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On Premise vs. SaaS Software Solutions

Updated: Feb 22, 2023

On Premise ERP Solutions

When it comes to On Prem vs. SaaS, companies have bought servers, done backups and maintained the servers just like copiers and other business equipment. Over the last few years, the complexity of servers has multiplied, with features like virtualization, anti virus software, firewalls, and more complex backup utilities. Smaller companies (under $50 million in sales) typically don’t have dedicated IT staff who can remain up to date with these technologies. Today, it takes a team of experts to keep up on the various aspects of business systems.

SaaS ERP Software Solutions

Simultaneously, ‘SaaS’ ERP software has emerged as a viable option for many small companies. Instead of purchasing and maintaining physical servers, and ‘owning’ enterprise software, the software is ‘rented’ and all transactions take place on line. The management of these systems is almost non existent since backups, performance tuning, and troubleshooting is done by the vendor. This is much simpler for companies to adopt software solutions, while being reasonably expensive.

Depending on the specific situation, the ‘payback’ of purchasing versus renting is around 2 to 3 years. Even though a company may pay more in the long run, the cost of the SaaS environment is an expense, not a capital outlay, and financially may make more sense depending on the profitability and financial policies of the company. This is very important when looking at On-Prem vs. SaaS for your ERP software.

The drawback of SaaS solutions is they are typically ‘multi tenant’ meaning multiple companies are in the same database. This is not a security issue, since modern systems do a great job of segregating each account, but the issue is lack of flexibility. Each ‘tenant’ has limitations on adding new tables or fields, or the ability to extend the product for particular requirements. The other major consideration is these solutions are all upgraded together at intervals set by the vendor. It is incumbent upon the customers to evaluate the upcoming changes and be sure they are ready.

Contact EpiCenter for Assistance Choosing Between On Prem or SaaS for your ERP Software

With these elements in mind, the decision of how to deploy a system may be limited by the system itself, as some may only be offered as multi-tenant SaaS. This means that even if a company wanted to convert to their own server over time, the software may not support this conversion.

As one can tell from this brief overview discussion, the options are plentiful and there are ‘pros and cons’ with all of them. Engaging with a trusted ERP advisor is vital to making the best decision for your organization, and EpiCenter stands ready to offer the options and help you make this critical decision.

Want to learn more? Contact us!

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