Date: 16 June 2015
Back in 90s when many Accountants and book keepers getting themselves familiarized with new Information technology world and learning new solutions, it was considered that if somehow one is entering and saving the day-to-day transactions in the computer he is up to date with the changing technology world. Right so, because the comparison was between book keeping on the hard ledger books and data stored in computers. But after about 2 decade that is not true. If one is only saving their day-to-day business transaction on a server and getting Basic reports out from the data that he has entered, he is not utilizing and keeping up with the new and advance technology rather he is just surviving in this era of globalization.
Let’s look at how the change in technology has shaped the commerce around the world. Without any doubt one of the significant achievement of technological advancement is that it has almost removed the barrier of physical distance between people. You can easily communicate, transfer large amount of data and information, doing any type of transaction from any part of world and is now on our finger tips. This only indicate that even a small business or a startup is no longer limited to the geographical area that it will do business in. A small startup in any third world country can do its business on a global scale and sell it’s product and services to anyone around the globe who is connected to the internet/Cloud. One other thing that is shaping the world since a decade is social media. More and more data and information are today shared via social media. All the successful business are using the information and data available on social media to draft there strategies and make business decisions (it’s a Part of Business Intelligence that I will cover in another post).
Now coming back to the topic of this post. On-premises ERP is the one that is installed and configured on the server which is located in the same premises or at the location that is connected via LAN. A workstation or a client software is installed on the end user machine which is used to key in data and/or generate required report for the data stored in the database of the solution. On the other hand Cloud based ERP is the one where the Complete ERP Package is hosted on the server that is accessible to anyone via internet. Its web based so only Web browser is required to use the application.
Comparison between on-premises and Cloud ERP solution
1. Accessibility: One of the biggest advantage that one can get using a cloud base ERP is the accessibility. The performance of Enterprise solution is no longer be dependent on the devise that is used. It all depend on the Internet that is been used and the platform where the Cloud ERP is hosted.
On the other hand On-Premises ERP is hosted on a local server and it can be accessed via PC or a devise where the client is installed. Different devices may causes issues and even different version of Operating System may have issues running the ERP. If the ERP was not supporting Linux or Macintosh then it will not work on those Operating system and hence the company’s options are limited to choose the devices and Operating systems.
2. System upgrades: Every Enterprise solution releases system upgrades or new versions periodically. In case of on-premises ERP we need to upgrade or install whole Solution again and also install workstation/client on every machine using ERP. It can be a time consuming and expensive exercise if there are lots of custom written applications or reports. On the other hand with Cloud base ERP customer/Users do not need to worry about new and upgraded version of ERP as the Upgrades and versions are maintained by the providers itself. Companies and Users will get the latest version as and when it is release by provider. It also will not cost any extra amount for the company to use latest version of the application it just be the part of their subscription.
3. Hardware Maintenance: The performance of the on-premises ERP is very much depend on the resources available on the server where ERP in installed. Also each workstations need to fulfill minimum system requirement in order to run the solution efficiently. Whereas the cloud base ERP just need a web browser to run the solution. The performance of the Cloud base ERP will be based on the speed of the Internet. This means moving to Cloud will reduce the hardware maintenance cost and company do not need to spend anything on IT specialist and so not need to buy any expensive Servers and work stations. They only need a device to run a browser to take advantage of all the features provided by Cloud base ERP solution. Since only Web browser is required to run the ERP solution now company do not even need to stick to any expensive Operating system. They can even chose any Open source Operating system.
4. Implementation and Scalability: As compare to On-premises ERP solution the Time of Implementation cloud base solution is less. No Setup or installation is require so from day one ERP id up and running and users can start using it. Similarly with the growth of an organization it’s easier for cloud base ERP to adapt and fulfill growing needs of the business as compare to on-premises ERP Solution.
5. Globalization: If a company has its operations in multiple locations or in different countries it’s far easier for Cloud base ERP solution to adapt as compare to on-Premises ERP. No extra infrastructure is required to fulfill the need of people located in different locations and working for same company.
6. Security: In case of On-Premises ERP the security of data is the responsibility of the organization itself. The company’s data is as secure as there network are. However the responsibility of the data security in case of cloud base ERP is in the hands of provider.