ERP System Type: Cloud, On-Premise, Hybrid

Monday, October 30, 2023

Enterprise Resource Planning (ERP) is a software or system that has become the backbone for managing various aspects of a company's business. ERP integrates various functions such as finance, production, human resources, inventory, and others into one comprehensive system. However, when choosing the right ERP system for your company, you will encounter three main types, namely Cloud ERP, On-Premise ERP, and Hybrid ERP. This article will discuss each of these types of ERP systems, reveal their characteristics, as well as help you understand which one may suit your company's needs.


  1. Cloud ERP

Cloud ERP, also known as SaaS (Software as a Service) ERP, is an ERP system based in the cloud. This means the ERP software used by the company is hosted and accessed via the internet. Some of the main characteristics of Cloud ERP include:


Low initial costs: In most cases, Cloud ERP does not require a large initial investment in hardware and infrastructure. Companies only need to pay a monthly or annual subscription fee.

Access from anywhere: Since this system is accessed via the internet, you can use it from anywhere with a sufficient internet connection. This enables remote work and greater mobility.

Automated maintenance and updates: Cloud ERP providers are typically responsible for maintaining, updating, and securing the system, eliminating the need for in-house IT staff to perform these tasks.


Customization limitations: Cloud ERP is often less customizable than On-Premise solutions, because the SaaS provider controls the infrastructure and source code.

Data security: Although Cloud ERP providers typically take strong security measures, some companies may be concerned about the confidentiality of their data stored in the cloud.

Dependency on provider: You depend on the Cloud ERP provider for system availability. Disruptions on the provider's side can affect your company's operations.


  1. On-Premise ERP

On-Premise ERP is an ERP system that is installed and runs on your company server. This is a traditional model that has been used by companies for decades. Some of the main characteristics of On-Premise ERP include:


Greater customization: You have complete control over the ERP infrastructure and source code, enabling greater customization to suit your business needs.

Greater data security: Your data is stored within the walls of your own company, which can provide a higher level of security.

Full control: You have full control over system maintenance and updates, so you can manage timing and changes as needed.


High initial costs: On-Premise ERP requires significant initial investments in hardware, software, and IT resources.

Maintenance intensive: You must have skilled IT staff to manage and maintain these systems on an ongoing basis.

Access limitations: System access is usually limited to the company's physical location, resulting in limited mobility.


  1. Hybrid ERP

Hybrid ERP is a combination of Cloud ERP and On-Premise ERP. In this model, companies use both types of ERP systems for various business needs. This is an approach that may suit companies that have diverse needs or that want to combine the benefits of both models. Some of the main characteristics of Hybrid ERP include:


Customization as needed: You can use On-Premise ERP for needs that require a high level of customization, while you can use Cloud ERP for functions that require flexibility and mobility.

Manageable costs: With a Hybrid approach, you can control costs by choosing a model that suits your specific business needs.

Flexibility: Hybrid ERP provides the flexibility to adapt to changing business needs over time.


Added complexity: Managing two ERP systems simultaneously can be complex, and requires a good understanding of data integration and work flow.

Double maintenance costs: You have to manage maintenance and updates for both systems, which can increase operational costs.



Each type of ERP system, be it Cloud, On-Premise, or Hybrid, has its own advantages and disadvantages. The right choice will depend on your company's specific needs, budget, and business strategy. It is important to conduct a thorough analysis before making a decision, and if necessary, consult with experts in the industry or an ERP consultant. Choosing the right ERP system can help your company increase efficiency, productivity and competitiveness in an increasingly competitive market. Consult your business and get it free demo secara GRATIS sekarang juga!

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