ERP is a software solution that manages the business processes of an organization. If you’re considering purchasing an ERP, On-Premise or Cloud solution, we’ll explain the benefits and cost implications so you can make the right choice for your company.

Choosing the Right ERP Solution

In today’s fast-paced world, businesses are facing increasing pressure to reduce costs and expand their reach. This is especially true for small and medium enterprises that are looking to grow their business and expand overseas.

With this in mind, choosing the right ERP software is no longer just a luxury; it should be a necessity if you want to improve your company’s efficiency and stay competitive in today’s marketplace.

Costs of Cloud vs On-Premise Software Solutions

Cloud Solution
Cloud ERP Solution is a type of Software as a Service (SaaS) that allows users to access ERP applications through the internet. This eliminates the need for complex hardware and software systems, as well as the hassle of installing, maintaining, and upgrading them. Cloud ERP systems have lower upfront costs and require minimal hardware and infrastructure investment, as computing resources are leased instead of purchased. Providers usually help organizations configure the ERP system to suit their needs and handle maintenance and upgrades. With Cloud ERP systems, users have access to business-critical applications whenever and wherever they need them.

On-Premise Solution
When it comes to On-Premise software, you need to consider one of the largest budget items, servers. The expenses include not only the initial purchase cost but also the ongoing maintenance cost and the lifespan of the server, which typically lasts only 3-5 years. It is important to consider the cost of server downtime during maintenance, as well as the cost of bringing in outside contractors to work on servers during any downtime if you don't have an in-house IT team. Additionally, the electricity cost of running and cooling servers should not be overlooked. Backups are also a significant cost, which includes managing, off-site storage, error checking, and fixing. Then you have software-related expenses including upgrades, fixes, testing, and licensing of all software on your servers. Moreover, integrating different systems can be more complicated due to parameters, and it may cause overtime costs for IT staff. Budgeting for all of these expenses can be unpredictable from year to year.

From the standpoint of expert consultants; which is preferred?

We asked our Consultants who are considered experts with over 25 years of experience consulting ERP implementations and post-customer care. They were around when all customers had only on-site servers. This is what they tell us.“From a consultant's point of view, cloud ERP is more cost-effective because there is less risk of downtime because data is stored in the cloud and easier to access and support as a result of the data being stored in the cloud. Plus, your backup is stored with the ERP software provider you choose from, and the liability for backup integrity is transferred to them. They will always have data backup. Having cloud access plus the cost savings that it brings make up for that. You will not have to employ a large team of IT staff, your consultant and ERP software company will have that handled for you, which is one of the big bonuses.”- Kristin Christian, Algorithm Consultant

In the end, which is best for you?

When it comes to choosing between a Cloud-based ERP solution or an On-Premise one, businesses should weigh the cost and benefits of each option. On-Premise requires a larger budget for hardware and maintenance and limited accessibility and budgeting for those items can be a daunting task. A Cloud ERP solution allows businesses to access their data and applications from anywhere, making it more convenient for remote teams, outside consulting, and upgrades. Plus, more benefits of Cloud ERP such as:

  • A better view of your business process. 
  • Improved cooperation.
  • Enhanced inventory control.
  • Greater customer service.
  • Stronger security and regulatory compliance.
  • Scalability benefits

Ultimately, the decision comes down to a business's budget and access requirements. If cost is a major concern, a Cloud ERP solution may be the best option. 

Visit our website to view Acumatica and Epicor's costs associated with Cloud ERP


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