ON PREMISES OR IN THE CLOUDS?

In the clouds or in your office?

Cloud systems and on premise systems are the two main choices when it comes to ERP. Yet, what exactly is the difference between cloud based ERP programs and on premises ERP program?The easiest way to explain is that an on premise system has all the programs, software, drivers installed directly in the office, onto each computer or the servers. Cloud ERP is basically a Software as a Service or SaaS system. The ERP vendors host all the necessary drives and hardware and the business need not buy expensive hardware.

On premise systems are self-managed by the business whereas cloud systems are managed by third parties. There are many hybrid options that combine the benefits of both cloud and on premise programs.
Infrastructural or IT requirements are the greatest for on premise systems. The enterprise has to purchase all the necessary hardware servers and IT equipment beforehand for the ER P deployment. Cloud hosted or hybrid systems have a moderate amount of investment required for the ERP system. Completely cloud based programs have little if any additional IT requirements. All the necessary resources and infrastructure are with the ERP provider.
There are concerns about the total costs of ERP ownership. On premise programs are generally not financially feasible for small and medium enterprises as they require a large upfront investments. Cloud program do not entail large up front expenses and generally have monthly or yearly payment models. Over a large period of time, cloud ERP may be the more costly system. A hybrid ERP system requires a moderate investment in total. Businesses would need to decide how long they would use a particular system, their budget and assess their financial capabilities before making a decision.

The software licenses are owned by the enterprise in the case of on premise ERP. For the cloud based system, the software license are rented by the company. Hybrid system also give the business ownership over the licenses. Because on premise and hybrid systems give the entire ownership of the license to the company, the usage license does not expires. In the case of cloud ERP, the license to use the system expires upon non-payment fees or when the company does not renew their contract. As per accounting principles an on premise and hybrid system would be regarded as a capital asset or capital lease while cloud ERP would be regarded as an operating lease or expense.
Cloud systems have a distinct advantage over the other two in terms of updating ERP software. Cloud systems are updated automatically by the vendor and it is ensured that the business is always running on the latest version. For hybrid and on premise ERP, the system is updated very infrequently - generally every 18 to 24 months and business often run on outdated system to avoid the additional expenses and possible data loss that may occur as a result of the updates.
Both on premises and hybrid ERP give the business the ability to completely customize their programs. Generally the greater the customization required, the greater the cost of the ERP. Businesses have to assess their requirements and decide how customized their program needs to be. Cloud ERP may be limited in their scope of customization offered depending on the vendor. Companies should find an EPR vendor that is compatible and one that provides them with the specifications they have in mind. The majority of small and medium enterprises do not require much customizations and the cloud systems would meet their business requirements.
Hybrid and on premise ERP systems have user based security. Access to data is determined by the company and its personnel. Each user or employee will have access to data that is relevant to their department and work. For cloud based systems, data is generally accessible corporate wide, but can be restricted. A function of cloud ERP is the greater accessibility it offers to users compared to strictly on premise programs. Users can access data from any part of the world through the internet (unless the company has restricted it). This allows them to be more efficient. Small and mid-sized companies where decision making is fairly integrated benefit from greater transparency and accessibility provided by cloud systems.

Large companies would typically opt for hybrid ERP and have greater restrictions on data accessibility to prevent unauthorized data manipulation.
Security of the servers is internally managed in the case of onsite ERP. For this the company must have a capable IT department or team to ensure no confidential data is vulnerable to hacks. The security and maintenance of the data is in the domain of the company. The additional expenses in employing capable IT personnel means that typically only larger companies or companies with highly classified or sensitive information would use onsite ERP. For hybrid and cloud ERP the maintenance and security of the servers is externally managed.
Cloud systems are the most logical option for small and mid-sized enterprises while on premise ERP is opted by larger companies. Businesses need to assess their requirements and capabilities to maintain the ERP before deciding which system to opt for.







Contributor : Vidushi

ON PREMISES OR IN THE CLOUDS?

On-Premises or in the Clouds – the two main choices when it comes to ERP. Yet, what exactly is the difference between cloud based ERP programs and on premises ERP program?The easiest way to explain is that an on premise system has all the programs, software, drivers installed directly in the office, onto each computer or the servers. Cloud ERP is basically a Software as a Service or SaaS system. The ERP vendors host all the necessary drives and hardware and the business need not buy expensive hardware.

On-premise systems are self-managed by the business whereas cloud systems are managed by third parties. There are many hybrid options that combine the benefits of both cloud and on premise programs.

Infrastructural or IT requirements are the greatest for on premise systems. The enterprise has to purchase all the necessary hardware servers and IT equipment beforehand for the ERP deployment. Cloud hosted or hybrid systems have a moderate amount of investment required for the ERP system. Completely cloud based programs have little if any additional IT requirements. All the necessary resources and infrastructure are with the ERP provider.

There are concerns about the total costs of ERP ownership. On premise programs are generally not financially feasible for small and medium enterprises as they require a large upfront investments. Cloud program do not entail large up front expenses and generally have monthly or yearly payment models. Over a large period of time, cloud ERP may be the more costly system. A hybrid ERP system requires a moderate investment in total. Businesses would need to decide how long they would use a particular system, their budget and assess their financial capabilities before making a decision.

The software licenses are owned by the enterprise in the case of on premise ERP. For the cloud based system, the software license are rented by the company. Hybrid system also give the business ownership over the licenses. Because on premise and hybrid systems give the entire ownership of the license to the company, the usage license does not expires. In the case of cloud ERP, the license to use the system expires upon non-payment fees or when the company does not renew their contract. As per accounting principles an on premise and hybrid system would be regarded as a capital asset or capital lease while cloud ERP would be regarded as an operating lease or expense.

Cloud systems have a distinct advantage over the other two in terms of updating ERP software. Cloud systems are updated automatically by the vendor and it is ensured that the business is always running on the latest version. For hybrid and on premise ERP, the system is updated very infrequently – generally every 18 to 24 months and business often run on outdated system to avoid the additional expenses and possible data loss that may occur as a result of the updates.

Both on premises and hybrid ERP give the business the ability to completely customize their programs. Generally the greater the customization required, the greater the cost of the ERP. Businesses have to assess their requirements and decide how customized their program needs to be. Cloud ERP may be limited in their scope of customization offered depending on the vendor. Companies should find an EPR vendor that is compatible and one that provides them with the specifications they have in mind. The majority of small and medium enterprises do not require much customizations and the cloud systems would meet their business requirements.

Hybrid and on premise ERP systems have user based security. Access to data is determined by the company and its personnel. Each user or employee will have access to data that is relevant to their department and work. For cloud based systems, data is generally accessible corporate wide, but can be restricted. A function of cloud ERP is the greater accessibility it offers to users compared to strictly on premise programs. Users can access data from any part of the world through the internet (unless the company has restricted it). This allows them to be more efficient. Small and mid-sized companies where decision making is fairly integrated benefit from greater transparency and accessibility provided by cloud systems.

Large companies would typically opt for hybrid ERP and have greater restrictions on data accessibility to prevent unauthorized data manipulation.

Security of the servers is internally managed in the case of onsite ERP. For this the company must have a capable IT department or team to ensure no confidential data is vulnerable to hacks. The security and maintenance of the data is in the domain of the company. The additional expenses in employing capable IT personnel means that typically only larger companies or companies with highly classified or sensitive information would use onsite ERP. For hybrid and cloud ERP the maintenance and security of the servers is externally managed.

Cloud systems are the most logical option for small and mid-sized enterprises while on premise ERP is opted by larger companies. Businesses need to assess their requirements and capabilities to maintain the ERP before deciding which system to opt for.

Myth Busters: Data Insecurity on Cloud

“Sure an ERP system is great, but is my data safe on the cloud?”

Due to common misconceptions, and with wide spread myths about cloud storage some companies remain hesitant to move forward into the future.

The cloud enables greater transparency and accessibility, rapid deployment of the software across the company and seamless scaling of business functions to meet market changes. There have been a number of high profile attacks on company data in the past year, a case in point being Sony. These stories are bound to make some hesitant about switching to the cloud.
These are the top buyer misconceptions when it comes to cloud ERP system:

1. Cloud data is more prone to attack

An ERP vendor has more expertise on data security than the average enterprise engaging its services. The physical location of the server, be it on company premises or within a cloud provider’s data center, has little relevance on the server’s potential vulnerability. The data’s security relies less on the physical location of the server and more on the security measures implemented by the center. Companies with on premise ERP have the added responsibility of maintaining its server’s security and maintenance. The generally superior to that of the average enterprise. Thus purely in terms of data security, the cloud system is the better option for most small and medium sized enterprises.

2. Data Residency Control

Many countries have regulations that restrict personal or sensitive data to be exported or stored in a different country. Companies that fear that their data and records may be outsourced without their consent can rest east knowing that there are legislative restrictions to prevent that. By choosing a reputable and reliable ERP vendor who is transparent about the internal and external policies governing the relationship, the firms can be assured that their data is in reliable hands and rest easy.

3. Rival firms with the same vendor can hack and sabotage

A persistent but unfounded concern is that a cloud based system that houses the data of multiple firms is inherently more susceptible to data hacks, leaks and attacks. In a cloud system, firms share a pool of network and storage resources, which brings about this fear, because in the business world, sharing is not about caring. Firms can be assured that the cloud providers segment and secure the servers and resources in such a way that essentially each company’s data is in their own private space, completely detached and inaccessible for others.

4. No Cloud, No Worries!
A firm that has not opted for a cloud ERP system may smugly assume that it is safer. “My data is not stored on the cloud, it is stored on my own computer. I am completely safe!” But if the computers are connected to the internet, the firm is already on the cloud. Given that most, if not all, companies are connected to the internet, no company is perfectly safe from attacks and data theft.
5. Data security is the sole responsibility of the Cloud Provider
The cloud ERP vendor does manage the network security and associated tasks for the firm. However, to rely solely on the vendor for all aspects of data security is a massive folly. Internal data management and confidentiality policies, password policies, employee accessibility, user management and security training of employees are equally, if not more, important when it comes to maintaining data integrity and safety.
There are several reasons to choose a cloud based solution for your business needs. Lower costs, greater accessibility and flexibility are some of the many reasons that firms are increasingly opting for cloud-based ERP. The common myths and misconceptions regarding data security on the cloud are more fiction than fact. Enterprises looking for a suitable ERP system can be rest assured that the cloud options are safe.

Contributor : Vidushi