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Cloud erp software vs traditional erp systems the complete cost comparison

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Cloud-based ERP products, like Acumatica Cloud ERP Solution, are the best choice when selecting the right ERP System. Compared to the cost of traditional ERP Systems, your company can save more money with cloud ERP, which can be used instead to finance other business expenses.

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Cloud erp software vs traditional erp systems the complete cost comparison

  1. 1. Cloud ERP Software Vs Traditional ERP Systems: The Complete Cost Comparison Rupsha Dasgupta Cloud ERP Software more expensive than Traditional ERP Systems? When choosing the right ERP System, there are many factors that need to be considered during the decision-making process, and one of them is the total cost. Your organization’s budget will determine the training and implementation procedure, the System’s scalability, security, and more importantly, the type of ERP System. Companies can either go for Traditional ERP Systems or Cloud ERP Softwares. On-premise or traditional ERP Systems are installed, hosted and maintained in computers and servers of your organization’s physical location. All data are stored in the servers and can only be accessed and managed by a certain number of users. On the other hand, in Cloud-based ERP Systems, also known as Software-as-a-Service (SaaS), the company’s data, the equipment, and the system are all maintained by the ERP vendor. Your company can access the data through a software when connected to the web. For those who are wondering which type is more costly than the other, here is the complete cost comparison between Cloud ERP Software and Traditional ERP System.
  2. 2. System Customizations, Upgrades and Enhancement Costs A Traditional ERP System’s customization capability depends on the software that are released by the ERP provider. That means your company’s current customizations may not work well or may completely disappear when you install the new software version released by the vendor. And getting the new product is very important, because it’s the only way your system will get the upgrades and enhancements. This process is very costly. Aside from the cost of the new software versions, there will also be a huge labor and energy cost in redoing the customizations from scratch. Not to mention the amount of time needed for your IT personnel to work on it. No wonder that some organizations choose not to upgrade their ERP Systems! Contrary to On-premise ERP Systems, Cloud ERP solutions are continuously upgraded and enhanced by the ERP vendors themselves. All the cost associated with the updates are shouldered by the vendors, since they own and maintain the ERP System. Your organization can be assured of the latest ERP Technology without additional expense out of your pocket. Deployment Cost Software, hardware, servers and additional facilities are just some of the required initial investments in a Traditional ERP systems. These alone cost a large amount of money. In addition, if your existing IT staff does not have the necessary skills to integrate, operate, maintain and customize the ERP System, your company may require to conduct training or even hire new personnel. With Cloud ERP Solutions, the initial investment is much lower because all that you need to purchase is the software subscription and license. There is no need for additional servers; hardware and facilities are all maintained by the ERP vendor. All of your company’s ERP needs are provided by the vendor and are easily accessible via internet. Cloud-based ERP providers do all the maintenance and upgrades to make sure that the system you are using is always up. Therefore, there is no need for additional IT trainings or hiring from the part of your company, which definitely helps cut a lot of expenses. Also, with the Cloud ERP System running on its own, you can deploy your IT staff instead to other required business matters. Net Present Value The net present value (NPV) is also one of the big considerations when computing for the total cost of an ERP System. It requires a cost-benefit analysis from your finance experts to determine the real value of the ERP solution. NPV is regarded as the most important computation that needs to be done every time a profit organization is planning for a large investment, like an ERP implementation and integration.
  3. 3. The hardware, equipment, and facilities needed with Traditional ERP Systems are all subject to depreciation, which makes their value lesser in the long run and the total NPV of the system less valuable. If you decide to let go of the On-premise ERP System, you will have to sell all your investments to recover the cost, but at much lesser value. With a Cloud ERP solution, your company will only be dealing with a fixed cost for a subscription, just like an internet plan or a phone subscription. It does not depreciate. Thus, making the NPV computation much easier and the NPV of the system much higher. The advantage with a cloud-based ERP product is the capability to end the subscription with no added cost. If your organization decides to shift to another vendor or can no longer afford the cost of an ERP system, you can end the subscription agreement anytime. Get your Acumatica Cloud ERP Solution Now Cloud-based ERP products, like Acumatica Cloud ERP Solution, are the best choice when selecting the right ERP System. Compared to the cost of traditional ERP Systems, your company can save more money with cloud ERP, which can be used instead to finance other business expenses. Get your Acumatica Cloud ERP Solution now with ASC and get best implementation, integration, development, support, and training services on your new ERP System.

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