Selecting the right ERP system for your business does not have to be a complicated process, but you should consider the pros and cons of each option for your business – onsite or cloud-based? There is rarely only one solution for every business, and it does help to discuss the specifics of your situation and your goals with a professional ERP specialist (for current clients, or if you’re a new customer email email@example.com).
A cloud-based ERP system can only be accessed online, and requires little maintenance – which is usually included in your monthly cost but its efficiency is dependant on the speed and costs of your company’s internet provider. An onsite ERP is one that your business hosts on a server on the premises, and maintenance is up to you and your IT team.
When you’re choosing between an onsite ERP or a cloud-based one, there are several factors you’ll need to keep in mind. Remember that the right system for you will work with your business as it grows.
- Consider the cost of each option. Cloud based options are considerably cheaper upfront than onsite ERP’s but are ongoing.
- Consider the reputation and plans for development of the software provider. Do you know of and trust the company name?
- Consider installation and support – is this local (ie; can people come to you to help your team with updates, configuration and training) or is this only provided online/overseas/interstate?
- Remember that you’ll need to update and upgrade your software
- Consider the system you already use, how your staff use this and what would work best with it
- Consider the size of your business and how it could grow
- Have a plan for natural disasters
- Consider the start-up costs and necessary work
- Consider the speed and accessibility you’re looking for
COST OF ONSITE ERP VS. COST OF CLOUD BASED ERP
Generally, for an onsite ERP, you’ll have a high investment cost in addition to maintenance and upgrade costs, while a cloud based ERP requires a monthly subscription based on a package that you choose. However, you will need be dependant on factors such as internet speed for repetitive processes. For example, inputting invoices.
With an onsite ERP, you are responsible for the cost of the server and hardware, maintenance, the software, IT personnel to maintain both hardware and software, and more. However, this investment does become more cost effective in time with most large systems paying for themselves within a two to three year period. Also, the speed of your server will, for the foreseeable future, outpace your internet processing speed. This is particularly important if the majority of your business accounting activities take place onsite. You will also need to consider what other software applications you use in your day-to-day business. It is easier to ‘bolt on’ products to an onsite ERP system plus if you use other industry specific software (for example CAD) that needs a server anyway, the costs of maintaining a server will still exist.
If you choose a cloud based ERP, your regular ongoing costs may be higher, but the monthly subscription rate will include the cost of maintenance, hardware, software, and whatever the plan you choose includes. One of the major benefits of Cloud is the access to information from anywhere – great for your on the road Sales Team, work from home staff or Directors.
REGULAR UPGRADES AND UPDATES
When you host an onsite ERP, you are responsible for your own maintenance, including having an IT team to update software, install new hardware, and ensure that the settings are appropriate for your business. Both onsite and Cloud systems will need access to a dedicated team that understands how to configure the system to your needs.
As part of your monthly subscription for a cloud based ERP, upgrades and software updates should be taken care of for you. Your service provider should ensure that your business always has the newest version, and that the settings are customised to your business needs.
New versions for onsite ERP systems may require assistance by Support or a consultant – which is great if you have access to a local team.
All updates (think of Apple!) tend to come with fixes and potentially their own issues. This is less of an issue when an onsite ERP where versions can be ‘tweaked’ without having to wait for an online fix/update.
SPEED AND AVAILABILITY
As part of their service, cloud based ERP systems are usually as fast as your plan provides, and they are made available at all possible times. Generally, this should include a backup plan included for natural disasters, updates and upgrades, and any downtown will be scheduled at a natural low traffic time.
Maintaining your own onsite ERP system means that your own IT personnel will manage speed and availability of your system. In order to fully protect against natural disasters, you will likely need two separate servers with matching data in two different locations. As your hardware gets older, upgrades will be necessary to maintain the speed you want.
CONSIDER WHAT FITS YOUR BUSINESS
Whether you choose to host your own ERP or use a cloud based one may depend on the system you are already using. For example, if you don’t have a server, or a place to house one, a cloud based ERP might be more feasible. Do you have the IT team to maintain an onsite ERP? Choosing a cloud based one may make their jobs unnecessary.
Consider each of the items in this list based on the current size of your business, and the rate at which you’re growing. The investment required to house your own ERP system may or may not be worth it, depending on your business.