What are the major differences between SaaS ERP, Cloud based ERP and On-premise ERP

In the current business world with the evolution of digitalization of business activities ERP software become widely popular among all organizations, but selecting the best software among the different categories it is essential to understand the features of all the categories of ERP software.

There are three different categories of ERP solutions these are SaaS-based ERP, cloud-based erp software, and on-premise ERP. Each of these has its unique features advantages and disadvantages, the companies have to consider all these aspects and make the decision regarding the selection of the ERP system as per the nature of their business activities.

There are some basic differences in the features of a SaaS, cloud-based, and on-premise ERP. Some of the key differences between these three categories of the ERP system are stated below;

Key differences based on the Features of SaaS-based enterprise resource planning, cloud-based ERP, and on-premise systems.

The SaaS ERP is a service-based ERP solution, since the SaaS-based ERP system is hosted remotely it is generally run on a multi-tenant SaaS architecture. In comparison the cloud-based ERP software is maintained by the service provider and for on-premise ERP system will be developed by the IT team of the company which will be locally deployed in the server of the organization.

The features of the SaaS ERP are stated below:

• The main requirement of a SaaS ERP is that it requires a multi-tenancy, hosting, and management ERP vendor, and the pricing of this kind of software is made on a subscription basis.
• In the SaaS enterprise resource planning system, the service vendor will be responsible for maintaining the system, making upgrades to the system, and creating patches.
• The SaaS-based models are sold to the clients in the subscription model and after the system is developed it is provided to the client over the internet.
• The multi-tenant architecture of SaaS, allows the customers to use the same infrastructure, database, and software, at the same time this model ensures a high level of security.
• The adherence to government regulations that are associated with the data security and privacy of data can be easily complied with the SaaS model.
• The SaaS-based software also provides the customers the facility of custom extension programming through its multi-tenant feature.
• The SaaS solutions are based on program codes that enable the system to provide the clients updated versions with advanced features.
• The SaaS models also have features that enable the option of complete control of any customization and upgrade the system as per the requirement.
• The SaaS model also has another feature that allows the clients to select from a prepackaged specialized application that will give them detailed customization features.

Features of cloud based enterprise resource planning system

• In cloud based ERP system the clients from the internet can select the offsite data center.
• The cloud based ERP software is based on single tenant architecture.
• The cloud based ERP software also allow to track customer profiles and also enable the small business entities to maintain smooth interaction with their customers through its unique features and technologies like customer relationship management system.
• The price management features of the cloud based ERP also enable the companies to keep a track of all their pricing related data.
• The cloud based ERP has the features to manage the issues of more than one customers with quick tracking facilities and issue resolution tools and techniques.
• The features of the cloud based ERP also include the facility to extract product information efficiently in one platform thus it assist the business to manage its product or inventory through the product management system.
• The cloud based ERP system has the feature of providing business analytics techniques based on which the management can take important business decisions.
• A self-service portal is offered by most of the cloud based ERP system which make the system very user friendly and the clients can easily operate the system.
• The cloud based system also provide features like account management which will enable the user to post various accounts related transactions in the system like purchase sales, and payment related transactions.
• It also enables the user to generate invoices based on the input given and it also has the features to track such invoices.

Features of on-premise enterprise resource software

• The on-premise software is deployed in the local server of any company and created as per the specific need of the company by the IT team of that company.
• The on premise software are priced based on one time perpetual license fees, the fees for support and any updates or training are charged separately.
• The implementation control feature of the on-premise enterprise resource planning system gives the user more options to impose higher degree of control over the timeline and rollout of the implementation process.
• The on-premise enterprise resource planning system has extensive customization features which will enable the users to customize the system more totally so that all the business related requirements can be met from the system.
• Data security features of the on-premise system are high, as it does not allow the hosting of data on cloud.

Differences based on advantages and disadvantages of the cloud based, SaaS and on-premise ERP

Advantages of SaaS

• The SaaS based software is not expensive and the clients can pay as per the number of users, thus it is cost effective and reduce excess financial burden of the companies.
• The advanced interface of the SaaS based model is very user friendly for which the users can operate the SaaS based system easily.
• Business scalability projection can be made from the SaaS based enterprise resource planning software.

Disadvantages

• The cost of SaaS model will increase with the increase of the users so companies have to make projection of the growth of their workforce if they want to take SaaS.
• In highly regulated business environment the security standard of SaaS may not be adequate enough to protect the confidentiality of the data that are stored in the system.
• The universal SaaS solution is difficult to accommodate for all type of business entities.

Advantages of cloud ERP

1. The cloud based software allows the business entities to get updates on regular basis.
2. It enables quick data transfer though a stable internet connection.
3. Cloud based software are user friendly and can be used from any place.
4. Cloud based system is less expensive in comparison to other categories of enterprise resource planning system.

Disadvantages

1. In the cloud based ERP all the data are stored in cloud so the confidentiality of data can be at high risk in case of a cloud based system.
2. In cloud based enterprise resource planning system, the clients often found difficulty in hosting and access of customer information so the companies have to adhere with the guidelines issued by the GDPR.
3. It is difficult to transfer data from an offline system to a cloud based ERP system for which users does not want to use the cloud based software.

Advantages and disadvantages of on-premise model

Advantages

1. It supports extensive customization
2. Internal control system of on-premise model is more effective
3. The implementation control in the on-premise software can provide more control in the hands of the business entities.

Disadvantages

1. The cost of implementing a on-premise software is high
2. It cannot be operated if the local server has some issues.
3. Implementation of this system require more time than cloud system. 

Summing Up:

Thus considering the features, advantages and disadvantages it can be observed that there are several differences among the SaaS, cloud based erp software and the on-premise enterprise resource planning software, a user should select any one among these three categories based on the business requirement so that they can make optimum utilization of the system which ever they want to implement for their business operations.