Traditional Vs. On-Demand ERP

By Neil Zawacki
Updated: September 15, 2011

Traditional Vs. On-Demand ERP

Small businesses that decide to adopt an ERP solution are often faced with a difficult decision: do they purchase a traditional premise-based system, or do they choose an on-demand solution? This article will take a close look at the benefits and drawbacks of each possibility.


One of the main advantages of on-demand ERP is the low cost of entry. You don’t have to purchase expensive equipment or make sure that you have sufficient infrastructure to handle the system. You simply download a software application onto your computers and allow a hosting company to provide the service.

On-demand ERP also has very low IT support requirements. The physical hardware is kept at the hosting company, so you don’t have to worry about testing the system on a regular basis and making sure that all of the equipment is in working order. The ERP hosting company performs this service for its customers.

On the negative side, on-demand ERP may not necessarily integrate with legacy systems. This can be a significant problem if your office uses a lot of old computers. If you’ve got a dedicated on-demand solution then you should be all right, but a shared system probably won’t have that capability.

Another drawback about on-demand ERP is that it is fully reliant on the internet to function. If your wireless router should malfunction or internet provider be unable to offer service for some reason, you will lose access to all of your ERP data until the system is restored.


The main benefit of traditional ERP is that you have total control over the system. You can make any changes that you want and switch around various configurations as needed. You can also ensure that the information is secure since it will be kept inside your own building.

Another advantage of traditional ERP is that the system will work even if you lose your connection to the internet. Your employees will have access to everything they need to perform their duties and keep the company running. All the system needs is a power source, and you can purchase a generator as a security measure.

Unlike on-demand ERP, a traditional ERP solution has a high cost of entry. You’ll need to purchase a lot of expensive hardware and potentially upgrade the computer wiring at your office to handle it. That said, traditional ERP solutions have fairly low ongoing costs, so you’ll probably save money over time.

Traditional ERP also has pretty high IT support requirements. You’ll need to make sure to have a dedicated staff who can maintain the equipment and know how to fix problems if something should go wrong.

So which one is the best? It all depends upon the situation. If you are a small business who has limited resources, on-demand ERP is generally the way to go. If you are a larger business who wants a high level of control, then a traditional ERP solution may be the better choice.

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