On-premise vs Cloud

Whenever it comes to software or ERP deployments, the most crucial decision factors would be for on- whether to opt premise or cloud deployment. Despite cloud-based systems are being more common than ever before, traditional on-premise ERP remains the norm in the ERP space especially for SMEs.

On-premise refers to the deployment of any software locally within the organisation. In other words, installation will be done in local PCs and servers maintained within the organisation premises. On-premise deployments are usually priced under one-time perpetual fee. Cloud on the other hand refers to subscribing to any software hosted in certified data centre providers. These data centres are professionally equipped with the expertise and infrastructure to host almost any scale of business applications depending on requirements. Cloud based deployments are usually priced under monthly or annual subscriptions.

Let’s consider both the macro and micro perspective of things.

Macro:

  1. Certain countries may have legal data privacy guidelines in terms of managing business related information. If you are under any of the above scrutiny, do exercise caution when deciding on any of the deployment methods.
  2. The location of your organisation is another factor to be considered. Multiple location or country operations may require a single instance of the software operating within in a centralised server. Cloud deployment makes sense in this situation whereby all operations from different location or countries will be accessing to a single software source anywhere anytime. Some locations may also be prone to natural disasters such as flooding, earthquakes or power cuts which may not be suitable for on-premise deployment.
  3. Public infrastructure such as internet connectivity is another important factor to determine the feasibility of network setup within your organisation’s premise. It is not surprising for organisations that are located at city fringes or outskirts to have limited internet infrastructure and connectivity. This is especially the case in developing countries such as Malaysia whereby factories are commonly located at industrial parks far from main cities.

Micro:

  1. What would be your comfort level in terms of parking all your data and software in the cloud? Often, many smaller to mid-sized organisations would still prefer to have control and access to data secured within the organisation itself.
  2. Internal IT support and expertise are vital in supporting any on-premise software and applications. Cloud deployment removes these complexities by ensuring quick and smooth deployment while maintaining optimum bandwidth and security together with consistent backups.
  3. Degree of customisation required. Standard cloud-based systems are rolled out rapidly as standard package without much room for further customisations. The operating nature of any manufacturing plants would require a higher degree of customisations as compared to catering to the needs of a common trading business.
  4. Price Tag! While cloud deployment may incur lower initial investment, on premise deployment may sometimes be more cost effective in the long run especially for small and mid-sized organisations. It is a decision between “Cashflow or Total Cost”.

The above are only few of the major factors to be considered before implementing your desired solution. Many organisations are in fact still operating based on the on-premise model although cloud technology may soon mature as the new norm in the software industry. Having said so, a hybrid approach of perpetually/one-off priced system but hosted on data centre subscription may be a practical option for some businesses.