ERP started its journey in 1990. It made enough amendments to the industry and made it ERP ready for the future. But, not everything was classy. The ERP of the 1990s is only aimed at big business as they were costly, time-consuming, and maintenance heavy. Small and medium scale businesses just could not afford the luxuries of the ERP.
In recent times, the shift is slowly starting to begin. More and more small scale companies are starting to adopt the ERP. And, why not? ERP can automate most of the back-end processes and provide a distinct advantage over the business processes. ERP can also handle the different operational procedures, provide real-time access to information, and grow the organization to the right path.
Cloud has changed almost everything. It has impacted on services, Apps, and tons of different things that you can think. Cloud-based ERP solutions are also emerging in the current industry. The cloud-based ERP brings a lot of flexibility to the company and provides a viable way to distribute expenditure and growth.
Having more options doesn't always mean a good thing. Is cloud ERP the best approach? Let's find it out in detailed comparison between Traditional and cloud-based ERP.
Comparing Traditional ERP and Cloud-Based ERP
1. Understanding The Traditional ERP Implementation ways and Cloud-based ERP
Traditional ERP can be implemented in two ways -- on-premises and hosted. The on-premises implementation takes place within the organization. In this case, the organization needs to buy all the equipment, install the product, and maintain it. The process is costly for many reasons. The first reason is the hardware cost, secondly, the organization also needs to hire staff and train existing staff to manage the ERP system for them.
Hosted ERP implementation works differently. In this scenario, the company has to connect with a 3rd party hosting company for monthly fees. Using the method saves the initial cost. The hardware and the ecosystem are managed by the hosting company, elevating the need for a large staff. Overall, the hosting method looks great as it saves money and time. But there are some caveats to it as well. The company might be worried about data security and ownership. Many hosting services don't provide full support for migration, and that can leave the company in the soup.
Cloud-based ERP is different. It uses a SaaS model to deliver the needs of an ERP solution. Cloud-based ERP is also known as an on-demand ERP solution, which in turn improves the scalability of ERP solutions.
2. Data Security
Securing data is necessary for any organization. The end-users are important for any company, and their privacy matters the most. Any data leak of any form can easily bring a bad name to the business and impact their business adversely.
Traditional ERP solutions are more secure compared to cloud-based ERP solutions as the traditional ERP solutions are out of bounds. A better solution is a hybrid solution where sensitive data applications are implemented on-premises, whereas less data-sensitive applications are hosted on the cloud.
3. Simplicity and Cost Savings
Small businesses cannot afford to invest a hefty amount in ERP implementation. Cloud-based ERP solutions do provide enough incentives for small businesses to jump on the ERP bandwagon. Cloud-based ERP is affordable as there is no hardware or managing cost associated with it. Cloud-based services can be easily scaled and monitored from the dashboard with a single click. Moreover, the charges are manageable, to say the least.
If you compare both traditional and cloud-based solutions, traditional ERP wins hands down. The performance is provided mostly by the on-premises, followed by hosted and then cloud-based applications. The performance of cloud-based applications depends on the network and server status.
5. Disruption and Innovation
Traditional ERP is limited in the sense of changes and disruptions. They are tightly coupled on the ecosystem and hence are hard to improve. A cloud-based solution, on the other hand, does provide enough flexibility for innovation. The service-based model is more preferred than the product-based model.
Hybrid ERP Solutions To The Rescue
So, what's the best solution? The current industry is moving towards hybrid solutions. Hybrid solutions are composed of both on-premises implementation and cloud-based applications. The choice of which application goes to which, platform depends on the management decision and how it will affect the organization. The approach can save initial implementation cost, provide easy scalability, data security, and other benefits.
Through the article, we understood the difference between traditional and cloud-based ERP solutions. In the end, we also managed to look at what the Hybrid ERP solution has to offer. If you are looking for ERP for your organization, Odoo is your best choice. It offers all three types of implementation including hybrid configuration. 73Lines provide both Odoo consulting and Odoo integration at an affordable price. Contact us for more information.