Selecting Among Cloud, SaaS and On-premises ERP

A question often asked of independent consultants like Enterprise Resource Consulting is, what is the difference among a cloud system, a Software-as-a-Service (SaaS) system, and an on-premises system. It’s easy to be confused by them, especially when the terms cloud and SaaS are often used interchangeably. This article will try to give you a better understanding of these platforms.

Cloud systems

Cloud computing is the on-demand delivery of computing power, database storage, and application programs through a cloud services platform, via the internet, with pay-as-you-go pricing. Let’s look at an example.

Let’s say you have two locations, a headquarters and a distribution center, and a traditional on-premises system. Most likely your DC would access your HQ system over the internet. The DC would have access over the cloud. If you didn’t want to buy the on-premises system, or support it technically, you could instead hire a “hosting” company, and use their computer hardware. Your HQ and DC would each access it over the internet, and the hosting company would maintain and backup the server(s), maintain a redundant system in another location, provide malware protection, etc., and you would pay them for the services. All your present and future facilities would only need internet, and you can access your ERP from your desktop, laptop, tablet, or mobile device from wherever you are. Your IT department, or third-party network support company, would maintain your internet, PC desktops, and any other systems you use locally.

Examples of cloud hosting services are Amazon Web Services and Microsoft Azure.


SaaS is also cloud computing, but in addition, the SaaS ERP software is maintained by the software vendors. You outsource most of the IT responsibilities typically required to troubleshoot and maintain the software. The SaaS vendor takes care of it all, and you pay a monthly subscription fee based on the number of users and level of service you require.

As with cloud, you can access the software from anywhere as you have an internet connection.


This is the traditional platform on which ERP systems have been used. With on-premises, the system hardware is located at your site, along with the ERP software which was installed on the hardware when it was implemented by the ERP vendor. Your organization controls the hardware and ERP software and is responsible for maintenance and management throughout its lifetime. You own and control everything in-house and have full control and responsibility for the data.


All these platforms have advantages and disadvantages, of course. The best way to determine which is best for your organization is to engage an independent consultant who can review the main factors of budget, IT department expertise, and program modification requirements, to advise you during the selection process.


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