ERP Software Comparison Between On-Premise ERP Systems and SaaS ERP Systems In a Nutshell

On-Premise ERP Software Solutions Historically ERP software systems were only available as on-premise software. With on-premise solutions, the software applications are purchased by businesses at the onset and the enterprise systems are installed and deployed on site on the company’s internal servers. The entire ERP software system is also managed and maintained internally usually requiring quite a bit of resources and involvement by the company’s employees, users, and IT department. On top of this, the user of the software also provides all of the necessary infrastructure internally such as hardware, servers, networks and support staff. Some proponents of on-premise ERP solutions claim that on premise ERP systems are the solution of choice for large companies as they provide the necessary security, robust features, and control required to operate large operations. Many large and even midsized companies feel that only on-premise ERP systems offer full, complete enterprise resource planning functionality and capabilities. On-premise enterprise software are generally perceived as expensive and complex software applications. Traditionally, on-premise ERP systems are primarily purchased by larger sized organizations who had the deep pockets to afford the software costs and implementation resources required to manage and implement the applications. SaaS ERP Software Solutions Recently, particularly over the past 5 years, SaaS ERP solutions have emerged offering new innovative software solutions and alternative for the ERP software market. With SaaS, or software as a service, ERP software applications the ERP vendor provides their customers access to the software via an alternative delivery system, the internet. Rather than purchasing the software, the user purchases an ERP application service from the vendor via a subscription pricing model usually on a monthly fee per user, or on a number of transactions tier structure. This pay for service pricing model is particularly attractive for companies with smaller budgets and smaller cash reserves. With SaaS ERP software, the vendor or service provider is responsible for all software, hardware, research and development, upgrades, hosting, and software maintenance. Not only does this reduce cost expenditures for the customer, it takes a lot of resource requirements and headaches away from the customer and frees them up to focus on their core business. Outsourcing these tasks also delivers additional benefits as the customer avoids costly business disruption impacts resulting from routine software upgrades. Furthermore, customers can enjoy the benefits and potential competitive advantage of the latest software releases the moment they happen as any improvements and upgrades happen at the host level. Deployment of new upgrades happens automatically. For these benefits, smaller and midsized companies or the SMB market are generally the target market for SaaS, web-based ERP software solutions.