ERP On Cloud vs On Premise | Pros and Cons to Know

Published: 7 May 2025

ERP On Cloud vs On Premise

Many businesses today still struggle to decide between ERP on cloud vs on premise—even though 60% of companies now prefer cloud solutions. Are you confused about which one fits your business better? You might worry about costs, setup, or control, and that’s totally valid. Whether you’re upgrading from spreadsheets or just heard someone mention ERP, understanding ERP on cloud vs on premise can save you time, money, and stress.

Table of Content

ERP On Cloud vs On Premise
What is Cloud ERP
What is On-Premise ERP
Difference Between ERP On Cloud and on premise
Cloud ERP Pros and Cons
1. Cloud ERP Pros
2. Cloud ERP Cons
Pros and Cons of On-Premise ERP
1. On-Premise ERP Pros
2. On-Premise ERP Cons
Conclusion About On Premise vs ERP On Cloud
FAQS

What is Cloud ERP

Cloud ERP is a business software that runs on the internet. You can use it from anywhere without needing to install it on your own computers.

What is On-Premise ERP

On-Premise ERP is software you install on your own computers at your office. You control everything, but it needs more setup and support.

Difference Between ERP On Cloud and on premise

The main difference between ERP on cloud and on-premise is where the system is stored—cloud ERP runs online, while on-premise ERP runs on your own servers.

Cloud ERP	On-Premise ERP
ERP software hosted online by a vendor.	ERP software installed and run on your own computers.
Net Suite, SAP Business By Design.	SAP ECC, Microsoft Dynamics GP.
Quick setup, often ready in days.	Longer setup, may take weeks or months.
Monthly or yearly subscription.	One-time upfront cost, plus maintenance.
Lower.	Higher.
Handled by a vendor.	Handled by in-house IT team.
Automatic and regular.	Manual and may require downtime.
Available anytime, anywhere with the internet.	Available only on the company network.
Yes, I need a stable connection.	No internet needed for daily use.
Managed by a vendor with strong cloud security.	Managed by your company—more control, more responsibility.
Limited but improving.	Highly customizable.
Minimal or none.	Required for setup, support, and updates.
Easy to scale up or down as your business grows.	Scaling needs more hardware and planning.
Included in service.	Needs to be managed by your team.
Depends on internet speed and vendor infrastructure.	Depends on your hardware setup.
Easy mobile access for remote teams.	Harder to access outside the office.
Small to mid-sized businesses or fast-growing startups.	Large companies with strict control needs.
Vendor controls most of the system.	You have full control over data and system.

Cloud ERP Pros and Cons

Cloud ERP Pros

Easy Access: You can use it anytime, anywhere with the internet.
Quick Setup: It’s fast to start, with no heavy hardware needed.
Lower Upfront Cost: You pay monthly, not all at once.

Cloud ERP Cons

Needs Internet: It won’t work well if your connection is weak.
Less Control: The vendor handles updates and changes.
Ongoing Fees: You must keep paying to use the service.

Pros and Cons of On-Premise ERP

On-Premise ERP Pros

Full Control: You manage and customize everything yourself.
No Internet Needed: Works without an internet connection.
One-Time Cost: Pay once for the software, no monthly fees.

On-Premise ERP Cons

High Setup Cost: Requires a big initial investment in software and hardware.
Needs IT Staff: You’ll need an in-house team to maintain and update the system.
Limited Scalability: Expanding requires additional hardware and planning.

Conclusion About On Premise vs ERP On Cloud

ERP on cloud vs on-premise is a decision every business must make based on its unique needs. In my opinion, if flexibility, cost-efficiency, and scalability are important to your company, cloud-based ERP systems are the better choice. I recommend evaluating your current infrastructure and long-term goals before making the final decision. Start by assessing the advantages and limitations of both options to make an informed choice.

FAQS

Is Oracle ERP on-premise?

Yes, Oracle ERP can be on-premise, meaning it can be installed and run on your company’s own servers.

Is SAP ERP on-premise or cloud?

SAP ERP is available both on-premise and in the cloud, giving companies the choice to use either option.

Is NetSuite cloud or on-premise?

NetSuite is a cloud-based ERP system, meaning it is hosted online and accessed via the internet.

What is an ERP MRP system?

An ERP MRP system helps businesses plan and manage production, inventory, and material requirements efficiently within their ERP software.

Which is better, cloud or on-premise?

Cloud is better for flexibility, lower costs, and easier updates, while on-premise may offer more control but is often more expensive and harder to maintain. The choice depends on your business needs.