Cloud or on premise: Which ERP infrastructure is the right for your company?
In this blog post, we will elaborate on what to keep in mind when the question of cloud versus on premise arises.
First, it is important to mention that there is no definitive truth when you ask yourself the question: cloud or on premise?
The answer to the question depends on the individual company. At ECIT, we offer both solutions, which is why we are not biased when arguing for one of the approaches. Below we have listed four focus areas that we will discuss in the following.
- Operation and IT security
- Integration options
- Cost structure
- Complexity and competencies
Operation and IT security
First and foremost, you must take a position on who you want to be responsible for your operation and IT security.
An on premise solution is installed locally on your servers at the company address or your external ERP/hosting partner. The owner of the server is the one who is fully responsible for the operation, IT security, performance, etc. In other words, you are less dependent on the ERP provider (Microsoft, Visma, etc.)
With a cloud-based solution, the operation and IT security are managed by the provider. For that reason, your provider is responsible for various security precautions in form of backup and collation of data. IT security is most often discussed in connection with cloud-based solutions, and here we would like to emphasize that it is not unsafe to store your data in the cloud. In short, this should not an argument against cloud solutions in general.
However, a challenge with cloud concerns how the solutions – without exception – are being upgraded at the same time. Whether you want it or not, sooner or later there will be a heavy workload on your partner and provider, who in one month will have to test all the customers’ adaptions to ensure that they work.
A seamless data flow is essential for the operation of your company. If your systems are not integrated, you will eventually experience more manual tasks and a greater chance of errors in your data.
Cloud and on premise differ in terms of the possibility of integrations with other systems. As cloud solutions are more standardized, the possibilities may seem limited. However, integrations to other systems are made possible through Extensions or add-ons offered by the provider.
It can be argued that on premise has several integration options, as you, unlike cloud, are not dependent on the integration being developed and approved by the provider. In short, you have the possibility of developing integrations suiting your company in collaboration with your provider.
In summary, integrations are about meeting the needs of your company. You should therefore find out in advance which integrations you want, what the aim of the integrations are, and whether they already exist as Extensions or add-ons.
The cost structure is another important factor to keep in mind before making a final decision. The two solutions differ in relation to costs, and you can choose between a smaller monthly fee or a larger investment upfront. Therefore, the question concerns your financial situation and whether you are aware of your specific needs.
With a traditional on premise setup, you pay a larger amount upfront. Simultaneously, you have to consider the costs in relation to ongoing upgrade projects.
The cloud-based solution is in contrast subscription-based with a monthly fee. For that reason, this solution is more cost-effective, as you do not have to include the above-mentioned upgrade projects, and you only pay for the services you use.
Altogether, with on premise, you get a customized solution, which you pay the extra for. At the same time, it is worth mentioning that no matter what approach, you should be ready to invest time and money when implementing a new ERP system.
Complexity and in house competencies
Whether you should choose one approach over the other depends on how complex your company is and what competencies are available in house. The complexity is crucial for the needs and requirements you may have for your future solution.
Do you have strong internal IT competencies, a good agreement with your ERP partner regarding operation/updates, or are you in need of a tailored ERP infrastructure that extends beyond the standard solution? In that case, it may be advantageous for you to look in the direction of on premise.
Conversely, if you lack the right competencies in house and do not have a service agreement with your ERP provider, a cloud solution may be the right for you. As cloud-based solutions include continuous updates and adjustments, it may be ideal for the company that wants a plug-and-play solution.
How can we help you?
At ECIT, we can help you implement, operate, and support your future ERP solution, and we offer consultancy as a natural part of our services.
If you would like to know more about our services, you can read more here.
Kommerciel direktør & Partner, IT.