Comparing ERP Systems: On-Premise, Hosted, and Cloud Solutions

This report provides a comprehensive overview of Enterprise Resource Planning (ERP) systems, exploring the functionalities and benefits of ERP in business operations. It delves into three primary implementation models: on-premise, hosted, and cloud ERP. The report examines the advantages and d...Read More

Running head: ENTERPRISE RESOURCE PLANNING SYSTEM
ENTERPRISE RESOURCE PLANNING SYSTEM
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................3
On premise ERP.........................................................................................................................3
Hosted ERP................................................................................................................................4
Cloud ERP..................................................................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................9

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Introduction
The concept of ERP directly stands for the enterprise resource planning. The ERP can
be considered as an enterprise wide system of information that directly facilitate the aspect of
the flow of coordination and information of all the resources and the activity which are done
within the concept if the business organization. The functions which are related to the ERP
system are mainly supported by the system which may include the sector of the inventory,
logistics, manufacturing, invoicing and aspect of accounting. Some of the functionality which
is related to the concept can be directly linked with the aspect of the relationship management
functionality (Kilic, Zaim and Delen 2015). On the other hand relating to the business activity
the concept can be applied to a large number of area which may include the sector of the
inventory management, production, billing, human resource and quality control depending
upon the system. The ERP system can be beneficial in a way which directly enhances the
connection to the stakeholders who are outside the organization as well as enhances the
performance which is related to the performance. The ERP uses a centralized database system
which directly relies on the aspect of the common platform of the computing (Shatat 2015).
The main focus point of the report is to take into consideration different aspects which
are related to the concept of the ERP system. The different scopes which are related to the
aspect of the implementation of the ERP system such as on premise, hosted ERP system and
the cloud ERP system are majorly discussed in the report. The different weakness and
strength which are related to the concept are majorly discussed in the report.
On premise ERP
The software which are related to the on premise ERP can be related to different types
of product from the item which can handle accounting and payroll to the system that analyze
or simulate the business process or the control which is related to the control inventory and

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the issues which are related to the supply chain. One of the most important argument which
can be stated in context of the on premise ERP is that business requirement which is related
to the detailed use that an organization might want from a set of software’s (Leyh and Sander
2015). The idea which can be applicable in the context is the cloud system or the hosted
system which does not allow software’s to be supplement and modify in key ways. On the
other hand the on premise ERP system might directly allow IT staff to tweak and improve the
software and involve the aspect which is related to the customization for a particular business
case.
Advantage of on premise ERP
Some of the advantage which is related to the on premise ERP can be on the
following sectors:
Less vendor Dependency: The concept of the ERP are generally implemented by
organization for a long period of time. In some of the cases when it is seen that if the vendors
of the business go out of the concept of the business, the organization have nothing to show
relating to it and there are lots of scrambling which is done to directly implement a new
solution. The concept of the on premises ERP removes the concept which is related to the
vendor dependency. This is very much beneficial in a way which directly reduces the
different aspect which are related to the need of the system.
Data control: In most of the ERP system the data which is handled can be very
important to the organization and it can support different types of data. accounting and
expense, employee social security number, supply chain logistic management and other
business intelligence which directly represent the significant value to outside party. When an
organization hosts the ERP on premises, it can be stated that it has direct control over each
and everything which may include the sector of the security measures which are used in the

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physical access control aspect (Leyh and Sander 2015). The concept would not directly leave
the organization at the factor of the risk due to the factor that workstation which are
connected to outside of the network to the cloud based ERP system are very much insecure or
an employee at the end of the cloud provider may jump into the ship with as much data as
possible (Kilic, Zaim and Delen 2015).
Limit related to going cost: The cost which is related to the upfront may be higher in
the concept of the on premises ERP but it can be stated here that the total cost which is
related to the ownership may end up on a lower side. The concept directly depends on the
aspect of the costs which are incurred with the ongoing subscription and the aspect of the
support service which is related to the cloud. Taking into consideration the factor which is
related to the ongoing cost can be related to the cost which are related to the IT maintenance
and the energy. The main factor of consideration that should be done by any of the
organization would be to look into the total cost which is related to the ownership and not
only look into the aspect of the upfront cost (Shatat 2015).
Easier customization: Taking into consideration other ERP system, it can be stated
here that the solutions which are related to the ERP system can be very easy in a way of
integrating to the most of the popular ERP software’s and application but they are not so
good in the aspect of providing flexibility when the organization owns a customized solution.
Instead to throwing away all the useful application which are related to the aspect of the
tailourization relating to the organization, an on premise system would be directly providing
the organization with an option of customization for the working areas of the business. These
customization directly help the organization to use all the basic functions according to their
requirement and the overall cost of the aspect would be related to the applications which are
being used.

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Disadvantage of on premise ERP
The Disadvantage which are related to the concept of the on premise ERP can be
directly be related to the aspect of cost which are very much high in the early stages of the
venture. On the other hand it can be stated that the fees of maintenance which is related to the
concept is considerably high in the process which can be avoided by the means of
implementing the concept of the cloud computing (Leyh and Sander 2015).
Hosted ERP
Business software’s which are sophisticated directly enables the organization to
optimize streamline, optimize processes and drive the productivity which is related to the
different departments of the organization. These all concept makes the aspect of the ERP very
much crucial for most of the organization and it can also be considered as crucial investment
for most of the organizations. However it can be stated here that the selection of an
appropriate model which is related to the ERP can be considered to be very much important
decision. This is a major decision due to the factor that it should directly fits the need of the
organization and get into the normal working and the operation of the organization. There are
different models which are related to the aspect of the ERP system for example on premise
and cloud ERP. The main question which can arise in this case is that if both of the system
does not suite the need of the organization what should be done (Kilic, Zaim and Delen
2015).
Hosted solution can be one of the solutions in this aspect which directly deal with
effective compromise in the sector which would be directly give lots of benefit to the
organization in different sectors of the working. In the concept of the hosted ERP the
organization can directly but the ERP software and then hire or purchase the necessary virtual
server and the physical server at the end of the securing of the facility of hosting which would

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be running the overall system (Shatat 2015). In this concept it can be stated that other hosted
solution can also be available which would be available for implementation according to the
need of the transition. There are different subscription bundles which are available for
example an organization can directly rent both the ERP system and the server which is
related to the ERP.
Advantage of Hosted ERP
The aspect of the investment which is done in the sector of the ERP system can be
very much important but to take advantage of the concept the platform selection is very much
important. There are a number of reasons why the hosted solution of the ERP are better than
the cloud ERP and the on premise ERP which are stated below:
Maintenance support: The organization might not have the overall support in the
sector if the resources and the IT infrastructure which would be directly be provided by the
hosted service. The service which are delivered by the hosted service would be directly be
delivered according to the need of the organization.
Security: In any technology the most important sector which should be taken into
consideration is the security of the data which is posed by the system. It can be stated here
that the data of the organization sometimes are very much important and if the data gets lost
it could directly hamper the overall working of the organization. The hosted service directly
gives the provision of securing the data of the organization and maintain a standard so that it
is not accessible by any other person apart from the authorized person (Leyh and Sander
2015).
Easy to ship: It can be considered that it is very easy to move to the concept of the
ERP from hosted solution to ERP to on premises. On the other hand it can be stated that it is

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very difficult to move to the concept of the cloud based platform to in-house ERP due to the
factor the difference in architecture which is related to the system.
Disadvantage of hosted ERP
Higher cost: The initial cots which is attached with the concept of the hosted ERP can
be considered to be very much high. This is due to the factor that there are different
applications which can be used in the concept and the hiring of the license in the applications
can be considered to be very much high. It can be stated here that the in most of the ERP
system the upfront cost is relatively high (Shatat 2015).
Need of expertise: The hosted ERP solution cannot be used by any people. It should
incorporate higher standard of employee and would be expertise in the field. In most of the
cases it is seen that the training aspect is very much important in the aspect in which how to
deal with the concepts are mainly taken into consideration. It can be stated here that the
hosted ERP in the initial stages can be very much difficult to be understood due to the fact
that the concept have some sort of complexity attached to the concept (Kilic, Zaim and Delen
2015).
Maintenance sector and update: The sector of the maintenance and the update
sector are very much vital in the aspect due to the fact that there are no automatic update. The
organization have to provide update to the application and make sure that have the security
implications involved into the working.
Cloud ERP
The concept of the cloud ERP can be considered as a software which directly deals
with the aspect of enterprise resource planning on the concept of the cloud computing rather
than the aspect of on premises with the enterprise of the own data center of the organization.

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The concept of the ERP can be considered as a term which is related to broad set of activity
which helps the organization to manage different parts which are related to the concept of the
business. The application which is related to the aspect of the cloud ERP directly involved the
aspect of human capital management and finance. Taking into consideration other systems of
the ERP it can be stated here that the concept of the cloud ERP is a type of software as a
service (SaaS) which directly increases the accessibility aspect which is applicable via the
internet and the user enabled relating to share and the transfer of the data across the business
requirement as well as the external resources in a real time manner. Due to the concept that
the service is hosted in the concept of the cloud, the business are not notified with any of the
update in the field of the software immediately. The cloud based ERP also comes with
different aspects which are related to the backup, availability and disaster recovery plan form
the end of the providers to directly reduce the interruptions to the software.
Advantage of cloud ERP
The main advantage which is related to the aspect of the aspect of the cloud ERP are stated
below:
Access to more features: the basic approach which is applicable to the application
being on the concept of the cloud computing has many advantage which are related to the
access to the standard features which are related to the aspect (Kilic, Zaim and Delen 2015).
The updating sector which is applicable in the case can be considered to more appropriate
with the sector being taken care of by the cloud providers.
Faster implementation: The implementation concept which is applicable to the
aspect of the cloud computing can be considered to be very much easy as compared to other
services of the ERP. The main function which is related to the concept is the effort which is
applicable to the moving of the data from the legacy system to the concept of the cloud

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computing. From that point onwards it can be stated that the updating sector is very much
faster and it directly accompanies security of the data as well.
Cost consideration: The overall cost which is related to the aspect of cloud ERP can
be considered very much less if it is taken into consideration for a long run. It can be stated
here that if the concept is applied for initial stage it can be stated that it is would be an
expensive process but if it is taken into consideration in the long run it would be very much
beneficial.
Disadvantage of cloud ERP.
Limited customization: It can be stated here that with each and every release the cloud
providers are directly moving to a concept of more configuration. This directly means that the
functionality in this aspect can be considered to be a disadvantage in the sector of the cloud
computing. It can be stated that most of the organization require heavy application demand
which would be requiring loss of money involvement.
Limited customization: Most of the cloud ERP supporting service deliver the aspects
which are related to the financial and the HCM. Very few of the provider’s offer single suite
relating to the product that directly meet most of the requirement of the user. This directly
means that the integration of the on premises that meet most of the user requirement. This can
directly lead to potential additional cost, lost functionality and complex process flows.
Cost consideration: In the long run the concept of the cost which is related to the
concept of the cloud ERP can be considered to be very much on the higher side. It can be
stated here that in the long run it can be stated that cost which is related to the concept is very
much less and can be considered to be very much cost effective in different manner (Kilic,
Zaim and Delen 2015).

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Conclusion
The report can be concluded on a note that there are different aspect or service which
are related to the concept of the ERP. The main focus point should be which model has to
implement into the organization which would be working well for the organization. In most
of the cases it is seen that organization tend to move towards a concept which is cost effective
but it should be taken into consideration that the aspect which fits directly into the concepts
of the working of the organization should be adopted. There are different advantage and
disadvantage sector which are related to the concept but it should be taken into consideration
that remedial measures should be taken into consideration which would not directly impact
the overall working of the organization both in the sector of internal working as well as
external working. The adaptation of the concepts should be done in a way which directly
improves the overall functionality of the organization and should be adopted in a way which
improves the standard of the organization and improves the quality of service which is
expected from the organization. In most of the cases it should be taken into consideration that
the organization should take into consideration different aspects which are related to
framework of the ERP so that the benefit which can be achieved from the concept is on a
higher end.

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