American author, Alan Lakein, mentioned, “Failing to plan is planning to fail”. This quote highlights the importance of proper planning. Proper planning is of paramount importance for businesses to maximize their profit and to achieve their objectives. When it comes to companies operating in a competitive market, the business processes can be planned and managed by specialized software called ERP (Enterprise Resource Planning). It integrates and manages all the core processes needed to run a company (HR, finance, manufacturing, supply chain etc.) into a single system. It is consists of different ERP applications that interact with each other and share a common database. This automates all the business operations, improves productivity and reduces human errors.

ERP can be Cloud-based ERP or on-premise ERP software. On-premise ERP solutions are installed locally on one’s company’s hardware and servers whereas cloud ERP which is also called SaaS i.e. Software-as-a-Service is provided as a service company’s ERP software and its associated data is managed centrally (in the Internet "cloud") by the ERP vendor and is accessed by customers with the aid of a web browser. On-premise ERP solutions are managed by one’s IT staff while with the other type of deployment, the data is managed centrally by the respective ERP vendor.

Let us now compare the main differences between these two types of ERP solutions-
When it comes to the total cost of ownership (TCO), On-premises ERP solution requires an extra investment which is not needed for a cloud-based ERP system as it is hosted on a vendor’s server.

On-premise ERP software lacks flexibility as it has restricted remote access. A cloud-based ERP system offers greater flexibility and mobility as the data here can accessed from anywhere with the aid of internet connection.

On-premise ERP system is at a higher risk of malicious attacks. On the contrary a cloud ERP system is managed by a professional service provider which ensures better security as multiple data disaster and recovery protocols are in place.

When it comes to the upkeep of these two varied ERP solutions, an on-premise ERP system requires a full-time, dedicated IT administrator to maintain it. Whereas a cloud-based ERP system’s updates are managed by the vendor.

These differences bring certain pros and cons with them. On-premise ERP system gives greater data control, lesser vendor dependency. On the flip side it takes long implementation time, is a costly undertaking, lacks flexibility and needs a dedicated IT team. When it comes to the cloud-based ERP system, it ensures quick implementation and greater data integration, ease of system accessibility and makes its management easier as it is managed by a vendor. Its cons are a lack of ownership and the need of consistent internet connectivity.

“We’re not in an information age anymore. We’re in the information management age”. This quote by Chris Hardwick emphasizes the importance of information management and in order to do that in a business setting it is imperative to choose the right ERP solution understanding the differences as well as the advantages and disadvantages between a cloud –based ERP and an on-premise best ERP software in 2020 and then take an informed decision. https://www.linguee.in/enterprise-resource-planning-software

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Source:https://www.prlog.org/12844925-difference-between-cloud-based-erp-and-on-premise-erp-software.html