What’s Better for You: A Cloud ERP or an On-Premises ERP?

Imagine you're tasked with selecting the right ERP system for your institution. With so many options on the table, where do you even begin? What factors should you consider to ensure the system you choose aligns with your institution's unique needs and goals? The decision can feel overwhelming, especially when each type of ERP system comes with its own set of features, benefits, and challenges. One of the first decisions you’ll want to make when determining which ERP is right for your campus is whether you prefer a cloud ERP or an on-premises ERP.

While many institutions are drawn to the scalability and flexibility of cloud-based systems, others prefer the control and customization offered by on-premises solutions—but these are only a few of the considerations you’ll need to weigh when determining between the two types. With so many factors to consider, it can be challenging to determine which option best aligns with your goals. To help you make the right choice for your campus, we’ve outlined the pros and cons of both cloud and on-premises ERPs.

Why Choose a Cloud ERP?

Lower Initial Costs
Cloud ERPs typically involve lower upfront capital expenditures (CAPEX) since there’s no need to purchase expensive hardware or maintain infrastructure. This makes cloud systems more budget-friendly for institutions looking to keep initial costs low.

Scalability
Cloud ERPs are incredibly scalable. Whether you’re expanding or dealing with high-demand periods, cloud systems adjust automatically to your needs. No major infrastructure upgrades are needed to accommodate growth.

Automatic Updates
Forget the headache of manually updating your system. With a cloud ERP, updates—including security patches and system improvements—are applied automatically, ensuring your system is always up to date.

Accessibility
Cloud ERPs allow authorized users to access the system from any device with an internet connection, making remote work or on-the-go access simple and efficient.

Business Continuity
Cloud systems are inherently more resilient. With built-in disaster recovery features, cloud ERPs help ensure business continuity even in the event of unexpected disruptions.

Why Choose an On-Premises ERP?

Data Control
On-premises ERPs give institutions complete control over their data and security protocols. For institutions handling sensitive data, this level of control is crucial.

Customization
On-premises ERPs offer flexibility when it comes to customization. You can tailor the system to meet your institution's exact needs, ensuring a highly personalized solution.

Security
With an on-premises ERP, institutions have the ability to tightly control physical and digital access to their systems, which can be an added layer of security when compared to a cloud-based system.

No Internet Reliance
Unlike cloud ERPs, on-premises systems don’t depend on an internet connection. This means you won’t face the risk of downtime caused by internet outages.

Weighing the Drawbacks of Cloud and On-Premises ERPs

While both cloud and on-premises systems have distinct advantages, they also come with trade-offs.

Cloud ERP Drawbacks:

Ongoing Operating Expenses: While cloud systems are lower in initial cost, ongoing subscription fees and licensing expenses can add up over time.

Internet Reliance: A stable internet connection is required to access cloud ERPs. If your campus faces connectivity issues, operations could be disrupted.

On-Premises ERP Drawbacks

High Initial Investment: On-premises systems require significant upfront costs for hardware, software, and implementation. You’ll also need to account for ongoing operational expenses.

Increased IT Requirements: With an on-premises ERP, your institution needs to invest in IT staff to manage, maintain, and update the system. For smaller teams, this can be a challenge.

Making the Right Decision for Your Campus

Ultimately, whether you choose a cloud ERP or an on-premises ERP depends on your institution’s unique needs. Cloud solutions are a great choice for scalability, automatic updates, and cost-efficiency, while on-premises systems offer more control, customization, and security. No matter the route you choose, you’ll want to make sure you select the solution that best supports your institution’s mission and goals.

Jenzabar is here to help. Download our ERP Buyer’s Guide to learn more about ERP solutions and make a decision that will empower your institution for years to come.