When searching for an ERP solution, many enterprises considering the latest in ERP systems mistakenly think it has to be an either/or solution – a reliable on-premise system or an agile cloud-based, software-as-a-service (SaaS) ERP solution.
With an on-premise solution, you purchase the software and license, install it on your own server, and maintain it yourself.
With a cloud solution, you pay a monthly fee (typically per user), and the supplier provides everything: the software, updates, server, maintenance, etc.
Both solutions have pros and cons.
- Lower upfront costs
- Lower maintenance costs
- Most providers maintain very secure environments
- Easy to scale as users are added/removed
- Available on most devices anytime anywhere (with an internet connection)
- No control over software updates and changes
- Little customization available for company specific needs
- Less control over security policies
- Without an active internet connection, most cloud-based ERP solutions don't work offline.
- Typically lower long-term cost (No monthly costs)
- Heavily customizable for business requirements
- Control over all security and data storage procedures and policies
- Depending on setup, can access without an internet connection if needed
- Control over updates and software changes
- Higher upfront costs (hardware and license)
- Updates require heavy IT involvement
- Must have team to backup and maintain system
- More difficult to scale if significant number of users are added
So what’s a modern enterprise to do? Get the best of both with a hybrid cloud ERP solution
A hybrid ERP model provides a solid base of on-premise functionality and agile cloud applications to address both unique existing business processes and rapidly-evolving, high-impact areas of your business. This bi-modal strategy also presents the least amount of risk because the known core, on-premise ERP can be trusted to work reliably while the cloud can be used to add specific, limited functionality one project at a time to avoid major problems, delays, and unacceptable additional cost.
Since every business has different needs, it’s important to start by evaluating several different factors that can affect the implementation of hybrid ERP:
- Is the hardware your core ERP runs on still fully supported and addressing modern requirements?
- Is the underlying software still fully supported and addresses modern requirements?
- Are there resources available that can fully support the core ERP?
- Where does your existing ERP solution succeed and fail in supporting your existing processes?
- Which existing ERP functions are systems of record (core ERP) and which are systems of engagement (potential cloud application)?
- What parts of your manufacturing organization have custom requirements that are too difficult or too expensive for the core ERP system and might be better served in the cloud?
To learn more about hybrid ERP and cost effective, strategic ERP options that increase functionality to meet all your business needs, feel free to contact us.
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