Cloud vs On-Premises ERP: Which is Best?

18 Feb 2021

When it comes to finding the right server, it's important to weigh up the pros and cons of both cloud and on-premise solutions.

What Software Solution is Best for my Organisation?

The key difference between cloud vs on-prem software solutions is where it resides.

Due to its remote accessibility and ease of scalability, cloud computing has grown rapidly in popularity since its introduction in the early 00s. However, on-premise applications enable enterprises to maintain a level of control that cloud computing could not, which may lead some organisations to believe on-prem is more secure option.

In order to discern which software solution would best align with your organisation's needs, you must first understand the pros and cons of both cloud computing and on-prem applications.

What is a Cloud Server?

A cloud server is a virtual server that runs in a cloud computing environment, meaning it is built, hosted and delivered through a remote platform that can be accessed anywhere with an internet connection.

Dynamics 365 Business Central is one of Microsoft's cloud computing solutions. 

Cloud Pros

Cloud Cons

Accessible - Access any applications remotely, all you need is an internet connection.

Connectivity - Without an internet connection the server cannot be accessed.

Affordable - No upfront costs and regular monthly payments allowing for easy budget control, covering software licences, upgrades, support and daily back-ups.

Long-term cost - While there is no upfront cost, the total cost of ownership of cloud software may add up to be more than on-prem over the system's life cycle. However, other costs with prem, which are not present with on-cloud, need to be factored in to this overall view.

Scalability - Meet demand with ease by adding extra licences to your software without the need for physical deployment.

Less customisable - The hosting solution will determine how configurable the cloud software can be, and how well it can align to your organisation's needs

Free Maintenance - As the server is hosted remotely, all maintenance will be taken care of by the cloud service provider, minimising operational cost.

 

Implementation - As the connection is entirely remote, cloud software can be deployed in a matter of hours/days, drastically reducing downtime and associated costs compared to an on-prem solution.

 

Lower energy costs - By hosting your server outside of your premises, you no longer have to pay to power your server manually, reducing operational costs substantially.

 

 

What is an On-Premises Server?

An on-premise (on-prem) server is a physical server that runs on computers within the premises of the user/organisation who have installed the software, and therefore must be managed and maintained individually by the user/organisation.

Dynamics NAV is Microsoft's on-prem ERP solution.

On-Prem Pros

On-Prem Cons

Total cost of ownership - Pay for your user license once and minimise monthly outgoings for your software applications.

Maintenance - Not only does the license require a large upfront cost, but maintenance is also an additional cost to keeping your server up to date. This can be challenging for smaller organisations with limited budgets and technical resources.

Complete control - Customise your data, hardware and software platforms to meet the exact needs of your organisation.

Prolonged Down-time - On-prem implementation takes longer than its cloud-based alternative, as the software must be installed on each individual user's computer/laptop.

Uptime - Gain immediate access to your server via any computer hosting the software, without the need for an internet connection.

Compliance - For industries that operate under regulatory control, staying up to date with the latest rules and regulations is imperative. As opposed to a cloud-based solution where this would be automatically covered by third party providers, for on-prem software users this must be manually researched and implemented.

Security - Having control of your security is essential for organisations with extra sensitive information, making on-prem a more suitable option.

 


Research has shown there is no one-size-fits-all solution. The software needs of an organisation vary largely depending on a number of factors, such as number of users, size of budget, and level of support needed. As an overall consensus, IT decision makers suggest that in order to achieve long-term goals, all organisations must leverage cloud computing to some extent when implementing Microsoft Dynamics software. 

Here to Guide You 

With over 30 years of experience working with Microsoft products, we are experts at finding a solution that will meet the unique needs of your organisation. Get in touch today to find out how you could benefit from migrating to the cloud, or to discover why a partnership with TES is the key to unlocking total digital transformation

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