Home What Are the Different Types of Cloud ERP, and Which One Should Your Company Use? 

What Are the Different Types of Cloud ERP, and Which One Should Your Company Use? 


Enterprise resource planning solutions, also known as ERPs, are now part of the mainstream for businesses in the retail, restaurant, hospitality, and finance industries. Nowadays, it’s become second nature for companies not only to invest in business technologies like ERP solutions but to operate in a more tech-driven and data-driven way because of them. 

Thanks to characteristics like real-time visibility over business data, high-powered calculation and automation capabilities, and customizability, cloud ERPs make it easy to achieve this goal and secure handsome returns for clients. But there are many cloud ERP solutions in the market compared to before, and it can admittedly be rather difficult for companies to narrow it down to their best choices. 

When scouring the market for your own cloud-based ERP, what type of product should you look into? To help you make the best returns on your cloud ERP investment, here’s a quick guide on how the different cloud ERPs work and what factors to consider when buying one for your company. 

The 3 Different Types of Cloud ERP

Let’s start with the definition of a cloud ERP. Cloud ERPs are ERPs that run on a service provider’s cloud platform. As opposed to traditional ERP solutions, which are deployed exclusively on business premises and are run offline, cloud ERPs can be accessed from anywhere as long as authorized users have an internet connection. Given the hybrid and work-from-home business models of the digital era, cloud ERPs are often the better choice of investment for businesses as opposed to their traditional on-premise counterparts. 

A cloud ERP is typically available in a software-as-a-service (SaaS) arrangement. That means that you’ll enter into a service agreement with a service provider to use their servers for storing business data, operating core modules, and doing everything that you’d rely on an ERP for. 

That said, not all cloud ERP solutions are created equal. Below are the three types of cloud ERP that you’re sure to encounter in today’s market.  

On-Premise Private Cloud ERPs

The first type of ERP that’s available to you is the on-premise private cloud ERP. Private cloud ERPs can be considered the best of both worlds: they feature the extensibility and connectivity of cloud technology, but it also comes with the same security and exclusivity as traditional on-premise ERPs. 

While on-premise private cloud ERPs are known for their sophisticated and trustworthy cloud capabilities, they are also the most expensive of the lot. Only businesses that have the money for their own exclusive on-premise cloud ERPs consider them a viable option.  

Public Cloud ERP Solutions

Next are public cloud ERP solutions. These cloud ERPs are both owned and hosted by a cloud service provider. Whereas private cloud ERPs can be thought of as having exclusive tenancy, much like a single homeowner, public cloud ERPs operate using a multi-tenant arrangement where there are shared resources for all clients. 

Public cloud ERPs do not require high upfront capital costs. Instead, users can simply pay as they go. And because they’re sharing IT resources with other companies, users don’t have to spend much on IT overhead. However, control of the IT environment and customization options are limited, and there’s a greater risk of incurring business interruption due to latency or security threats. 

Proprietary Cloud ERPs

Lastly, there’s the option of purchasing cloud services through a proprietary cloud ERP arrangement. In this arrangement, an ERP vendor hosts the business’s ERP from its own proprietary data center and charges the client with either an annual or monthly billing scheme. 

A proprietary cloud ERP arrangement allows a client more privacy than a public cloud ERP, and there’s the added appeal of getting more personalized services from the provider than what’s typically available from a public cloud platform. These solutions are also more flexible compared to both public and private cloud-based ERPs. 

All things considered, a lot depends on the vendor’s reputation and how well they can implement a cloud ERP service to suit your company’s needs. A great vendor can significantly increase a business’s earning potential thanks to the capabilities of its cloud ERP, while an untrustworthy one can cause a client to regret even upgrading at all. 

Conclusion: How to Choose the Best Type of Cloud ERP Solution for Your Business

To summarize, there’s no one-size-fits-all cloud ERP solution for every company, and you should choose which solution to invest in based on factors like the following: 

  • How big your company budget is for new ERP technology.
  • How large your company is and how much it actually needs in terms of IT resources. 
  • The nature of your business. 
  • The level of flexibility that you need over your ERP’s IT environment. 
  • The abilities of your cloud ERP provider. 

As with other big investments you’ll make for your business, continue to read up on the cloud ERP options available to you and choose wisely.

Also Read: 6 Key Features of Attendance Management Systems

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