Hosted ERP or Cloud ERP?

By Neil Zawacki
Updated: September 28, 2011

One question that many small businesses face is whether to adopt a hosted ERP solution or a cloud ERP solution. The two choices are quite similar, so it’s easy to get confused. This article will describe the advantages and disadvantages of each.

HOSTED ERP

Hosted ERP requires you to purchase the software from either the publisher or Value Added Reseller and have it installed at a data center. That company then hosts the solution and performs important tasks like upgrades, maintenance and support.

Advantages

  • Your information is kept safe in a secure data center that performs regular backups. You can also set up redundant servers in different locations so as to ensure continuity of service should an emergency occur.
  • You own the software through an indefinite license. This means the ERP solution will continue to work even if you stop paying maintenance fees. You will simply be stuck on the last version you used.
  • You can switch the ERP solution to premise-based without too much trouble.

Disadvantages

  • Hosted ERP tends to be the better deal at first, but tends to cost more in the long run due to the monthly hosting costs.
  • You will need to set up redundant internet lines if you want to make sure you’ll still have access to the information if your connection goes down.
  • Local applications may have difficulty integrating with the hosted ERP solution. You can potentially circumvent this by installing them at the hosting center.

CLOUD ERP

Cloud ERP is similar to Hosted ERP, but the servers are virtual. This means the ERP solution is being shuttled around the huge number of servers that make up the cloud. You essentially rent things like servers, data storage and message capacity.

Advantages

  • Cloud ERP tends to be quite affordable. There are no hardware setup or acquisition costs to take into account with your budget.
  • You have unlimited scalability with the system. If you want the ERP solution to handle a hundred users, you can easily do so.
  • The software can be sold or rented. This provides a bit of financial flexibility that hosted ERP lacks.

Disadvantages

  • Existing applications may need to be reworked in order to properly work with the system. This takes time and money.
  • If you run a large number of applications inside the cloud, you may incur heavy costs since you are paying per unit of data instead of paying per server.
Featured Research
  • The Future of ERP

    Today's business decisions are data-driven and the difference between success and failure can be boiled down to utilizing the correct data. Now more than ever, companies have access to not only robust data but consumable data as well, through Enterprise Resource Planning (ERP) software. more

  • Top ERP Trends of 2017

    No matter the size, success or industry in which you do business, data is vital. Because of this, data-driven technologies such as Enterprise Resource Planning (ERP) systems are becoming more important for the streamlining of quantitative data and gaining/analyzing key insights. Even better, as of 2017, ERP tools aren’t only for enterprise companies in the manufacturing and distribution sectors—they’re for everyone. But that’s not the only keynote change that’s taken place this year … Download our latest guide to see what else is happening with ERP! more

  • Making a Business Case for ERP

    Are you in the market for an ERP solution but hesitant to purchase due to the potential financial risks associated with implementing such a tool? While costs may seem prohibitive, and make it difficult to get stakeholders on board, an ERP system can add SIGNIFICANT value to your organization, regardless of what industry you are in. more

  • Building Secure Multifactor Authentication

    As threats to password security have increased in recent years, multi-factor authentication (MFA) has rapidly gained adoption as a method for increasing the assurance of authentication for consumer and enterprise web and mobile applications. more

  • CIO eGuide

    Data is becoming increasingly important in business. As a result, more and more organizations are becoming attractive targets for hackers. Data breaches caused by stolen credentials are on the rise. You need smarter tools to protect your organization against the monetary and reputational damage caused by a data breach. This guide will explain how Okta Adaptive Multifactor Authentication (MFA) provides the security that IT needs, while also providing the simplicity end users want. more