It is a well known fact that incorporating an ERP system in a business can bring about an impressive transformation and fortune to it in the long run. But once you decide to give your company an upgrade with ERP, chances are you are bombarded with choices. Also updating an already existing ERP system is often required to harness the benefits of latest technology, to operate more efficiently and gain new functionality. Companies seem to be relying on hybrid ERP (combination of cloud and on premises ERP) to be the quickest route.
It’s an ERP solution that is installed locally on your computer’s hardware and servers which is than managed by IT staff is termed as On-premises ERP. The company maintains the software in house. The initial investment in this plan is high since the company needs to purchase and manage the software and other related hardware like servers to run the system. Not to forget the IT professionals who ensure that the system is functioning by investing a significant amount of time and money. Even an upgrade requires a lot of effort as the team must deploy the system across the various users’ computers and re-implement various customizations and integrations that your business installed on your previous software. Though the on-premises ERP is slightly at a disadvantage due to its upfront cost and difficulty in up gradation, most of the companies still prefer it because it enables the enterprise to handle its own data thereby ensuring security. Also, it offers the ability to customize and gives more control over the implementation process.
Cloud ERP—also called SaaS, or Software-as-a-Service is a type of deployment wherein a company’s ERP software and its associated data are managed centrally (in the Internet “cloud”) by the ERP vendor and are accessed by customers using a web browser. Compared to on-premises ERP the initial costs in this plan is lower although it might turn into an overhead cost the company continues to pay throughout the system’s lifecycle. By implementing cloud ERP your role and effort is substantially simplified. All you have to do is implement the software according to your requirements and access it through the internet while the cloud ERP provider manages the entire IT infrastructure and ensures the system is up and running at all times, for you. Cloud ERP definitely has an upper hand over on-premises ERP when it comes to:
- Deployment speed – Unlike on-premises ERP, cloud ERP does not require additional hardware hence the company need not waste time on procuring and installing IT infrastructure. They usually take 3-6 months for deployment while on-premises solution requires at least 12 months.
- System upgrades and enhancements – Cloud ERP solutions are continually upgraded by the provider so you can be sure you’re always using the latest, most advanced version of your ERP software.As for on-site ERP solution when the provider releases a new product update or enhancements, your previously implemented customizations will be wiped out when you upgrade and your IT team will have to start customizing from scratch again.
- System performance and accessibility – cloud based ERP provide better accessibility and system performance than on-site ERP solutions. It also offers optimized performance that can adapt to your needs.
As the name implies, hybrid ERP consists of both cloud and on-premises ERP solutions in order to get the best out of both the worlds. A combination of in-house ERP supplemented by cloud-based ERP applications serves as a logical solution to many enterprises who want to enhance their present in-site ERP system without changing it. Apart from splitting the functions between on-site and cloud ERP, hybrid helps a company to integrate or add functions to its existing ERP system at minimum cost. Usually companies have afterthoughts about functions it didn’t want to invest in at the time of ERP implementation because they didn’t see their value at that time. Later when they realize, instead of going back and adding the capabilities to their on-site ERP system, the company can choose to use bolt-on modules from the cloud to answer its needs.
The growing popularity of hybrid ERP is attributed to the flexibility and simplicity it offers by involving the benefits of both cloud and on-premises ERP.