Disparate systems and processes help to manage various facets including sales and marketing, product planning, manufacturing, and development of an organization. ERP, Enterprise Resource Planning, is a software that integrates these facets in a single database, application, and user interface and fosters better communication levels within the organization. ERP enables enterprises to automate a multitude of back-office functions related to human resources, services, and technology as well as streamline business operations.
ERP solutions are exclusively designed to centralize business processes like inventory management, human resource and payroll management, customer relationship management (CRM) etc. and pair with different business modules for facilitating human capital management and finance processes. For example, ERP software provides companies with the capability to manage essential segments of business from a single application.
Types of ERP
ERP solutions can be deployed either on the cloud or on-premise, with each type having its benefits and challenges. You can choose between on-premise ERP and a cloud ERP depending on your specific business needs and availability of IT resources. Once a business user knows which ERP solution fits his or her requirements the most, designing an integrated ERP system is easy.
Let us have a brief outlook on ERP types.
On-Premise ERP
Unlike being hosted in the cloud by a third-party provider, on-premise ERP systems are installed locally within a company's contours. On-premise systems provide a maximum degree of security and control. On-premise ERP systems suit organizations that work with business-critical information such as patient records, financial data and more as losing such sensitive information can ruin the credibility and authenticity of the business.
On-premise ERP systems offer a number of benefits:
1. Increased security and control: ERP systems take care of all types of business information from social security numbers, supply management logistics statistics, to accounting and expenses reports. It offers organizations a higher control on every aspect including the security measures employed to control the physical access. Hence, enterprises can eliminate the risk of thefts or breaches as external interferences are minimized. The level of security and control catered by on-premise ERP systems is unmatchable.
2. Limited on-going costs: Though the upfront cost is higher in this case, the total cost of ownership is lower. In general, organizations need to make a capital expenditure (one-time investment) while deploying on-premise systems. Cloud ERPs, on the other hand, include additional costs the organization need to pay for continuous operation.
3. Easier Customization and less vendor dependency: On-premise ERP systems allow organizations to change the dynamics whenever needed. This helps business users eliminate the need to depend on the vendor. Additionally, on-premise solutions offer flexibility by providing various customization options to meet organizational needs and requirements.
Red Flag: Though on-premise ERP system offers a wide range of benefits, it has several disadvantages like higher implementation time, ongoing maintenance requirements, and increased upfront costs as well.
Cloud ERPs
Cloud ERPs are hosted on a third-party cloud computing platform. Such systems make use of a web browser or a web service for communicating data to points of productions as well as production workers from the cloud. So, instead of being installed in a central location, cloud ERPs allow organizations to install, configure, and update systems from a remote location.
There are many benefits offered by cloud ERPs that include:
1. Enhanced stability: Cloud ERP systems offer greater stability to organizations by allowing the third-party vendor to improve the software constantly. As a result, the organization's ability to handle data also improves.
2. Increased accessibility: Cloud ERPs allows users to use applications from possibly anywhere and on a majority of devices.
3. Reduced upfront costs: The upfront costs involved during the deployment of cloud ERPs is lower. This is the primary reason why small businesses or start-ups go for cloud ERPs.
Red Flag: Since the control is on the third-party vendor, Cloud ERPs have a lower control over data. In addition, drawbacks such as compromised security and lower compliance are inevitable.
Hybrid Solution
Most companies adopt a hybrid model that combines the advantages of on-premise and cloud ERP systems both. This helps organizations strike the balance between administrative and operational business capabilities and business flexibility & agility.
Conclusion
Whether you pick an on-premise system or a cloud ERP system, it must be integrated with the organizational system and applications. The role of ERP integration comes into play here. Enterprises must find suitable ERP connectors to integrate data across the periphery of organizations. ERP integration not only helps organizations automate business processes but also deliver business outcomes.
Implement an integrated ERP system today!
