In the face of economic pressure, many companies are looking for the best cloud ERP solution to improve their operations and help them to gain a competitive edge. But with so many options in the market, choosing the right ERP solution can be challenging. In this article, we will help you understand the benefits and fundamental differences of true cloud ERP (multi-tenanted) versus on-premise ERP or self-hosted cloud ERP to help you make an informed decision.
Understanding the Different ERP Hosting Options
What is Cloud ERP?
Cloud ERP is a software as a service (SaaS) model where the ERP system is hosted on a cloud server. This means that all the data of the organisation is stored and processed on the cloud computing, and users access it via the internet. Cloud ERP software is rapidly gaining popularity because it is easy to deploy, flexible, and affordable.
One of the biggest advantages of cloud ERP is that it allows businesses to access their data and software from anywhere, at any time. This means that employees can work remotely, and businesses can easily expand their operations to a new physical location without having to worry about setting up new physical servers or IT infrastructure. With the seemingly permanent change in work flexibility expectations that were brought about during the pandemic, businesses are now opting for solutions that give users the ability to work from anywhere.
Another advantage of cloud based financial management systems is that they are highly scalable. Businesses can easily add or remove users and can quickly upgrade or downgrade their software as needed. This makes it an ideal solution for businesses that are experiencing rapid growth or that have fluctuating demand.
What is On-Premise ERP?
On-premise ERP, also known as in-house solutions, are hosted on the company’s local server. Companies have to purchase the software licences and have to allocate IT resources for the system’s maintenance and management. On-premise ERP offers complete control and customisation to businesses that have the resources to manage and maintain it.
One of the main advantages of on-premise ERP is that it allows businesses to host their data and software locally. This means that businesses can customise their infrastructure to meet their specific needs, and can manage data security internally.
However, on-premise ERP can be expensive to set up and maintain as businesses need to purchase the software licences upfront, and have specific hardware and networking infrastructure to access the main server.. Additionally, on-premise ERP can be difficult to scale, as businesses have to purchase additional hardware and software licences as they grow.
What Is Multi-tenancy?
Multi-tenancy is a software architecture in which multiple users share the same resources of a single instance of an application. In other words, instead of having each user running their own copy of the application, all users share the same version and resources. This allows for cost savings and increased efficiency because server hardware and software costs are shared among multiple tenants. Multi-tenancy also provides scalability as companies can easily add or remove users as their needs change.
The Benefits of True Cloud ERP (Multi-tenanted)
True cloud ERP, also known as multi-tenanted software, provides the best of both worlds by combining the benefits of on-premise and cloud based solutions. It is hosted on a single instance of the server that is shared among multiple tenants.
A true cloud ERP solution provides the flexibility and cost savings of cloud computing with the control and customisation of on-premise solutions. It offers an ideal solution for businesses that need to scale quickly, as it allows them to easily add or remove users as needed. Furthermore, multi-tenanted ERP systems are highly secure as all data is stored on a single server, allowing businesses to take advantage of the same robust security protocols that are used by large enterprises.
What is Self-Hosted Cloud ERP?
Self-hosted cloud ERP is a hybrid solution that combines cloud and on-premise solutions. In this model, companies host their ERP system on cloud servers but are responsible for managing the system themselves. Self-hosted cloud ERP offers the scalability and flexibility of a cloud solution with the security and control of an on-premise solution.
One of the main advantages of self-hosted cloud ERP is that it allows businesses to have more control over access to their virtual servers. Additionally, similar to true cloud hosting, self-hosted cloud ERP is highly scalable, allowing businesses to easily add or remove users, and to quickly upgrade or downgrade their software as needed..
However, self-hosted cloud ERP can be more complex to set up and maintain than true cloud ERP solutions, where the cloud service provider and software vendors are responsible for ensuring cloud servers are operational and meet the business requirements of their users. With self-hosted ERP, Businesses still need to allocate IT resources for ongoing maintenance and support, and have to ensure that their servers are secure and up-to-date at all times.
When it comes to choosing between cloud ERP solutions and on-premise ERP solutions, one of the most important factors to consider is the cost. Let’s take a closer look at the cost comparison between these options.
Initial Investment and Setup Costs
Cloud ERP solutions have lower initial investment and setup costs as there is no need to purchase hardware, software licences, or hire IT staff to manage the system. This means that businesses can get up and running quickly without having to make a significant investment upfront.
On-premise ERP solutions, on the other hand, require significant upfront costs for purchasing hardware, software licences, and IT staff. This can be a significant financial burden for small and medium-sized businesses that may not have the resources to make such a large investment.
Self-hosted cloud ERP solutions also require initial investment for purchasing hardware but not necessarily software licences. This option can be a good compromise for businesses that want to have more control over their ERP system but don’t want to make a large upfront investment.
Ongoing Maintenance and Support Costs
Cloud ERP solutions have lower ongoing maintenance costs as the vendor takes care of system maintenance, upgrades, and support. This means that businesses don’t have to worry about hiring IT staff to manage the system or paying for expensive upgrades and maintenance.
On-premise ERP solutions require regular upgrades, maintenance, and support, as each client has a unique code base, with the vendor having limited ability to upgrade without involvement by the client’s IT team, which can be very expensive in the long run. This is because businesses need to hire IT staff to manage the system and pay for software upgrades and maintenance and often need to scale down business operations while the upgrade is being completed. This could be anywhere from a couple of hours to weeks at a time. .
Self-hosted cloud ERP solutions require ongoing maintenance and support, but the costs are lower than on-premise solutions. This is because businesses don’t have to pay for software upgrades and maintenance, but they still need to have IT staff to manage the system.
Scalability and Future Upgrades
Cloud ERP solutions offer scalability and flexibility, allowing businesses to add or remove users as needed, and they offer automatic updates and upgrades. This means that businesses can easily scale their ERP system as their needs change without having to make a significant investment.
On-premise ERP solutions require additional investments when upgrading, and the process can take longer to implement. This means that businesses may not be able to take advantage of new features and functionality as quickly as they would like.
Self-hosted cloud ERP solutions are scalable, but upgrades are dependent on the company’s IT staff’s availability and expertise. This means that businesses may not be able to take advantage of upgrades if they don’t have the necessary IT expertise in-house.
Dive into our extensive comparison table list between ERP Hosting Options for;
– Technology Platform
– Business Risk
– Accessibility & Costs
– User Experience
– Long-Term Financial Impact
Data Security and Compliance
When it comes to managing sensitive business information, data security and compliance are of utmost importance. With the rise of cloud-based enterprise resource planning (ERP) solutions, businesses have more options than ever when it comes to securing their data.
Cloud ERP Security Measures
Cloud ERP vendors invest heavily in security measures to ensure their customers’ data is protected from potential threats. They provide multi-factor authentication, advanced firewalls, and encryption to safeguard against unauthorised access. Additionally, vendors undergo regular security audits to maintain compliance with industry standards and regulations.
One of the key advantages of cloud ERP security is the ability to scale security measures as your business grows. As your company expands, cloud ERP vendors can provide additional security features to ensure your data remains secure.
On-Premise ERP Security Measures
On-premise ERP solutions offer the ultimate security control, as the business has complete control over the system’s security. However, this level of control comes at a cost. Businesses must invest in IT staff and cybersecurity solutions to ensure the system’s security measures are up-to-date and effective.
On-premise ERP solutions also require regular maintenance and updates to ensure they remain secure. Failure to do so can leave the system vulnerable to cyber attacks, which can result in data breaches and other security threats, as was the case for Optus (2 million customers affected), Woolworths My Deal (2.2 million users affected) and Medibank (9.7 million customers affected) as stated by itnews.com.au.
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Self-Hosted Cloud ERP Security Measures
Self-hosted cloud ERP solutions offer a middle ground between cloud-based and on-premise ERP solutions. They provide secure data storage and processing on the cloud, while still allowing the business to manage and implement their own additional security measures.
While self-hosted cloud ERP solutions can provide a high level of security, they still require businesses to have the expertise and resources to manage their own security measures. This can include investing in cybersecurity solutions, as well as regularly monitoring and updating security protocols.
Overall, when choosing an ERP solution, businesses must carefully consider their security needs and the resources they have available to manage those needs. Whether you choose a cloud-based, on-premise, or self-hosted ERP solution, it’s essential to prioritise data security and compliance to protect your business and your customers.
System Performance and Reliability
System performance and reliability are critical factors to consider when choosing an ERP solution for your business. The ERP solution you choose should be able to handle your business’s needs, including large datasets and multiple user direct network connection, without compromising on performance or reliability. In this section, we will discuss the performance and reliability of cloud ERP solutions, on-premise ERP solutions, and self-hosted cloud ERP solutions.
True Cloud Solutions for ERP Performance
Leading Cloud ERP solutions like NetSuite are becoming increasingly popular due to their reliability and performance scores. Cloud solutions like NetSuite, use dedicated servers, which means that they can handle large datasets and multiple user connections easily. They also offer cloud elasticity, which means that the system can scale up or down to meet your business’s needs. Cloud ERP solutions in general are designed to be highly available, meaning that they have built-in redundancy, which ensures that the system is always available when you need it.
In addition, cloud ERP solutions offer automatic software updates, which means that you always have the latest features and security patches. This eliminates the need for manual software updates, which can be time-consuming and error-prone.
On-Premise ERP Performance
On-premise ERP solutions offer predictable performance, but it depends on the hardware’s quality, age and maintenance level. Upgrading the hardware or migrating to new platforms can also pose performance challenges.
On-premise ERP solutions often offer control over the system’s functionality, which means that you can customise the system to meet your business’s specific needs. However, this can cause issues in the future, as customising an on premise solution essentially changes the source code of the application, meaning future updates may interfere with customisations, and vice versa, customisations may interfere with new functionality rolled out in future releases.
Self-Hosted Cloud ERP Performance
Self-hosted cloud ERP solutions offer the benefits of cloud ERP solutions, including scalability and automatic software updates, while also offering greater control over the system. However, self-hosted cloud ERP solutions require more IT expertise and resources than cloud ERP solutions, which means that they may not be suitable for all businesses.
Choosing the right ERP solution depends on a company’s unique requirements, resources, and future growth plans. True Cloud ERP solutions, like NetSuite almost always emerge as the superior choice when compared to on-premise or self-hosted cloud ERP options. The benefits of true Cloud ERP are abundant, offering unparalleled advantages in terms of scalability, cost-effectiveness, accessibility, and security.
By harnessing the power of the cloud, true Cloud ERP empowers businesses with the ability to adapt and grow rapidly, leveraging cutting-edge technologies and real-time data insights. With simplified implementation, automatic updates, seamless integration, and enhanced collaboration capabilities, Cloud ERP drives operational efficiency and flexibility, enabling organisations to stay competitive in today’s high pressure economic environment. Embracing true Cloud ERP is not just a technological decision, but a strategic move that positions businesses for long-term success, innovation, and continuous growth.
Frequently Asked Questions
A cloud provider is a third-party service that provides computing resources such as servers, cloud storage, private servers and networking over an internet connection. Cloud providers offer businesses a way to access services on demand, without having to invest in hardware or software upfront. This can be beneficial for businesses who have limited capital or IT staff, allowing them to quickly get up and running with the latest technology.
Cloud providers are also responsible for the security and maintenance of the hardware and software, allowing businesses to focus on their core operations.
The top providers of cloud hosting services include Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform, IBM Cloud, and Oracle Cloud Infrastructure. Each provider offers various services like cloud computing, storage, networking, and database solutions to help businesses store and manage their data.
Amazon Web Services (AWS) is a comprehensive cloud platform offering more than 175 products and services including computing power, storage, networking, analytics, and machine learning.
Microsoft Azure is a comprehensive cloud platform offering more than 200 services including computing power, storage, networking, artificial intelligence (AI), and blockchain solutions.
Google Cloud Platform provides a range of products and services for businesses to store and manage their data including cloud computing, storage, networking, analytics and ML solutions.
IBM Cloud is a comprehensive cloud platform offering more than 170 products and services including computing power, storage, networking, analytics, and machine learning.
Oracle Cloud Infrastructure provides a range of products and services for businesses to store and manage their data including cloud computing, storage, networking, analytics and ML solutions.
When it comes to choosing a cloud environment for Enterprise Resource Planning (ERP) solutions, there are several options available. Depending on the size of the organisation and its requirements for scalability, flexibility, security concerns, and cost-effectiveness. Ultimately, the best cloud environment for a business will be one that provides the features needed without sacrificing performance or security.
The three most common cloud environments are public clouds, private clouds, and hybrid clouds. Public clouds are hosted by third-party providers, allowing businesses to take advantage of cost savings and shared resources. Private clouds allow organisations to host their data in a secure environment with greater control over security and customisation options. Hybrid clouds provide the best of both worlds, combining public cloud features with the privacy and security of a private cloud.
A cloud Product Lifecycle Management (PLM) system is a type of software that helps organisations manage the entire lifecycle of products: from conception to design, production, distribution, and customer service. PLM systems are designed to improve collaboration between teams, increase efficiency in product development processes, reduce costs and improve the quality of products.
Cloud PLM systems offer a number of advantages over traditional PLM systems, such as: greater scalability, increased flexibility, improved collaboration and enhanced security. Furthermore, cloud PLM systems can be accessed from anywhere, anytime which makes them ideal for organisations with multiple teams or remote employees.