Cloud ERP vs. Hosted ERP
Are you interested in understanding the differences between a hosted ERP and a cloud ERP? Our goal in writing this article is to minimize any confusion you have regarding the same. If you need help in evaluating the right ERP software for your business, don’t hesitate to contact us to schedule your free ERP consultation. Now let’s get started.
What is a cloud ERP system?
A true cloud ERP system (also called Software as a Service) is a multi-tenant solution which means that while your data is private, the vendor’s data centers allow the workload to be spread out across multiple servers so resources can be shared. As a user, you can access the ERP software from any location 24/7 if you have an internet connection.
The software vendor owns the infrastructure and is responsible for the software maintenance, security, and backups. This can be helpful for small and mid-sized businesses because they don’t have to make a big upfront investment in hardware and software. As a cloud ERP user, you will pay a subscription fee to use the software. You don’t own the software.
Advantages of a cloud ERP system
- Lower upfront investment in hardware and software.
- IT maintenance, security, and backups are handled by the vendor.
- Depending on the vendor, pay for only what you need.
- With reduced IT infrastructure and maintenance costs, it’s easier to predict what your ERP expenses will be because of the subscription-based licensing model.
Disadvantages of a cloud ERP system
- Less control and customization options for your software.
- The security may not meet industry requirements.
What is a hosted ERP system?
A hosted ERP system is usually hosted off-site on a private server owned by the company or a third party. This is usually not a multi-tenant solution which means you have more control over your software solution and security options. Some examples of third-party hosting platforms include Amazon Web Services and Azure.
Depending on your software vendor this could mean that you own your software but are choosing to use a hosting service to run your software. It could also mean that you don’t own the software and are paying a subscription fee to access the software, but still, have the freedom to host the software wherever you want to.
Advantages of a hosted ERP system
- You have greater options to customize the software.
- If you are in an industry with complex regulatory compliance you may benefit from having more control over the software.
- You have more control over the security of your software depending on the hosting provider you choose for your software.
Disadvantages of a hosted ERP system
- You are responsible for owning, maintaining, and upgrading the software.
- Integrations and customizations can be more expensive, and complex compared to a true cloud software solution.
- Customization and integration can be more expensive compared to cloud software.
Before we wrap up this article, we’d like to address another deployment option that you may come across while evaluating different ERP solutions for your business.
On-Premises Deployment
If you choose this deployment model you are responsible for the infrastructure and the deployment of your software. In this deployment model, your ERP software is usually hosted in-house on your servers. If keeping your software and hardware in-house is important to you, then this is a great deployment option for your business.
Next steps
If you need assistance with evaluating the right ERP solution for your business, contact us for a free consultation today. We look forward to speaking with you.
At CTO Associates, we offer Acumatica Cloud ERP and Sage 100 as ERP solutions for small and mid-sized businesses. Contact CTO Associates to schedule your free consultation today. We look forward to speaking with you.