Cloud ERP vs On-Premise ERP: choosing the right ERP solution

Cloud ERP and on-premise ERP are two different ways of implementing enterprise resource planning (ERP) software.

One of the most important things to think about when choosing a new enterprise resource planning (ERP) system is whether you want on-premise ERP or cloud setup. ERP systems that run in the cloud are becoming more popular than ever before. Today, almost every ERP vendor has some kind of cloud deployment choice, and some have even stopped selling on-premise ERP.

In the end, the discussion about cloud-based ERP vs on-premise ERP should include a number of things, such as upfront and ongoing prices, security concerns, business goals, and staff capacity. In this article, we’ll look at on-premise ERP systems and cloud-based ERP systems and list the pros and cons of each.

Cloud ERP vs On-Premise ERP Comparison Table

Remember that the choice between Cloud ERP and On-Premise ERP depends on the needs, resources, and priorities of your company. This table gives an overall look at the changes you should think about when making your choice.

AspectCloud ERPOn-Premise ERP
DeploymentHosted on remote servers; accessed via internetInstalled and hosted on company-owned servers
Initial CostsLower upfront costs; subscription-basedHigher upfront costs for licenses and hardware
MaintenanceManaged by the service providerRequires in-house IT team for maintenance
ScalabilityEasily scalable; flexible resource allocationScalability may require hardware and software upgrades
AccessibilityAccessible from anywhere with internet accessLimited to on-site access
UpdatesAutomatic and regular updatesManual updates, potentially leading to version disparities
CustomizationMay have limitations due to shared environmentHighly customizable to fit specific needs
Data SecurityRelies on service provider’s security measuresCompany has direct control over data security
IntegrationIntegrates well with other cloud servicesIntegration may require more effort and resources
Disaster RecoveryProvider handles backup and recoveryCompany is responsible for backup and recovery
DowntimeMinimal downtime during updates and maintenanceDowntime during updates and maintenance
Total Cost of OwnershipLower TCO due to reduced hardware and maintenance costsHigher TCO due to initial and ongoing expenses

What is Cloud ERP?

Cloud ERP, also called Software as a Service (SaaS) ERP, means that the ERP software and the data it needs are hosted on remote servers that are handled by a third-party provider. Users can access the system through the internet, which lets them work together in real time, move around, and add more users. Cloud ERP has a number of appealing benefits:

  • Cost-effectiveness: With Cloud ERP, you don’t have to spend a lot of money on hardware and equipment up front. Instead, businesses choose a plan where they pay for only the services they use. This plan cuts down on capital costs and makes it possible for monthly costs to be known in advance.
  • Scalability: Cloud ERP systems are very easy to expand or shrink, so businesses can grow or shrink their operations without a lot of trouble. As the company grows, it is easy to add more resources to meet the needs of more people.
  • Accessibility and mobility: With Cloud ERP, users can use the system from anywhere with an internet link. This amount of accessibility improves the ability to work from home, making it easier for employees in different places to work together.
  • Automatic Updates: Cloud ERP providers take care of software updates and support, so businesses always use the most up-to-date version. This gets rid of the need for manual updates, which take time, and lowers the chance of security holes.
  • Disaster Recovery and Data Security: Most Cloud ERP providers offer strong options for backing up data and restoring it after a disaster. Data is kept in safe data centers with backup systems, which makes it less likely that data will be lost.

What is On-Premise ERP?

On-Premise ERP means that the ERP software is installed on the organization’s own computers, which gives the organization full control and management of the system. Here are some of the most important advantages of this method:

  • Data power and Security: With On-Premise ERP, businesses have full power over their data and infrastructure. This can be especially useful for businesses that have strict rules about security and compliance.
  • Customization Flexibility: On-Premise ERP systems usually have more ways to change the software so that businesses can make it fit their needs and workflows.
  • No Need to Be Connected to the Internet: On-Premise ERP works without the internet, which makes it a good choice for businesses in places where internet access isn’t always dependable.

Cloud ERP vs On-Premise ERP: User Experience and Interface

Cloud ERP vs On-Premise ERP

When considering Cloud ERP and On-Premise ERP systems, the user experience and interface design are very important. Most cloud ERPs have easy-to-use web interfaces that can be accessed from any device with an internet link. Their dashboards and navigation are easy to use, which makes users happier and speeds up usage.

On-Premise ERPs, on the other hand, might need more complicated setups, which could make the learning curve steeper. The layout depends a lot on how it is set up, but it isn’t always easy to use. Cloud ERPs often put flexible design at the top of their list of priorities, which makes sure that interactions on different devices go smoothly. Overall, the user experience of Cloud ERPs tends to be more flexible, easy to use, and focused on the user. This fits well with the current business expectation for interfaces that work well and are easy to use.

Cloud ERP vs On-Premise ERP: Security

Businesses care a lot about security, and this is also true when it comes to picking which software to use. Cloud ERP gives the vendor access to your info. Even though they have strict security measures in place, this can be a problem for some companies because they can never be sure that everything is safe. In a study done by BT, 49% of IT decision-makers said they were “very or very worried” about how safe cloud services are.

But, while on-premise ERP puts the protection of your data in your own hands, this is often a bad thing. You might not have as much protection as you need if you do it yourself instead of going with a well-known company. This is because, even though an on-premise ERP solution puts all of your information on a central, encrypted server network, if you choose a vendor with a cloud-based system, they make sure their security is strong enough to protect your important data.

Cloud ERP providers can help keep this from happening by hosting data in a number of different places. In the worst event, if the cloud-based storage system is broken into, the provider will move quickly to let their customers know and help fix the problem. This is also what is best for them.

Cloud ERP vs On-Premise ERP: Scalability and Flexibility

Cloud ERP vs On-Premise ERP

When comparing Cloud ERP and On-Premise ERP solutions, scalability and freedom are the most important things to look at. Cloud ERP systems offer a level of scalability that is unmatched, making it easy for businesses to change their resources as their operations grow or shrink. Cloud solutions can handle growth without having to buy a lot of new gear because they can be scaled up or down on demand. On the other hand, On-Premise ERPs often require large hardware and infrastructure expenses up front.

Cloud ERP options also give users more freedom by letting them access their data from different devices and locations. This makes it easier for people to work together and be flexible. On-Premise ERPs, on the other hand, might not be as accessible due to hardware limits. In the ever-changing business world of today, where adaptability is key, Cloud ERP solutions shine because they offer scalable resources and flexible access. This makes it easy for businesses to respond quickly to new opportunities and demands.

Cloud ERP vs On-Premise ERP: Integration Capabilities

When comparing Cloud ERP and On-Premise ERP solutions, integration is one of the most important things to look at. Cloud ERP solutions often do well in this area because they offer APIs and connectors that make it easy to connect to a wide range of third-party apps and services. The flexibility of the cloud makes it easy for different platforms to share and sync data in real time, which improves teamwork and operational efficiency.

On-Premise ERP systems, on the other hand, might need more complex integration processes, which could include custom development and integration middleware. Depending on what the ERP provider has to offer, the integrations may be restricted in what they can do. When looking at ERP choices, it’s important to look at their integration capabilities. A well-integrated ERP ecosystem can improve business processes, make it easier for data to flow, and create a digital environment that works well together. Cloud ERP is often better at meeting the integration needs of current businesses because it is built to be flexible.

Cloud ERP vs On-Premise ERP: Risk Assessment and Management

Risk Assessment and Management is a very important thing to think about when deciding between Cloud ERP and On-Premise ERP. Cloud ERP has benefits like automatic updates and better disaster recovery, but it also raises concerns about data protection and reliance on third-party providers. On-Premise ERP, on the other hand, gives you more control over your data, but it costs a lot up front and requires you to have IT experts on staff.

To reduce risks, companies need to do a thorough risk assessment that takes into account things like the sensitivity of data, compliance with regulations, the reliability of vendors, and the possibility of downtime. For cloud solutions to work, they must have strong security measures, encryption methods, and regular audits. For On-Premise options, there should be backup plans in case hardware fails or data is stolen. To make an informed choice that fits with a company’s risk tolerance and long-term goals, it’s important to find a balance between the pros and cons.

Cloud ERP: Pros and Cons


  • Cost Efficiency
  • Automatic Updates
  • Quick Implementation
  • Data Security
  • Disaster Recovery


  • Internet Reliance
  • Customization Limits

On-Premise ERP: Pros and Cons


  • High degree of customization
  • No Internet Dependency
  • Long-Term Costs
  • Direct control over data


  • Longer deployment time
  • Limited Remote Access

Cloud ERP vs On-Premise ERP: which one should you consider?

Choosing between Cloud ERP and On-Premise ERP is a big decision that depends on the needs of your company, your budget, and your long-term goals. Cloud ERP is a good choice for businesses that want to embrace digital change and remote work because it is flexible, scalable, and easy to use.

On the other hand, On-Premise ERP is best for businesses that have strict security needs and want to make changes. By looking at the priorities of your company and the pros and cons of each choice, you’ll be able to make an informed decision that fits with your business strategy. In the end, the right ERP system can make a big difference in how well your business runs and help it grow in the digital age.


What is the difference between cloud ERP and on-premise ERP?

Simply put, cloud ERP is when a company uses a vendor’s tool to store its important data. On the other hand, an on-premise ERP system means that a company hosts its own data on its own hardware, on its own premises.

Is SAP ERP on-premise or cloud?

SAP S/4HANA can be used on two delivery platforms: On-premise, which gives you the most control, and the cloud, which lets you get started quickly. Both have good and bad points.

What are the benefits of cloud ERP vs on-premise?

Most of the time, cloud ERP works better than on-premise systems. The architecture of cloud software is built from the ground up to get the most out of the network, which can mean that applications are more likely to be available than with standard on-site ERP systems.

Editorial Staff
Editorial Staff
The Bollyinside editorial staff is made up of tech experts with more than 10 years of experience Led by Sumit Chauhan. We started in 2014 and now Bollyinside is a leading tech resource, offering everything from product reviews and tech guides to marketing tips. Think of us as your go-to tech encyclopedia!


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