The conversation around cloud ERP vs. on-premise ERP is louder than ever. Companies have realised the urgent need to install an intelligent business management system for business growth. Still, many struggle to choose between on-premise solutions and cloud solutions.

This article will help you choose the correct mode of deployment.

What are Cloud-based and On-premise ERP Systems?

On-premise ERP deployment is the process of installing and configuring business management software on the company’s infrastructure. The data and hardware are stored on the company server, and your IT team has to manage the software. In the case of an on-premise ERP, you have to purchase a license or copy of the ERP before using it.

On the other hand, a cloud-based ERP is a scalable and flexible business management tool hosted on the vendor’s server. These are not installed on the on-premise infrastructure. Cloud-based solutions are termed SaaS solutions or software as a service.

These systems can become the backbone of small and mid-sized companies, seamlessly integrating with other tools and automating workflows. You can also access real-time data. The definitions clearly state the distinctions between on-premise ERP vs. cloud ERP. Each system has its pros and cons. However, the following points break down the main differences between both.

Key Factors in Choosing On-Premise vs. Cloud-Based ERP

There are a few determining factors that need to be meticulously evaluated before deciding between cloud-based ERP vs. on-premise. These aspects are:

Ownership Costs

For using on-premise ERP systems, companies have to pay the license charges upfront, as well as manage the ERP-related infrastructure servers, hardware and facilities. Even more so, for on-premise solutions, the IT teams have to spend a significant amount of time, effort and other resources to keep the ERP up and running when you need it. Since the cloud ERP partner will host and maintain the system, you can implement the solution per your needs and access it from any device through the internet.

For cloud-based ERP, initial costs are typically much lower because you simply implement the software to your requirements and then access it through your computer’s internet connection. These solutions also have flexible pricing, and you do not have to bear high upfront costs. Most follow a subscription-based method. Since the subscription cost is already known, you can also plan the cash flows.

The vendor will be responsible for running and maintaining the solution, protecting data, and upgrading the product. The in-house IT teams can focus on innovation and business growth rather than on managing the on-premise ERP. Therefore, the ownership costs of ERP on-premise vs. cloud will largely influence your choice.

System Upgrades and Enhancements

Although on-premise ERP software solutions are customisable, replicating them in future versions can be difficult. In the event of new product updates and enhancements, old customisations are completely wiped out and have to be implemented from scratch again. Fearing the additional workload and costs, companies continue to use outdated systems.

Unlike on-site solutions, cloud ERP systems continuously upgrade the ERP, so you can leverage the latest, most advanced version of the business management tool. The previous customisations and integrations are carried forward to the updated solution without spending a dime.

Deployment Speed

ERP deployment is a detail-oriented job that requires careful planning and can be time-intensive. Nevertheless, the deployment speed for cloud ERP puts it in an advantageous position over on-premise ERP. Cloud ERP installation does not require any additional hardware. Hence, you do not have to waste time and resources in procuring and installing IT infrastructure.

However, on-premise installation does not offer speed. It can take up to 12 months, whereas cloud ERP deployment can be done within 3 to 6 months. With cloud ERP, you can easily roll it out across multiple regions, subsidiaries, and divisions, avoiding the cost associated with those rollouts. Cloud ERP solutions are easier to scale, and as the business grows, you can add more users without additional investment. In the case of an on-site ERP solution, investing in new hardware is often necessary.

Besides examining these four factors, you must remember that every organisation is different. Therefore, when choosing between cloud ERP and on-premise ERP, evaluating the advantages and disadvantages of both systems is essential for informed decision-making.

Advantages of Using On-Premise ERP

There are five advantages of using an on-premise ERP. They are as follows:

Internal Data Compliance: The foremost advantage of implementing an on-premise ERP is that the solution ensures you adhere to strict data privacy policies. This is vital for safeguarding the data you do not want to sync and share.

Existing Infrastructure: Your company can leverage existing servers and other infrastructure by deploying on-premise solutions and saving money.

Custom Integrations: With an on-site ERP, you can enjoy high-level 3rd party integrations, especially if the company needs unique ones. Interlinking with other apps and solutions will help drive greater value through the on-premise module without spending a fortune.

Lower Cost of Ownership: It is true that you have to pay a huge up-front cost when choosing an on-premise ERP. However, you will bear such costs only once. In the long run, such costs can be recovered, and the overall cost of ownership can be low.

Less Dependence on Internet Connections: The team working from the office can access on-premise ERP solutions without a stable Internet connection since the application is already installed on the company’s laptops and PCs.

Disadvantages of Using On-Premise ERP

Some of the limitations of an on-premise ERP solution are:

Slow Deployment: As on-premises ERP systems have to be installed on multiple servers and workstations, the deployment process is often lengthy and slow, taking several months to finish.

On-going Support and Operational Costs: For an on-premises ERP solution, you have to incur recurring maintenance, support and operational costs, including software license charges, upgradation fees and more.

Maintenance Duties: Your IT team will be majorly responsible for maintaining and updating the on-site ERP. If your team lacks knowledge or expertise, it can spell a blunder for your ERP project.

Advantages of Using Cloud ERP Software

The following are the advantages of a cloud-based ERP solution:

Affordability: Cloud ERP installation involves zero upfront costs. Your business can save a significant amount of money as the cloud software follows a monthly subscription model.

Mobility and High Accessibility: A cloud-based ERP solution allows busy teams to stay on top of important events anytime from anywhere and access the system from any device with an internet connection.

Speedy Deployment: Often, deploying a cloud ERP can be a matter of a few weeks or months. It can be deployed quickly and seamlessly without additional investments and prolonged downtimes, in contrast to on-premises systems that can take up to 12 months.

Real-Time Data: Cloud ERP systems provide real-time data to all the stakeholders in the company. Therefore, the work is never hampered due to the inability to access real-time data.

Flexibility and Scalability As your business grows, cloud-based ERPs can easily scale up based on organisational needs. Unlocking a new module, adding new users or integrating the ERP with third-party solutions is a matter of a few clicks.

Disadvantages of Using Cloud ERP Software

Like every other system, cloud solutions also have some drawbacks, such as,

Recurring Payments: Choosing cloud-based ERP means that there is a never-ending monthly expense. Even though the cost of ownership is low, monthly payments can be a drawback.

Less Control: If you want complete control of the ERP solution, cloud deployment may not be an option for you. Since it is hosted on the vendor’s server, you may not have the ultimate control. Additionally, if the vendor’s server is experiencing downtime, it will affect your operations.

Heavy Reliability on the Internet: Although cloud ERPs let you access data at any time from anywhere, they require a stable Internet connection. Without constant connectivity, a cloud ERP is not of much use. Therefore, companies also have to incur high-speed internet charges.

Data Security: In the case of cloud-ERP solutions, data theft and privacy violation is a legitimate concern. The vendor has to take extra precautions to protect the client’s business data.

Why Should You Choose Cloud ERP?

If you are looking for a reason for choosing Cloud ERPs, here is one. According to Finance Online, the cost of maintaining on-premise ERP is 30% more than cloud ERP solutions. For small and mid-level companies, budget can be a constraint. Therefore, choosing a cost-effective option gives them the same leverage (if not more) as an on-premise ERP.

The advantages of the cloud ERPs are plenty. It eliminates the need to maintain elaborate systems and servers. Therefore, during cloud implementation, you do not have to invest in new on-premise infrastructure. Your team can access the system from any device at any time. They also get to work with real-time, accurate data that improves decision-making.

Between ERP on the cloud vs on-premise, the choice is clear!

Conclusion

Cloud ERP’s role in digital transformation will be pivotal as old and new companies use the power of technology in their businesses. Nevertheless, the concerns over compliance, data security and cyber crimes will increase in the future. Implementing cloud ERP can backfire without the right policies. Hence, businesses and ERP partners must join hands to create a safer and more reliable cloud environment.

FAQs on On-premise vs. Cloud ERP

Today’s competitive business scenario poses new challenges for enterprises across the world. There, cloud and digital transformation can be a silver lining and you can keep your business competitive. The cloud approach has enabled the management to make informed decisions based on actionable insights. Implementation of advancements of technology and adapt to new changes in business processes are easy with the help of cloud solutions.

SAP Business One Cloud solution is an ideal example of how a cloud-based ERP system can bring a digital revolution in your business. Here we make a list of key business benefits of moving to the cloud for modern enterprises.

Boost in Productivity

As an entrepreneur, you know the secret of boosting productivity at your workplace, right? Cloud and digital transformation enable you to increase productivity across every department. Employees are empowered with instant access to real-time company data and quick communication. Cloud computing also brings automation with the help of AI-based functionality to eliminate maintenance processes and the need to remain occupied in time-consuming, mundane tasks. Your employees can readily provide clear reports, store key information, and maximise the level of productivity.

What’s more, automation and increased efficiency of employees can also enable you to take your business to the next level without increasing resources.

Reduction in Operational Costs

SAP Business One Cloud solution offers a highly flexible model. You can easily scale up or down the capability to meet your changing requirements effectively with this solution. It helps you reduce the operational costs for hiring resources and spend on infrastructure and hardware. Today, companies want to save big on infrastructure and resources by migrating to cloud. Also, you can readily take advantage of big data and AI-based features without worrying about storage space.

The cloud-powered solution enables you to store corporate data on remote servers thereby enabling you to get rid of investing in a server room.

Read: Choosing Between On-Premise and Cloud ERP Software

Support Diverse Requirements

Entrepreneurs witness changes in various requirements in various aspects ranging from planning to sales, and budgeting to finance. Such sudden and sharp changes need an advanced technological solution. There, a cloud-based ERP system can lend a helping hand. You can easily manage operational and financial requirements while getting real-time insights to make informed decisions.

In other words, the cloud-based solution can fetch, collect, and analyse the data to manage the business processes and predict requirements with ease. It is also possible to mitigate the associated risks and increase the profitability of your business with the help of cloud technology.

Faster Implementation

Many enterprises lag behind because of a longer implementation timeline. Whether it is migrating to new technologies or integrating technological advancements, the implementation time plays a vital role in achieving various business objectives. At times, a slight downtime can cause a lot of damage to your running business. The good news… migration to the cloud platform is quick and easy. You can rapidly shift your business processes to the cloud platform without any risk of data theft.

Simply put, cloud-based solutions cause minimal disruption in your business. Taking the example of SAP Business One Cloud again, you can readily implement it in your business system with the help of a reliable SAP Business One partner. With decades of experience in developing and integrating custom ERP solution, such a global partner can readily shift your entire business to the cloud.

Higher Security

The cloud-based solution can provide enhanced security to your confidential corporate data. It is almost impossible to breach data with encryption and other safety measures for data stored in cloud servers. You can also avail the benefit of authentication access on the basis of hierarchy. In a way, you can prevent sensitive information of your company from going into the wrong hands.
Higher security can further enhance the trust factor because your customers can remain assured of their personal information and transactions. You can attract more customers by providing them safe and secure cloud-based transactions. This is particularly beneficial for eCommerce and B2C businesses.

What makes cloud deployment highly profitable is the fact that it can reduce the total cost of ownership (TCO) by 2.3 times in the on-premise solution. Also, cloud technology offers benefits to the customers and enables them to get your company or brand’s information on the move anytime. You can readily integrate business-friendly features of emerging technologies like IoT and AI in the cloud solution.

In a Nutshell

Cloud technology is capable of increasing visibility and providing security to your business operations. There is no exaggeration in mentioning that cloud is a future of modern business. Cloud computing not only provides a strong foundation but also drives your business by bringing automation and convenience.

At Silver Touch Technologies, we combine the benefits of the cloud concept and SAP Business One advantages in the customised SAP Business One Cloud solution. We assist you to streamline your complex business processes through robust features of SAP Business One and flexibility of cloud-based solutions.

Do you want to give your business an edge of advanced technology? Just send us an email at info@silvertouchtech.co.uk and our expert consultants will contact you shortly.

SAP Business One can be implemented both on-premise and off. Yes, both kinds of implementation come with pros and cons. However, there is a reason why just 15% of the ERP users opt for on-installation while 84% use either SaaS-based or cloud ERP. Cloud-based ERP offers more benefits than their on-premise counterpart. The same is true for the SAP Business One cloud. Migrating. SAP to cloud migration SAP Business One cloud is the makes the ERP more flexible, more snappy, and more performance-oriented.

What Is SAP Business One Cloud?

SAP Business One cloud is the off-premise installation of the ERP. Although SAP does host SAP Business One on the cloud, most businesses prefer to go with the managed SAP Business One – which is hosted by SAP partners. Companies take the help of an implementation partner who would take care of the implementation part. Reputed SAP Business One vendor like B1 Partner Cloud host SAP Business One on their own AWS or Azure platform and offer their clients a fully managed ERP service. As a result, the customers of such ERP vendors don’t need to make sense of the technological complexity involved in setting up a cloud environment and implementing the SAP Business One cloud.

Pain Points Associated With Using an On-Premise ERP

Don’t get us wrong. Every on-Premise ERP has their special pros and benefits. However, for some businesses, such on-premise ERPs might not be a good fit. These companies suffer from some pain points associated with using on-Premise ERP.

The primary pain point of using an on-Premise ERP is the upfront cost. Companies opting for such ERPs need to buy expensive hardware in order to implement the ERP on the premise. The price of such hardware is becoming increasingly expensive every day.

When you have an on-Premise ERP setup, everything is your responsibility. From keeping the ERP up and running to ensuring all the security best practices are being followed, it’s your company that has to do all these maintenance tasks. It’s too much of a responsibility, and it’s time-consuming as well.

To keep the resources used by your on-premise ERP in good shape, you need to hire IT specialists, and this is a recurring cost.

From a functional point of view, on-premise ERP offers little to no scalability. This becomes a problem for businesses seeing ups and downs in demand for their products or services.

Lastly, most companies delay updating their ERP when they use on-premise ERP. That’s because they want to avoid disrupting the flow of their process. As a result, most users of on-premise ERP often use backdated versions.

How Does Migrating to SAP Business One Cloud Resolve These Pain Points?

Flexibility is the most significant benefit of SAP to cloud migration. This flexibility comes in the forms of operational, financial, skill-related, and more. Here are the reasons why migrating your SAP Business One to the cloud is extremely beneficial-

Minimal Upfront Cost

When it comes to implementing something in the cloud – be it ERP or any other software, the most obvious benefit is the fact that there is no need to spend money on servers and infrastructure that support the servers. SAP Business One cloud is hosted on the servers of your ERP vendor that manages the ERP installation for you. Hence, you save a huge amount of money that you would have otherwise spent on buying servers. Some might argue that the subscription model of SAP Business One Cloud will prove to be costly in the long run. However, remember that since the vendor manages the setup, you don’t need to spend too much money on hiring SAP experts, IT engineers, or IT security specialists. Maintaining a server is a recurring cost. On top of that, managing the on-premise installation of any software can be time-consuming. SAP Business One cloud provides respite to all these issues.

No Server Configuration Issues

Opting for SAP Business One cloud frees you from the complexities of setting up the server for the ERP. As a result, you get to focus on what matters most for you – growing your business. On top of that, since the vendor manages the server, the responsibility of maintaining its security is shared with the vendor. All SAP-certified vendors like B1 Partner Cloud go the extra mile to keep their server configuration free from any errors. So, in summary, migrating SAP Business One to the cloud helps you get peace of mind.

Flexibility In Scaling Up and Down

SAP to cloud migration comes with the most practical benefit of scaling the IT resources up and down. There isn’t a single organization whose business growth happens in a uniform manner. During special days like Black Friday or Christmas, companies see a significant uptick in sales. To make sure that the ERP system can handle the increased workload, businesses need to use additional hardware. However, as the demand subsides, the additional hardware becomes redundant. This is a terrible waste of money. SAP Business One cloud solves this problem. Since it is powered by virtual resources – virtual storage, virtual RAM, virtual network settings – a business can increase the allocation of these virtual resources. Once the demand subsides, the business can easily scale down its resources.

Timely Updates

Since the backend of SAP Business One Cloud is managed by either the vendor or SAP itself, users of the ERP don’t need to manually update their ERP. Every new update is tested thoroughly to examine its impact on the stability of the system. Hence, on the one hand, the users of SAP Business One cloud get the benefit of timely updates, and on the other hand, they don’t need to worry about updates breaking their system.

So, in summary, here are the benefits of using SAP Business One Cloud-

No requirement for expensive hardware. The installation is hosted by the vendors on cloud platforms.

No complexity since the vendor manages the server.

Virtual resources can be scaled up and down without the fear of hardware redundancy.

No need to hire expensive IT specialists as the technical aspect of the ERP installation is managed by the vendor.

Get timely updates.

It feels great when you can offload the complexities of managing the technical aspects of SAP Business One.

Steps & Best Practices to Migrate SAP Business One to Cloud

Migrating SAP Business One to the cloud is simple but not simplistic. These steps must be followed while migrating SAP Business One to the cloud-

Create a Proof of Concept

Migrating an ERP to the cloud is not a magic pill that will solve all your ERP-related problems. Sometimes your company needs to adopt a different strategy to solve its current ERP problems. Hence, instead of jumping right into migrating your SAP Business One ERP to the cloud, first, create a PoC. When the Proof of Concept does solve your problem on a smaller level, you can then move on to full migration.

Decide Whether You Want a Managed ERP Service or Just a Cloud Infrastructure

SAP to cloud Migrating can happen in two ways. First, you can take the SaaS approach, where computing the resources and the ERP software are both managed by the vendor or SAP. Alternatively, you can just opt for virtual infrastructure or Infrastructure as a Service and manage the technical aspects all by yourself. The first approach is suitable for companies that have limited bandwidth to hire expensive IT specialists.

Specify Which Database You Want To Use

SAP Business One can work with MS SQL Server and its flagship in-memory database – HANA. Since HANA integrates smoothly with SAP Business One, our suggestion would be to opt for this in-memory database while migrating to the SAP Business One cloud. It offers faster data processing functionality and advanced analytical power. However, depending on the requirement, a business can stick to SQL Server, which works equally well with SAP Business One.

Exporting Enterprise Data

After the initial implementation of SAP Business One cloud, along with the database, comes the important task of exporting the master data and other enterprise data. SAP Business One itself offers user-friendly tools to export data in bulk. Once the data is validated and cleansed, it can be imported to the SAP Business One cloud using the import wizard offered by the system. Data validation must be performed to make sure that there is no discrepancy between the existing database and the new database.

Thorough Testing

Lastly, the new SAP Business One cloud implementation must be thoroughly tested before it is selected for daily use. The test can and should take one to two weeks to finish.

Conclusion About SAP to Cloud Migration

Migrating to SAP Business One cloud is not a scary proposition. Since SAP wants companies to modernize their IT infrastructure, it has made the migration process as frustration-free as possible. However, there are still a lot of moving parts involved with migrating your SAP Business One environment to the cloud. This is where B1 Partner Cloud in. We already have specialization in installing SAP Business One from scratch. We can obviously help you simplify the migration process. Contact us today for a smooth and successful migration to SAP Business One Cloud.

FAQs of SAP to Cloud Migration