20 Feb 2025
Any business with more than a handful of employees benefits from a seamless connection between its operations and financial data. The more automated these links are, the more efficiently the business runs. That’s the fundamental principle behind Enterprise Resource Planning (ERP) systems.
However, selecting the best ERP solution is far from simple. Businesses must choose between ERP SaaS (ERP Software as a Service) and on-premise ERP—two unique deployment options, each with its own set of benefits and problems. Beyond technical preferences, this selection has a direct influence on scalability, prices, security and overall company efficiency.
With more businesses moving away from traditional on-premise ERP, it is critical to grasp the major distinctions between these approaches. This article compares ERP SaaS versus on-premise ERP, providing you with the information you need to make the right decision for your business.
Definition of ERP SaaS
ERP Software as a Service, or ERP SaaS, is a kind of cloud-based ERP system. It is often hosted remotely and uses a multi-tenant SaaS architecture.
It is now the most popular deployment strategy among organisations since ERP providers install and administer the software, so you don’t have to worry about the technical stack.
In other words, ERP SaaS eliminates the need to engage an internal IT crew for installation, upgrades and maintenance. It may be purchased by paying a subscription fee to your ERP supplier and delivered as a service via the Internet. Your workers may access and interact with the program via the interface from any device with an Internet connection. Thus, given the complexity and difficulties of ERP implementations, SaaS platform provides much easier and more rapid deployment.
Definition of On-Premise ERP
An on-premise ERP system is placed on your company’s hardware and servers and maintained by your IT personnel. When you choose an on-premise ERP, you are responsible for the whole expense of infrastructure setup, as well as human resources and backup to maintain those servers.
Deploying an on-premise solution may also be more time-consuming than SaaS deployments. Furthermore, it frequently necessitates several approvals for hardware selection and precious time commitment by your internal IT staff during and after deployment.
Cost Considerations
On-premise ERP demands a far larger expenditure to acquire, install and administer the software. This also covers charges for purchasing a license, hosting, maintenance, software upgrades, training and other basic operating costs. If your organisation does not have an in-house IT staff, you will need to employ more experienced individuals to handle the system. All these factors contribute to capital spending, making ERP adoption a time- and cost-intensive process.
In the long term, however, ERP SaaS is often less expensive than on-premises options. ERP SaaS companies often charge a monthly or annually fee in exchange for full hosting, server, implementation, software update and maintenance services. This drastically reduces setup costs and speeds up run-time.
Implementation and Deployment
With on-premise software, the company is responsible for the whole implementation process, which takes place on the company’s infrastructure. Depending on the functionality required, installation may take longer than normal.
Unlike on-premise ERP solutions, ERP SaaS does not require any additional hardware. You may select from the vendor’s software features and have the system implemented without having to spend time purchasing and installing hardware or servers. As a result, using ERP SaaS solutions will save you a substantial amount of time.
Scalability and Flexibility
The scalability of on-premise software is restricted by its hardware. When you need to increase the storage capacity or number of users, you must build extra hardware infrastructure.
Meanwhile, ERP SaaS systems provide flexibility to support the expansion of business operations, and a software upgrade is sufficient to allow scaling up your business activities.
Customisation and Control
On-premise ERP systems allow for extensive flexibility. You own all the software components, and they may be reconfigured to meet your company’s needs. However, it comes with additional costs and, if not properly configured, can result in a variety of operational setbacks such as misconfiguration or extended outage.
ERP SaaS solutions usually offer standardised features. Although companies provide configuration choices, considerable customising may be limited. This standardisation assures consistency but may not meet extremely specific requirements.
Accessibility and Mobility
ERP SaaS provides improved mobility and flexibility, allowing data to be accessible from any place, at any time and on any device with an Internet connection. This gives firms greater insight and control over their operations.
In contrast, on-premise ERP systems have restricted remote access, making it impossible to monitor corporate activity away from the office.
Security and Data Ownership
With ERP SaaS, the service provider may handle your data, and while they use strong security standards, some companies may be concerned about not having complete control over their data.
On-premise ERP puts data security within the authority of the company’s internal IT staff. While this might be beneficial in terms of direct monitoring, it can also lead to weaknesses if internal security measures are insufficient compared to those supplied by competent service providers.
ERP SaaS solutions frequently reduce risks by hosting data in numerous places, which provides a greater level of security. On the other hand, on-premise systems condense data within a local, centralised server network.
Making the Right Choice for Your Business
When selecting between ERP SaaS and on-premises ERP, it is critical to analyse your company’s specific requirements and goals. Key aspects to consider include:
Business Needs and Objectives
Determine your company’s particular needs, such as size, industry and development potential. ERP SaaS systems provide scalability and flexibility, making them ideal for small to medium-sized enterprises (SMEs) seeking cost-effective solutions and speedy installation. Larger companies with more complicated procedures may opt for on-premise ERP for greater flexibility and control.
Industry and Data Sensitivity
Consider the compliance and data security requirements of your industry. On-premise ERP is a popular alternative for industries with tight data protection rules, such as healthcare and banking. It provides better control over sensitive information. ERP SaaS suppliers must exhibit adequate security measures in order to fulfil industry requirements.
Financial Capacity and Long-term Strategy
Review your budget and long-term plan. ERP SaaS often reduces upfront expenses and predictable subscription pricing, making it suitable for enterprises with tight budgets. While on-premise ERP requires larger initial investments, it may provide greater control and perhaps cheaper long-term expenses. Consider scalability and flexibility for your future expansion ambitions.
The Bottom Line
In summary, choosing between ERP SaaS and on-premise ERP is a decision that goes beyond technology. It impacts business agility, cost efficiency, security, and overall operational effectiveness. ERP SaaS offers flexibility, lower upfront costs and ease of deployment, making it an excellent choice for growing businesses seeking a scalable solution. In contrast, on-premise ERP provides greater control and customisation, appealing to companies with complex processes and stringent security requirements. Here is an infographic to quickly sum up the difference between the two solutions:
If you’re looking for a robust ERP solution that balances flexibility, security, and efficiency, Synergix ERP is designed to meet diverse business needs. As a leading ERP provider in Singapore, Synergix Technologies offers cloud-based and on-premise ERP solutions tailored to optimise operations, enhance productivity and drive sustainable growth. Our comprehensive system integrates key business functions, ensuring seamless automation and real-time data insights.
Discover how Synergix ERP can transform your business operations. Contact us today to explore the best ERP solution for your needs!
