Which is better for my company: ERP in the cloud or local ERP?
When it comes to choosing an ERP (Enterprise Resource Planning) system for a company or business, we find a myriad of options available. But undoubtedly one of the key criteria on which we base our decision will be whether we choose an ERP cloud solution or a locally installed system.
The main difference between the two alternatives is clear: the option of a local installation tool uses the resources (servers and/or computers) of the company itself, and their management and maintenance are also generally the responsibility of the company. On the contrary, ERP cloud software is offered in the Software-as-a-Service (SaaS) format, which means that both the “program” and the data created with it are centrally managed by the provider and are hosted on their servers, so that access to the tool is done through the Internet, from any browser.
Choosing between either option can make a big difference when implementing this type of system in a company. Thus, we review some aspects to take into account that will give us a clearer view.
Cost of a cloud ERP vs local ERP
Local installation ERP system formats often require a greater investment, both at the time of implementation, by contracting the software license itself and acquiring the computer equipment that supports it, as well as its maintenance.
And if the company does not have a technical department that has the ability to manage the tool, it will be necessary to train one or hire the support externally. More importantly, it will require a time and budget investment for the continued operation of the tool, including hardware maintenance. Each time the software receives an update, the department or responsible person must perform the system-wide implementation (each server’s central server and endpoints), and, if necessary, re-enable the customizations made to the program.
On the other hand, the initial costs of ERP solutions in the cloud are usually much smaller because they only need an initial configuration tailored to the needs of each company to access the program via the Internet. The software provider is also responsible for hosting and maintaining the technical infrastructure that supports it, ensuring that it is always accessible, data security and that updates are done without undermining this custom configuration.
This lack of technical maintenance by the company itself is usually the determining factor in the use of the ERP format in the cloud compared to the local installation. In addition, in the former, costs are known in advance, since they are generally offered under a periodic subscription model, based on the number of users and employees, modules that provide additional functionality, etc.
All in all, industry figures estimate that the savings of a cloud system from self-installation can reach 50% of the total cost over a period of about four years.
Rapid integration of an ERP in the cloud vs. local ERP
Incorporating a resource planning system into a company is a process that requires careful organization, but one element of ERP cloud software comes with the advantage that implementation will be much faster.
As we have already mentioned, the cloud-based solution does not require the company to acquire or configure any type of computer equipment. In fact, the tool can be easily implemented even if the company is organized in several divisions, territorial centers or subsidiary companies, with the cost savings that an installation for each element would imply.
ERP cloud vs local ERP software performance
Related to the previous point, another of the advantages presented by the ERP in the cloud is the scalability factor, that is, the flexibility offered by the providers of these solutions to increase or reduce the capacity of the software, either in the number of users or in the data processing.
This is possible thanks to the fact that, compared to the local installation format, computer systems are optimized so that the operation of the program achieves maximum performance. And that’s how “cloud” architectures dynamically adapt to the required capabilities at any given time, being able to handle any “peak” load.
It is also important to note that ERP cloud solutions provide access to the data that it handles in real time and can be queried from anywhere and anytime. This means that employees have all the information available on their laptops or mobile phones, wherever they are without additional costs.
Security and confidence of an ERP in the cloud versus local ERP
Within the selection criteria of an ERP or another format, it should be taken into account that, in the case of the independent installation, practically all management “stays at home”, and security will depend mainly on ourselves.
With regard to cloud software, it offers greater guarantees that the client company can shape internally. Do not forget that this is one of the skills of your business, so the provider will be responsible for providing customers with the most advanced security standards and the necessary updates.
Given the above, there is no doubt that the choice of an ERP system in the cloud has many advantages that make local software a totally obsolete system.
What do you think about this? Leave your feedback in the comments.