In the world of Industry 4.0, choosing the right enterprise resource planning (ERP) system is critical for optimizing operations and streamlining success. With so many options on the market, it helps to learn what types of ERP systems are available to you.
n this article, we’ll explain what on-premise ERP systems are, who they are right for, what their benefits are over cloud-based ERP systems, and explain hybrid ERP options.
What Is On-Premise ERP?
On-premise ERP software is a centralized software solution that is installed and maintained on your company’s local servers and infrastructure. Unlike cloud ERP software which is hosted on the Internet and accessible from anywhere, on-premise ERP can only be accessed on an internal intranet at the location of your manufacturing business.
On-premise ERP systems can be managed locally by your IT department, an external software vendor, or an ERP consulting firm like Godlan. Your ERP selection will depend on your current capabilities.
Who Is On-Premise ERP Good For?
On-premise ERP systems are best for organizations that require full control over their ERP software, data, and infrastructure. You might need an on-premise ERP solution if your manufacturing business deals with confidential data or your industry has strict regulatory compliance requirements. It’s also good for businesses that don’t have reliable access to the internet.
Some industries that opt for on-premise ERP systems include:
- Aerospace and Defense – This industry may choose on-premise ERP software to protect their intellectual property or because they are government contractors and the government requires it.
- Medical Device and Life Sciences – Manufacturers in the medical and healthcare industry choose on-premise ERP solutions to protect their clients’ health data to comply with HIPAA.
- Automotive and OEM – In a world of rapid advancement, the automotive industry might require on-premise ERP systems to protect intellectual property.
You might choose an on-premise ERP solution for many reasons, even in the age of Industry 4.0. Fortunately, there are solutions to fit the needs of all manufacturers in all industries.
On-Premise ERP vs Cloud ERP Software
The difference between on-premise ERP and cloud ERP systems begins with how they’re hosted. On-premise ERP systems are hosted on local servers at your facility. Cloud ERP systems are hosted on remote servers. These servers could be anywhere in the world and you typically pay for hosting. The cost is often included in the price of the software and ERP implementation.
- Deployment: On-premise ERP is installed locally on your servers whereas cloud ERP is hosted on the vendor’s servers and accessed via the internet.
- Cost: On-premise ERP systems have a higher upfront cost as you need to purchase your own servers and software licenses.
- Maintenance: Both types of systems require ongoing maintenance and updates. However, on-premise ERP requires someone to come out to your facility to perform maintenance whereas cloud ERP systems can be managed remotely by the software vendor and/or ERP consultant.
- Scalability: Cloud ERP systems tend to be more easily scalable because on-premise systems require the purchase of more servers and hardware to grow.
The benefits of on-premise ERP vs cloud ERP software include data security and reliability. Because your business’s data is not on the internet, you have a decreased risk of cyber attacks. You’re also less likely to go offline if there are issues with the internet. Access to data is speedier because your servers are within your facility, reducing load times for manufacturers who require faster data collection and transmission.
Cloud ERP software offers convenience because you can access your data from anywhere with your mobile device. However, you’re more open to security breaches and downtime caused by interrupted internet service.
What Is Hybrid ERP?
If you understand the benefits of both on-premise ERP and cloud ERP solutions and want the best of both worlds, a hybrid ERP system is right for you.
A hybrid ERP system combines elements of both types of systems. For example, you might want to keep certain modules or functionalities on-premise (and off the internet) while others can be accessed remotely through the cloud.
This approach allows you to leverage the benefits of both deployment models, like maintaining critical data on-premise for security reasons while using cloud-based applications for scalability and flexibility.
Is On-Premise ERP Right for Your Business?
The choice between on-premise ERP, cloud ERP, or a hybrid ERP system hinges on factors unique to your business. While on-premise ERP systems offer maximum control, security, and reliability, cloud ERP offers convenience, scalability, and accessibility from anywhere. Not sure which deployment model is right for you? Ask our experts at Godlan today.
