud ERP
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Your ERP vendor handle updates, backups and security
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Your system is always current
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You rely on internet access
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Less work for your internal team
For On-Premise ERP:
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You control security, backups and uptime
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You decide when to update
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No internet dependency for daily use
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More responsibility on your team
Cloud reduces IT headaches. On-premise gives control. You don’t get both.
Which option is right for you?
Choose Cloud ERP if you:
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Don’t want to manage servers or updates
- Have a small or stretched IT team
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Need to get up and running fast
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Want predictable monthly costs
Choose On-Premise ERP if you:
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Need full control over your system and data
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Have strict customer or compliance requirements
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Already invested in IT infrastructure
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Have a team that can manage it
Why this matters with Global Shop Solutions
Most ERP companies push you into one option. We don’t. You get the same all-in-one ERP whether you choose cloud or on-premise. No switching systems later. No starting over. Start where it makes sense now. Adjust as your business grows.
Decide for Now and the Future
ERP is a long-term investment in the success of your business, so it’s important to consider your current business needs and your goals for tomorrow. If rapid growth tops your list of goals, a scalable Cloud ERP system might fit the bill. If control of the system is your #1 priority, On-Premise ERP could be the right decision for your business.
There is no one-size-fits-all for ERP, so we highly recommend conducting in-depth research on each platform before making your decision. This should include user-based reviews, talking to users similar to yours in size and structure, and visiting ERP providers that offer both types of platforms. Above all, view a demo of each type with different providers.
Schedule a demo to see how Cloud or On-Premise ERP can simplify your manufacturing for today and tomorrow. We’ll be happy to work with you to make the right decision for your business.