Why enterprises are shifting from On-premise ERP to the Cloud ERP system? 	

Tags: erpsystems, softwaredevelopment, cloudsystems, desktoperpsystems
Published: 2019-12-09 10:14:55


The global ERP market is expected to reach [$47 billion](https://www.marketwatch.com/press-release/erp-software-market-2018-global-trends-statistics-size-share-regional-analysis-by-key-players-industry-forecast-by-installation-application-industry-verticals-2018-06-19) from 2017 to 2022. The **number of ERP systems is witnessing a swift rise among all sizes of businesses**. The primary reason behind this is the benefits of these systems for companies.

It’s a misconception that ERP systems are only for enterprise-level companies. From the recent past, small-scale businesses have also started investing in ERP systems. The small-mid size businesses have invested [$889,000 in ERP systems](https://www.idg.com/tools-for-marketers/2018-cloud-computing-survey/). 

Do you know what has made this change to happen? It is the shifting from on-premise ERP systems to cloud ERP systems. As per a survey, [73% of companies](https://www.idg.com/tools-for-marketers/2018-cloud-computing-survey/) have a minimum of one ERP app on cloud and the remaining 17% are planning for the same next year. 

**Below is a graph that shows the anticipated increase in the cloud ERP market from 2018 to 2025.**

![ERP market](https://lh3.googleusercontent.com/PrupG0ZZZkuszB3BkFbOz3Rx5j2dCmklzOBpw93s7dmRUnEB038_ByimcqyDhni6dtNpYKswwp1U8-wsvBTs5qvpzDgRBAk74Xd-PHUffe4zgtZayvQVNHrdX53lRSIpcEjUJbBy)

Undoubtedly, cloud **ERP systems are on a rising spree** and revolutionizing the enterprise resource planning system. Before explaining the reasons behind the popularity of cloud ERP systems, let’s understand the basic meaning of ERP systems, on-premise, and cloud ERP systems. 

**What are ERP systems** 


ERP system comprises of a range of software which handles the core processes of your enterprise.  They are capable of integrating almost every business process from human resources to inventory management. 

**What is an on-premises ERP system?**

As the name suggests, these are the systems that are installed locally in the company’s system or server. These are installed at **one-time installation fees**. They can also be termed as the local server ERP systems, intranet ERP systems or self-hosted ERP systems. 

**What is cloud ERP systems?** 

It is an ERP system that is not hosted on the company’s server rather it is installed in a vendors’ server. They are accessed by a web browser and need an internet connection to run. 

Based on the basic definition, I hope you have perceived the **cost-benefit of cloud ERP systems**. This has been a primary reason for small-scale businesses to adopt cloud ERP systems.

![cloud erp](https://lh6.googleusercontent.com/0XSy-pVWlPw-G3aGCWoF9TNPGB0fOhUzFAGJ7wOWwrAoGDWw-vyGdd2G7k-ZgccbdEdE3TsaIvU8_YAv0H8Yir1nI7U5lBlmOKZBHN04oWbnGzY2xG5R5qpdMln4d35s_GlkF1fX)


But this is not the only reason behind the increasing adoption of cloud ERP systems. There are many other reasons. **Here are the key points which make cloud ERP better than on-premise ERP systems:**

**Cloud ERP System Feature #1: Performance:**

Keeping in mind the maximum server and network performance, cloud ERP systems are designed. On the other hand, on-premise ERP systems are like **legacy systems that are old and not enough competent**. This affects their performance.

Cloud ERP systems are preferred today because they are adjustable to additional load in case of peak season or sudden growth in your operations. The local IT department will 100 percent lack expertise in comparison to performance monitoring by cloud solutions. 

**Cloud ERP System Feature #2: Accessibility:**

Data on cloud ERP systems can be accessed at any time from anywhere because they provide real-time data. This means that your **workforce will be able to check data on smartphones, laptops, tablets, etc. at any time**. 

The traditional on-site ERP solutions cannot be accessed anywhere. You have to be physically present in your premises with the desktop to access your data. The accessibility advantage of cloud ERP solutions makes them more convenient to use. 

**Cloud ERP System Feature #3: Deployment and implementation cost:**

Time and cost to launch is a major factor to consider while getting [ERP development services](https://www.pixelcrayons.com/custom-software-development-services?utm_source=dev.to&utm_medium=tiarash). **In the case of a cloud ERP system, hosting, installation, setup, and implementation are all done by the vendors.** It will take a few days or minutes to get prepared for your use.

In the case of traditional on-site ERP systems, it used to take years to get developed and installed. Moreover, the implementation is done by the local IT department. Cloud ERP does not need any hardware or human resources at your office premises. This reduces the time, cost as well as efforts.

![cloud erp systems](https://lh3.googleusercontent.com/8J-VqlnhHRjuEO_63DeqUwvN-w3W4Ms1AMBmcbqpMwVpvjCeJ2gwlL59CsgOEf7yaHAdcv3nJhjBWwL-qwZ_VdcQIU4Wxy6ByfczdIwC0O38G_KRiXiUIze05rfHKVY4oKqAfrRA)

**Cloud ERP System Feature #4: Integration and connectivity:**

In on-premise ERP systems, you get restricted to use the functionalities provided by the software installed in your system. Cloud ERP systems eliminate this restriction with its integrated services.

**Cloud ERP systems work unanimously with other systems by connecting with API connections.** These systems can integrate you into out-of-the-box solutions that are not yet a part of your competitors’ business processes.

**Cloud ERP System Feature #5: System up-gradation and maintenance:**

In on-site ERP systems, the issues with performance are hard to resolve and need a full-time IT professional for this. On the other side, cloud ERP systems are preferred because they provide timely updates.

This is one of the most important benefits of cloud ERP solutions. With these cloud services, you will never have to experience an up-gradation process which is large and time-consuming. 


**Cloud ERP System Feature #6: Customization:**

In cloud ERP systems, you will not require customizations as there will be regular updates of features. Whereas in desktop ERP systems, customization will require time which may delay the installation process. There is no scope to customize after deployment.

![cloud erp systems](https://lh6.googleusercontent.com/NiDn4tTXr7AWjtADG9nEcVQeQogovEL3V0HozQIV9_OYwjOvklolt9tPwgmrKoOtq08_UDs004bcajjrJYlBL4jqy8cDq91HSnEEFOFqzeA_LI09Lj0aVKpahZggrADd8fBin_Yh)

**Cloud ERP System Feature #7: Security:**

94% of companies feel that their [data security is better](http://www.technousa.com/blog/erp-trends-facts-statistics-2017) with cloud services. Although it does not say that on-premise ERP systems were unable to deliver data security. **Security in cloud services depends upon the vendor.** 

If you will [hire software development company](https://www.pixelcrayons.com/contact-us?utm_source=dev.to&utm_medium=tiarash) which is reputed for its secure cloud ERP solutions, you will not face any kind of issue. These companies follow best practices, procedures and adhere to PCI DSS guidelines.  

**Conclusion:**

Almost every parameter we considered, Cloud ERP system has an upper hand over on-premise ERP systems. **Cloud ERP services can provide quick installation, regular updates with better security, integration, and accessibility**.

Moreover, Cloud ERP systems are cost-effective when it comes to deployment, implementation, and up-gradation. If you are still doubtful about the two then I would suggest you consult with proficient [software developers](https://www.pixelcrayons.com/hire-software-developers?utm_source=dev.to&utm_medium=tiarash).

For any **further queries and consultation**, you can leave a message in the comment section below. I am also open to suggestions and reviews. Happy reading!