HomeIndustriesERPCloud-Based ERP or Conventional ERP?

Cloud-Based ERP or Conventional ERP?

“Which one, Cloud-based ERP or conventional ERP?” That’s the question that arises when a company considers implementing an ERP solution to their business, especially in Singapore. With a variety of new systems being introduced on the market, companies are becoming skeptical about Cloud-based ERP solutions. Choosing between Cloud-based ERP and conventional ERP is similar to buying or renting a house. Therefore, it is very important for companies to consider the best and most trusted type or brand of ERP.

When someone rents a house for the long term, the total amount they spend on rental costs will probably be quite large. If they add a little more amount, then they might be able to buy the house. In a rented house, of course, our opportunity to modify the house is limited, but if you have your own house, we can modify it according to our wishes, depending on the budget. If we want to live somewhere in the short term, renting a house is a better option because we can break the contract and move somewhere else. So whether buying or renting a house, it all depends on the desired lifetime, modification needs, and cost factors.

Choosing Cloud-based ERP software is similar to renting a house and choosing a conventional ERP is similar to buying a home. When it comes to long-term use, conventional ERP solutions will be more cost-effective. Cloud-based ERP covers usage and licensing fees over a period of time.

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Cloud-Based ERP vs Conventional ERP

erp for business

Choosing between a cloud ERP and a conventional ERP is similar to the paradigm of buying or renting a house! When someone rents a house for the long term, the total amount they spend on the rent is considerable. If they add some more amount to it they could have probably bought the house. In a rented house, restricted modifications are allowed but the owner of a house can modify the house as they want, depending on their budget. If the tenant is looking for a short-term stay, renting a house is a better option as they can just cancel the contract and move on when they decide. So whether to buy or rent a house depends purely on the tenure of use, whether it requires any modifications, and the cost factor.

Cloud-based ERP software

HashMicro’s ERP solutions are a better option when the company does not have a large amount to invest in the initial implementation. The only investments companies need in this case of it are workstations for data entry and secure high-speed internet connections. An on-site workstation will connect data to a web-based server over an internet connection. This the company does to retrieve the processed data from the server and send the data to the server for processing and storage. Any software or hardware development you need is done on the server end without affecting the end user or client.

Lately, some companies in the defense and aviation sectors have chosen to implement Cloud-based ERP. Cloud-based ERP for government agencies is also an option to automate administrative and operational processes in real-time and securely.  Many major players in the e-Commerce sector including Amazon are successful after adopting Cloud-based ERP solutions for their companies.

Microsoft came up with its new Cloud platform under the name Microsoft Azure Stack. Microsoft’s cloud is targeting companies that were previously anti-use of the Cloud platform because of concerns about data security and regulatory issues. Microsoft Azure Stack offers a private Cloud for enterprises with system support such as PaaS or Platform-as-a-Service and IaaS or Infrastructure-as-a-Service.

Conventional ERP software

Another problem with conventional ERP software is if the company decides to end the business. If this happens, the ERP you are implementing becomes obsolete. In such cases, the entire investment in ERP implementation is a loss because you cannot sell or transfer to a third party. If you use cloud-based ERP, the disadvantage is the license or usage fee you have paid before.

The organization can decide to discontinue using the particular ERP service and move on with another product that suits the new business. Data security is another concern for many organizations, dealing with classified or highly secure data. Though security is a must for all cloud-based ERP, if the organization cannot take risks, conventional ERP will be a better option. Here, the organization will manage all the data under its servers. So data security is entirely at their risk when it comes to conventional ERP solutions.

Also read: Original Equipment Manufacturer: Definition, Characteristics, and Benefits

Large Enterprises that Use Cloud-Based ERP

Recently a few organizations in the defense and aviation sector have chosen to implement it. Many big players in the e-commerce sector including Amazon are succeeding after adopting the cloud version of ERP solutions for their organizations. Microsoft is coming up with its new cloud platform called Microsoft Azure Stack. Microsoft’s new cloud release is targeted at companies that stayed away from the cloud platform because of data security and regulatory issues. Microsoft’s Azure Stack offers a private cloud for the organization. It intends to support PaaS or Platform-as-a-Service and IaaS or Infrastructure-as-a-Service.

Types of Cloud-Based ERP Solutions

types of cloud-based erp

Cloud-based ERP can be your choice to improve the company’s performance to be more optimal and efficient. This system can also be your choice that does not have a large amount to invest in the initial implementation. However, you need to know that there are three types of cloud ERP solutions. Here’s the explanation:

SaaS (Software as a Service) model

The cloud ERP solution provider shares the hardware or server with many small businesses. A small service fee or a subscription fee is charged for each user or business subscribed to their ERP solution. This is the most popular model for small businesses as the subscription fee is negligible when compared to the implementation cost of on-site ERP. It is equivalent to buying a server space to host a business portal.

Hosted ERP model

Each customer or business has a dedicated server. This is comparatively expensive but preferred by larger organizations. This has many advantages over the SaaS model. Since the server is not shared, data is more secure. Issues with the data of one business do not affect the others, as each business has a dedicated server.

Hybrid ERP model

Certain modules are in the conventional model and the remaining are in the cloud-based model. Businesses with an existing installation of conventional ERPs can adopt this model for upgrades and additional modules. They can retain the already implemented ERP on-site and at the same time utilize the cloud-based models for additional functionalities without disturbing the existing model.

Also read: YOY Growth: Get to Know the Benefits and How to Calculate It!

How Do You Choose the Right Type of ERP for Your Business?

how to choose cloud-based erp

After knowing the importance and its types, you will choose which type of ERP is right. Are you having trouble choosing because of the many exciting options? You do not need to worry because factors can help you determine the right ERP choice. In short, the key factors in deciding on the type of ERP to be implemented are:

  • The implementation cost for an on-site ERP that includes new or upgraded IT and human resources is very high. Add to that the cost of training the employees to use a new system. A cloud ERP solution is the better option for your company.
  • If your company is planning to use the ERP for more than 10 years, a conventional ERP would be more cost-effective. It is because considering the subscription or licensing fee that will be charged by the cloud ERP solution provider.
  • You can choose a conventional ERP if you need extensive adjustments. This is because cloud ERP doesn’t support too many customizations.
  • Does your data need to be extremely secure? Then go for the on-site ERP implementation. This is because data security requires considerable investment.
  • The maintenance and up-gradation costs for on-site implementations will be higher than the cloud ERP solutions. Upgradations for this ERP are done in such a way that the downtime is minimized.

Keeping all these factors in mind, the organization can decide whether to consider a conventional on-site ERP solution or a cloud-based solution.


There are pros and cons regarding which ERP options are suitable for your company. It has many benefits, such as simple implementation and being easily accessible, etc. You also won’t get these benefits from conventional ERP. The ERP has many benefits, such as simple implementation and being easily accessible, etc. There are three types of cloud-based ERP: the Saas model, the hybrid model, and hosted model.

Are you experiencing confusion in determining the best cloud-based ERP provider? HashMicro cloud-based ERP software can be your choice to improve an enterprise’s performance easily, quickly, and accurately. Hash Core ERP is a cloud-based ERP that can help you to drive your company’s growth. You can also choose the right ERP vendor after calculating the ERP software pricing scheme. Tell us about your type of business and industry and we will offer you the best business solutions. If you want to get a free demo of our tour product, click here!

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HashMicro is a software development and enterprise resource planning (ERP) company. Consequently, we often provide articles about ERP and other systems that all businesses need.

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